The cosmetics production market has doubled in value between 2013 and 2017 to over EUR 100 million, and the preliminary data for 2018 indicate that the value had exceeded EUR 120 million. Expanded product ranges and sustained advertising in the industry have matched perfectly with the trend of economic growth and the diversification of consumer habits, according to a study by KeysFin.
The turnover of local cosmetics producers increased by 11 percent in 2017 compared to 2016, and by 108.5 percent compared to 2013, to 104.8 million in 2017. Cosmetics consumption also had a steady growth, up by more than 4 percent from 2016 and 35.4 percent from 2013 to nearly EUR 1.5 billion in 2017. The KeysFin analysis indicates, as a whole, a business close to EUR 2 billion in 2019, including both the production and the sale of cosmetics.
Significant market developments have to be directly linked to imports of cosmetics, which increased by 9.7 percent compared to 2017 and were 102 percent higher than in 2010 to EUR 525.5 million in 2018. Companies mainly imported beauty or makeup products (35 percent of total in 2018), followed by perfumes, body care and hair care products.
In terms of exports, the sector’s performance is significant, compared with the level recorded 7 years ago. Financial data show that cosmetics exports in Romania advanced by 276 percent since 2010, to EUR 327.5 million in 2018. As compared to 2017, the exports of cosmetics decreased slightly, by 1.3 percent. Romanian companies mostly exported hair care products (70 percent of total in 2018) followed by body hygiene, beauty, makeup and perfume products.
Cosmetics imports grew by 9.7 percent compared to 2017 and were 102 percent higher than in 2010 to EUR 525.5 million in 2018. Companies mainly imported beauty products or makeup (35 percent of the total in 2018), followed by perfumes, body hygiene and hair care products. Overall, the trade deficit of the cosmetics market increased by 34.5 percent in 2018 compared to 2017, to EUR 198 million, 14.6 percent higher than in 2010.
Farmec – the biggest player on the market
Farmec SA is the most important player on the market by turnover. In 2017, the company recorded a turnover of EUR 46.9 million, representing 45 percent of the total market.
Detergent SA, a company indirectly owned by Procter & Gamble Marketing Romania SRL, with a turnover of EUR 22.1 million in 2017, holds 21 percent of the total market and the second place. The third place is occupied by Papillon Laboratories Cosmetiques SRL, a Cypriot company controlled by Miralon Holdings Limited with a turnover of EUR 11.8 million in 2017 (11 percent of the total). The ranking is completed by two companies with 100 percent Romanian capital, AIS Phrama SRL and Gerocossen SRL.
In terms of cosmetics trade, the largest businesses in the “Retail sale of cosmetics and perfumery in specialized stores” category was reported in 2017 by Interbrands Marketing & Distribution SRL, with EUR 187.4 million. The company, which holds nearly 16 percent of the total market, is controlled by over 90 percent of Cypriots from Holson Holdings Limited. Next in the ranking is L’Oreal Romania SRL, part of the French group with the same name, with business of EUR 80.9 million, and Sarantis Romania SA, also controlled by investors from Cyprus through GR Sarantis Cyprus Limited, a company that reported a figure of business of EUR 65.3 million.
In the “Wholesale of cosmetics and perfumery” category, DM Drogerie Markt SRL, controlled by DM Drogerie Mrakt GMBH in Austria, Millenium Pro Design SRL, owned mostly by local investors, and Sephora Cosmetics Romania S.A (controlled by Sephora Cyprus Limited) are the biggest players on the market.
The Keysfin analysis shows that, from the regional point of view, the largest turnovers, accounting fort almost 70 percent of the total, were obtained by companies in Cluj County. The list continues with companies in Bucharest, Prahova, Timis and Sibiu. Together, the top 5 counties registered 98 percent of total cosmetics manufacturers’ turnover.
Judging by profitability, the data support the significant evolution of this sector. Of the 145 cosmetics companies surveyed, 73 reported profits, 52 had losses and the rest broke even. The net result increased by 2 percent compared to 2016 and is 163 percent above the 2013 level to EUR 7.8 million in 2017. The commercial debts of the cosmetics producers accounted for 50 percent of the total, indicating increased credit dependency supplier far above the average of the economy in 2017 by 32 percent.
In terms of cosmetics trade, of the 1,960 companies surveyed, 949 registered profit, 725 lost and rest had a null result. The net result decreased marginally as compared to 2016 but is more than 210 percent above the 2013 level to EUR 71.1 million in 2017. The trade payables of cosmetics retailers accounted for 43.7 percent and 38.5 percent respectively, indicating a less dependence on the supplier credit, but remains above the average of the economy in 2017 by 32 percent.
A sector with 14,000 employees
On the whole, the Romanian cosmetics sector hired almost 14,000 employees in 2017, a majority in the trade sector. While manufacturers reported 1,654 employees, 6.4 percent above the 2016 level and nearly 50 percent over 2013, cosmetic traders had 12,100 employees in 2017, more with 44.5 percent over 2013.
The KeysFin analysis also shows that in the manufacturing sector, labor cost increased by 6 percent to EUR 14,300 per employee while productivity increased by 5 percent to EUR 63,000 in 2017. As for trade, the 2017 financial data shows the lowest cost / productivity ratio of only 7.8 percent, at the opposite end we have production with a cost per employee ratio of 22.6 percent of average productivity.
The KeysFin analysis is based on the annual, unadjusted, aggregate data reported by companies at the Ministry of Finance (at the end of the period), which have as main activity one of the NACE codes: production 2042 – manufacture of perfumes and toiletries ) or trade: 4645 – Wholesale of chemicals and 4775 – Retail of cosmetics and perfumery in specialized stores.