The organic cosmetics market - Spain

1.2 A growing global market

The entire cosmetics market

The global cosmetics market is estimated at *** billion in **** (***), i.e. *% growth for the year [***].

Growth in the cosmetics market World, ****-****, % Source: ****

Asia-Pacific alone accounts for **% of the global market value, followed by North America (***).

Breakdown of the cosmetics market by geographical area World, ****, % Source: ****

The skin care products account for **% of the cosmetics market, followed by hair care (***).

Breakdown of the cosmetics market by product category World, ****, % Source: ****

Finally, L'Oréal is the world's largest cosmetics group, with sales of $**.* billion in ****, ahead of Unilever (***).

Top six companies in the cosmetics sector in terms of turnover World, ****, billion dollars Source: ****

The organic cosmetics segment, a booming market

The world market for organic cosmetics has been growing steadily for several years: it is estimated at **.* billion in **** and is expected to grow at a CAGR of *.*% until **** when it would reach $**.* billion. [***]

This is a typical example of a trend-driven market, whose value is strongly influenced by consumer behaviour, as the search for natural products takes over from synthetic ones.

Size of the organic cosmetics market World, ***-****, USD billion Source: ****

A buoyant European market

The organic cosmetics segment is the most dynamic in the cosmetics ...

1.3 Spain, an emerging and promising market

Today, Spain is still lagging behind the other European giants (***). Spain is nevertheless showing promise in this sector and particularly in the segment studied, that of organic cosmetics.

Size of the cosmetics market Europe, ****, billion euros Source: ****

Organic, the new Spanish trend

Spanish consumers are increasingly demanding environmentally friendly and healthy products. The demand for organic and eco-friendly products has exploded in the country. In fact, between **** and ****, the demand for all organic products in general has increased by **%, driven in large part by the rise of organic food.

The one for organic cosmetics increased by *.*% (***) [***] Because of this peak, *** new organic and/or natural cosmetic brands were created in Spain in ****.

The Spanish market being relatively new, it is now developing mainly in urban areas. The typical example is Madrid, where sales of organic cosmetics have **% growth between **** and **** according to the Spanish Agency for Consumption, Food Safety and Nutrition.

The cosmetics segment being more specific, it is difficult to have a precise estimate of its size. However, STANPA - the National Perfumery and Cosmetics Association - states that in **** organic cosmetics represented **% of the overall national cosmetics market of *** million. [***]

1.4 Foreign trade

In the absence of data on Spain's foreign trade in the organic cosmetics sub-segment, we have focused on the broader cosmetics segment in order to understand the country's main customers and suppliers.

Spain is a slightly larger exporter of cosmetic products than importer for the category "cosmetic and toilet preparations; beauty, make-up and skin care preparations, manicure or pedicure preparations, code ****". [***]. In ****, the total amount of cosmetic exports is estimated to be around $*.* billion, compared to $*.** billion in imports, which is a coverage rate of ***%. Yet, this gap is likely to increase in the near future. Indeed, the trend in Spain in the cosmetics market is increasingly export-oriented and **** has been the first year in which the country was more export-oriented as an importer. This demonstrates a growing domestic market.

Source: ****

Trade in cosmetics is on the rise in the country, and the fact that exports are accelerating faster than imports does not indicate that imports are failing, far from it. Indeed, although exports have grown by **% between **** and **** when the imports s, for their part, have increased by **% over the same period.

Exports of cosmetic products Spain, ****-****, USD billion Source: ****

Imports of cosmetic products Spain, ****-****, USD billion Source: ...

2.1 A favourable consumer climate

In order to understand the national demand for organic cosmetics it is first necessary to analyse the demand for the more general cosmetics market.

Spain is a country that is receptive to cosmetic products, in fact the average annual budget for a consumer in the country in cosmetics was *** euros in **** (***) every day [***]

After having experienced a strong crisis during the years ****-****, Spain seems to be recovering and is already in a considerably better position * years later. Indeed, household consumption seems to be picking up which is essential for a sector like cosmetics and even more so for the cosmetics sub-segment. Fearing that this momentum could come to a halt due to the COVID-** crisis, the government has already approved several measures to help revive the economy and protect households and SMEs.

Spain is showing its ambition to continue its economic momentum pre-crisis COVID-**. To get an idea of how far they have come in the second half of the last decade, one need only look at the evolution of household income and the unemployment rate.

Total household disposable income Spain, ****-****, in billion euros Source: ****

Change in average household income Spain, ****-****, in euros Source: ****

Evolution of the unemployment ...

2.2 Consumer Behaviour

What they buy

Consumption of cosmetics in Spain is quite homogeneous among the different product categories. Skin care remains the most consumed product category, encompassing **% of purchases. Among skin care products, more than half are intended for facials (***). [***]

Cosmetics consumption by category Spain, ****, % Source: ****

Main criteria for buying organic cosmetics

Spaniards have demonstrated over the last few years that they are sensitive to health and environmental issues when consuming, which partly explains the growth in the organic markets, whether in cosmetics, food or other products.

When they go to buy this kind of product, they usually take into account different factors, among which the most important are the price and impact on their health (***). In addition to these criteria, the eco-responsibility of a product also plays a major role because **% of Spaniards look for recyclable products and **% of them will prefer a product that is at least partially recycled.

Criteria that consumers consider when buying an organic product Spain, ****, % Source: ****

3.1 Spain, leader in organic farming

The association STANPA lists over *** member companies. These companies represent **% of the national cosmetics market, **% are SMEs. These companies have more than **,*** direct employees in the sector and ***,*** indirect employees. Despite this large proportion of SMEs, the Spanish market is not very homogeneous. The indisputable leader remains L'Oréal with all its subsidiaries (***) and the leading Spanish player is Puig, a Catalan brand.

The hectares of Spanish organic farmland can be an interesting variable not only for the national organic industry in general but also for the organic cosmetics segment. Or, Spain is the European leader in terms of organic farmland, and the number of plots of land cultivated in this way continues to grow. Spain has *,***,*** hectares dedicated to this activity, which represents *.**% of its total agricultural land. There is therefore still considerable room for improvement, as in terms of percentage of agricultural land Spain is still behind countries like Austria (***) and others.

Hectares of organic farmland Europe, ****, million hectares Source: ****

Percentage of agricultural land dedicated to organic farming Europe, ****, in % Source: ****

3.2 Various distribution channels

Organic cosmetics are distributed to consumers through five distribution channels:

Mass distribution (***) Selective distribution (***) Hairdressers and home hairdressers Direct sales (***) Pharmaceutical advice (***)

The distribution channels for organic cosmetics do not have the same weight as in the more general cosmetics market. Indeed, if for cosmetics the privileged channel remains the supermarkets, organic products are bought much more in specific shops and pharmacies.

In Spain the value chain of the cosmetics market could be summarized as follows:

The preferred distribution channels for the purchase of organic cosmetics, on the other hand, are organized differently:

Places to buy organic cosmetics Europe, ****, % Source: ****

Other channels include perfumeries, hair salons, beauty salons and online sales.

Online sales are the fastest growing channel. Buying cosmetic products on the Internet was a very uncommon practice until quite recently. However, this trend has been reversed and even if the delay is still considerable compared to other channels, it is interesting to look at e-commerce. Indeed, the online sale of cosmetics in Spain was responsible for *** million euros in **** and this figure could reach *** million in ****.

Thanks to a survey conducted by Photoslurp in ****, we discover that in Spain, **.*% of women have already bought cosmetics online and the age ...

4.1 Specific ingredients

According to COSMOS - the international non-profit organization producing organic standards - organic cosmetics contain five categories of ingredients:

Water Mineral elements Physically processed agri-ingredients Chemically processed agri-ingredients Other ingredients

Agro ingredient (***) the use of a substance of plant, animal or microbial origin that is derived from agriculture, aquaculture or harvesting

Each category of ingredients has specific requirements and different regulations. In addition, it is necessary to identify the percentage of organic in each category. For more information on this subject, please refer to the COSMOS standard on pages **-** [***].

In the organic cosmetics segment, the most popular products are skin care and especially facial and hair care. Make-up products and perfumes still lag behind these categories.

4.2 The different supply trends

A green product throughout the value chain

Given the interchangeable terminology (***), it is difficult to get a comprehensive overview of all products labelled as organic.

Not all certified entities consider the entire product supply chain. This last aspect could potentially be a determining factor in a world of changing supply.

Not only are organic ingredients capturing the hearts and minds of consumers, but the whole concept of "green" is slowly taking hold. A new trend is emerging on the horizon, sustainability throughout the supply chain.

The main dimensions concerned are :

Origin Production - Transformation process Packaging

An offer driven by innovation

Now that the organic cosmetics market is entering the mainstream, the big brands and laboratories invest in it. This gives rise to innovations that push new products onto the market and which allow organic cosmetics to gradually take over from traditional cosmetics. In recent years, we have seen sulphate-free soaps, whose foam comes from natural agents, an oil based on passion fruit seeds which is concentrated and offers a notable effectiveness in the repair of tissues or an eye contour obtained from organic horse chestnut flowers among many other outstanding innovations. [***]

A unique packaging

The use of a unique package ...

4.3 Generally higher prices

Organic cosmetics generally tend to be sold at higher prices than non-organic cosmetics. Among the reasons that can be given for these prices, in addition to a higher willingness to pay to acquire this type of product, we also find the need to use more natural resources which have a higher cost in the production process.

Price comparison for a face cream (***):

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5.1 Terminology can be confusing

Terminology can be confusing

There is confusion about the definition and identification of "organic" products. A first step towards a better understanding of the product is to differentiate the following categories [***]:

The natural cosmetics : they contain ingredients of natural and/or organic origin (***) The organic cosmetics : they contain natural raw ingredients (***) from organic farming. They must therefore have a valid certificate attesting to their organic nature.

The distinction is tending to fade at world level, whereas it plays a dominant role in the German, French and Italian markets. It is therefore essential for Spain to make this distinction and, above all, to communicate it to consumers, if it wants to play in the same league as its European neighbours. Because of the cultural differences between countries, the international organization ISO in collaboration with the cosmetics industry, has established a guideline (***) which uniformly regulates the content of natural ingredients in this type of cosmetic product.

To establish the authenticity of a product, it is therefore necessary to ensure that a certified institution has certified its compliance with the requirements. In Western European countries, certification plays an important role against the trend towards greenwashing to distinguish genuine organic products. [***]

Some examples of organic ...

6.1 Segmentation

• LVMH Vins et Spiritueux
• Estée Lauder
• PUIG Group