Key take-outs from the industry debate at the European Economic Forum: the Polish cosmetics market is competitive, dispersed, novelties rule in cosmetics stores, and the customer is used to… the excess of choice. The prospect of development is still very good. According to Euromonitor International, the market value in Poland will grow and amount to PLN 20 billion.
#corporations and domestic companies
Corporations are strong, have a capital advantage and the global momentum. Polish producers have brands already favored by consumers and… great flexibility of operation.
The competitiveness of the sector is enormous. Michał Czajka, CEO of Sarantis Polska, emphasized that the innovation is a great strength of the Polish producers. Innovation which is significant locally, but it is also a big asset in export.
Polish companies operate much faster than corporations. I represent the foreign capital in Poland and I know that it is harder for large and medium-sized corporations to respond. In Polish companies, decision-making processes are quicker and it is a significant competitive advantage. It is not so easy to keep up with Polish companies – he emphasized.
Czajka also talked about the fact that the competitiveness in the cosmetics sector means that the consumer is presented with an incredibly wide selection of products. According to him, Polish consumers (mainly women buy cosmetics here) like to have a choice, even if with such a wide range the decision is not easy to make. They also like new products, that’s why the new products carousel revolves so quickly.
Analyses of beauty products in stores show how quickly this category changes. Within a year and a half, about 70% of products available on the shelves of cosmetics shops was replaced (not brands, not companies, but specific products), this shows that Poles love new cosmetics and they eagerly reach for new products – says Michał Czajka.
#you need to feel the trends
In order to make money on cosmetics, you need to constantly keep a dialogue with consumers, anticipate their needs, quickly react to trends. However, it gets complicated as there might be many trends at the same time, and you need to decide to what extent the trendy and popular products are part of the company’s specialization or its public image.
The president of the Floslek company Katarzyna Furmanek talked about trends in this aspect.
Pro-health direction is still one of the strong trends. This direction slightly changes the current interest of eco or natural cosmetics. In the case of these products, there was a problem with definition and difficulties related to testing by the customer whether every single vegetable ingredient used in the cosmetic product came from organic farming. Currently, more and more often, we talk about „clean cosmetics” – deprived any undesirable ingredients – points out Katarzyna Furmanek.
The contemporary consumer pays more and more attention to the composition of products. Consumers are increasingly more educated in this area or use various applications to facilitate the INCI analysis. In the context of natural cosmetics, Katarzyna Furmanek also emphasized that not only the product formulation is important for the consumer, but also the packaging that can be recycled or refilled, and how “clean” is the production. Consumers become more and more attentive and companies need to take special care of their reputation, because this translates into the perception of the brands themselves.
#strong in export
The famous statement that Poland is not enough for the Polish beauty products manufacturer has been repeated often in recent years. To maintain the stability of business and development, companies invest in export. Andrzej Kozłowski, the president of Verona Products Professional, believes that the possibilities of such activities must be well predicted.
When signing foreign contracts, it is always worth bearing in mind whether we have sufficient resources to implement them. The company must be prepared for the scale of orders, and demand must balance supply. You need to look before you leap, he argued.
According to Kozłowski, the markets on which medium and large companies should now develop is Asia, especially China and India. Asked about ostracism of companies that sell cosmetics in China, which is of course associated with the admissibility of animal testing, he commented that there are sales models that eliminate such tests.
We sell there using e-commerce, and this kind of trade allows you to bypass animal tests. China needs European products. The middle class is growing very dynamically there, and they do not want cheap Chinese products. Cosmetics created in Europe are a synonym of high quality there and there is a high demand for them – he said.
The issue of export to China certainly will be an important topic for the industry. On one hand we can already see that the corporations exert pressure on the Chinese government to give up the obligation to test beauty products on animals, on the other, there are some legal gaps to bypass these requirements. The question is, how to present such a specific issue to the general public who likes only a yes-no approach?
# young and talented
The competitiveness of the market does not deter young talented people. Paweł Kosowicz, president of Yope company, founded a business together with his wife. From the beginning they knew what they wanted and what compromises they would not make. Kosowicz knew quite well the industry and knew that it was a difficult market with quite a lot of good products. However, he and his wife saw a place for the brand with a very natural composition, useful and friendly for the whole family, with a characteristic graphic motif referring to the best traditions of design and modern communication directed to the consumer.
What drives us is not only the sale of products but the creation of products and incidentally everything we do at the same time. I still have the feeling that if we do it well, with passion and faith, that if we stick to our principles, consumers will appreciate it, and we will sell our products – said Kosowicz modestly.
According to Kosowicz, what attracts young people to business (not only in cosmetics industry) is the desire to create products which you want to buy for yourself. Despite full shelves, there is still some undeveloped room for the needs that larger players have not noticed yet. Consumers are changing, and you have to feel the trends really well to find something that no one else has come up with yet. These niches – somehow, this is how it works – are most often found by young companies.
#don’t be afraid to ask
Artur Błażejewski is the president of Cosmo Group, another young, extremely dynamically growing company. The company is a strong player in the hybrid nail polish category, its portfolio also includes products for professional eyelash extension, and has recently entered the premium color cosmetics segment.
In the years 2014/15, the company employed 20-30 people. It’s employment in 2018? 850 people! This shows how the company has risen quickly and highly on the growing wave of hybrid nail polishes.
GfK research, which the company commissioned several months ago, shows that in the group of 18-40 years old consumers, 26% of them use hybrid nail polish. This is every fourth Pole! However, what is interesting, in the group of 18-29 years old there are even more hybrid nail polish users – over 30%, which predicts that in the perspective of a few years, a hybrid nail polish will be chosen by every third female consumer. Market saturation is one thing, but the potential for the category seems to be growing.
The president of the Cosmo Group believes that consumer research is very important. Only having a product that suits the lifestyle of a modern woman can the entire sales motor start. That is simply creating a pull, instead of a push, mechanism.
Focus research was useful for the Cosmo Group when it created a new make-up brand, and the first sales results of Neo Make Up confirmed its conviction that it was right.
# easier together
The companies have a strong representation in the form of the Polish Union of Cosmetics Industry (PZPK). It is the voice of the industry in talks with the government or EU regulators. Blanka Chmurzyńska-Brown, the managing director of the Association, emphasized in the discussion the strong position of the Polish beauty products market on the entire European map (the top five of this part of the EU economy). Two components are particularly important here: production and growing exports by domestic entrepreneurs as well as their presence in Poland – also in the context of the already mentioned production – of global producers.
Our association’s representation grows from week to week. This year, 22 companies have joined us. This reflects the level of trust in our organization but is also a proof of how our market is still developing – said Chmurzyńska-Brown.
The cosmetics market is still on the rise. This is indeed an example of the industry branch where Poland is successful. The market is competitive, but as the examples show, you can still find your place on it, even when starting practically from scratch.
The strength of market leaders results from their strength of capital – it is certainly an advantage for global companies, but flexibility, innovation, and courage in overcoming clichés, allow Polish companies to develop quickly. Some focus on the Polish market, others on the contrary – they see more opportunities for themselves in exports, the third way is the balance between local and international development. Everyone implements it according to their own plan and ideas…
The competitive market certainly does not forgive one thing: mediocrity. These are the basic conclusions that we sure were able to present to the public during the European Economic Forum in Lodz.
Cosmetics Insight Poland