By the end of 2009 Germany had started to climb out of the economic hole it had found itself in and the first half of 2010 appears to have continued this positive run of form. Katie Middleweek reports
According to many industry insiders the German C&T market is really on the move again and, after a period of losses and uncertainties, the past year has seen some good gains across all C&T categories.
Figures from industry body Industrieverband Körperflege und Waschmittel (IKW), which tracks the mass market, corroborates this with nearly every sub-sector making a gain, according to its latest figures. IKW’s managing director, Bernd Stroemer tells SPC: “Consumer spending in Germany rose by 1.7% overall to total €12.82bn in 2009. The only category which remained static was hair care but every other sub-sector saw improvement which is a very positive sign. Even the categories we do not track are a healthy size, the largest of these being baby care products which was worth €260m in 2009.”
Hair static
Despite these healthy gains overall, hair care (including hair styling), which is the single biggest C&T category in Germany, remained static in 2009, according to IKW. However this did still account for a market value of €3.04bn, just ahead of the next biggest category of skin care.
Although the sector stayed put in terms of value sales, there was quite a lot of activity in the launch arena over the past year. German hair care giant Schwarzkopf & Henkel rolled out an array of products including Gliss Kur Shea Cashmere, a luxurious, extra moisturising range for very dry and damaged hair. The line-up includes shampoo, conditioner, a leave-in conditioning treatment and a one-minute intensive treatment which all included the patented Gliss Kur Cell Repair Technology said to regenerate the hair without weighing it down.
When it came to hair styling, another German company Beiersdorf debuted a number of new products in its Nivea portfolio, including Nivea Refresh Blow Dry Mist boasting a formula that creates small air cushions between single hairs to give volume and lightness. The company also added some new styling products to its Blonde Gloss Collection, a line created specially for the needs of blonde hair. The Nivea Blonde Gloss Vibrancy Spray is designed to provide highlighted hair with targeted protection while the Blonde Gloss Styling Mousse is said to brighten blonde hair and protect it from UV damage.
Skin wisdom
Facial skin care is always a hugely popular market in Germany with consumers keen to try new technologies and textures. While the big multinationals, such as L’Oréal Paris and Clarins, do have a good presence, it is very much a sector dominated by local brands, many of them coming out with new products with a natural and organic angle.
IKW puts the growth of the skin care market at 1.6% in 2009, which totalled €2.97bn. And figures for the first half of this year from IRI Germany show that women’s facial skin care in the selective market has also had a good time lately, putting on 6.8% to make €213.56m, while volume sales increased by a healthy 12.4% to 5.54 million units.
Drugstores remained a key retail channel for Germany and drugstore DM’s natural brand Alverde celebrated its 20th birthday last year by adding new products to its popular Alverde Clear skin care range. The line is designed for problem skin and uses natural clay to prevent impurities, black cohosh extract as a natural astringent and a multi-fruit complex, including blueberry and sugar cane extracts, to smooth skin.
German company Art Deco added to its Skin Yoga naturals line by rolling out BioLab Skin Yoga. Products in the range contain at least 70% natural ingredients, the hero ingredient being the Asian goji berry, included in the line’s Gentle Cleansing Emultonic, All Day Protection Cream and Peel & Care Goji Mask.
Colour confidence
According to the IKW, colour cosmetics in Germany was the category with the biggest growth in 2009, an extremely robust 7.8% on the previous year.
And data for the first six months of this year from IRI Germany continue the positive picture. IRI puts the value of the colour cosmetics market at €559.03m, a rise of 4.9%. Of the individual sub-sectors nail products fared best, up an impressive 20.4% to €56.27m, while eye products remained the most popular sector taking €205.97m, closely followed by facial products with €197.56m and lip products with €94.99m.
Many colour cosmetics are purchased in the drugstore channel, often at relatively low price points. One example is P2, an Austrian colour cosmetics brand found exclusively in DM drugstores in Germany. P2 launched two primer products for face and eyes last March. Perfect Face! Base is a face and décolleté primer that can be worn alone or under make-up and is said to be effective at hiding fine lines and wrinkles while Perfect Eyes! Base extends the life of eyeshadows by up to 12 hours and prevents creasing. Other new launches included Cosnova brand Essence’s roll-out of its Black Mania eye range comprising Carbon Black Volume Mascara, which gives volume and colour without clumping, and Carbon Black Liquid Liner, to create fine thin lines. And Art Deco again stepped up to the plate launching its Beauty Pop Colour Collection in 2009, inspired by South American singer Romero Britto. The range features a plethora of colourful cosmetics in vibrant hues including greens, blues and yellows to reflect South American joie de vivre, according to the company.
| Table 1: Germany mass C&T market, value sales, €bn 2009 | ||
| Value | ±% | |
| Total | 12.82 | 1.7 |
| Hair care | 3.04 | 0.0 |
| Skin care | 2.97 | 1.6 |
| Colour cosmetics | 1.43 | 7.8 |
| Oral hygiene | 1.32 | 0.8 |
| Women's fragrance | 0.98 | 1.1 |
| Male grooming | 0.88 | 0.5 |
| Bath & shower | 0.84 | 1.1 |
| Deodorants | 0.68 | 1.2 |
| Soaps & syndets | 0.22 | 2.9 |
| Others | 0.41 | 4.9 |
| Source: IKW | ||
| Table 2: Germany luxury C&T market, % sector share, 2009 | ||
| Value market share | ±% | |
| Women's fragrance | 30.0 | -1.0 |
| Face & body care | 24.9 | -1.4 |
| Colour cosmetics | 15.3 | -0.3 |
| Male grooming | 20.3 | -4.3 |
| Others | 9.5 | -0.7 |
| Source: Bundesverband Parfümerien | ||
Perfume popularity
IKW valued the women’s fragrance market in Germany at €0.98bn in 2009, representing a rise of 1.1% on the previous year. Always a popular category, as German women are big consumers of scent, IRI Germany’s figures for the first six months of this year have indicated that things are smelling sweeter still.
From January to June 2010, The German women’s fragrance market (including coffrets and fragranced body care products) grew by 3.5% to €450.88m while volume sales also rose by 2.7% to 21.18 million units. Edp is always a favourite format with German women and this was reflected in the 9.4% growth for the same period, boosting value sales to €165.43m. Coffrets are also doing good business, putting on 11.9% to €43.42m, as fragrance manufacturers pull out all the stops to get consumers to buy.
While multinational brands have a strong hold over the German fragrance market, there are some strong domestic players who make their mark.
Cologne-based fragrance house Mäurer & Wirtz made two additions in its Acqua Colonia range in 2009: the limited edition scents Blood Orange & Basil and Rhubarb & Clary Sage. The first was billed a stimulating scent combining the fruity accords of distinctive blood orange with the tangy aroma of basil while the latter combined tart rhubarb with the soothing aroma of healing clary sage.
In terms of international activity, French company Annick Goutal’s latest fragrance, Ninfeo Mio, was distributed exclusively in Germany by distributor and retail group Albrecht & Dill and proved extremely popular. The scent was inspired by Camille Goutal’s trip to the garden of Ninfa, near Rome. The scent combines top notes of Italian lemon and bitter orange leaves, a heart of fig and lavender and base notes of cedarwood and citrus.
Male grooming
IKW put the growth of the male grooming market at €0.88bn in 2009 although this only represented a relatively minor 0.5% growth, one of the smallest of the mass market. However figures from IRI Germany were much more optimistic for the first six months of this year, putting sales of men’s facial creams in the mass market up by a massive 14.7% to €29.6m, split evenly between anti-ageing and moisturising creams. Sales of shaving waters, predominantly taken up by aftershave products, also showed 2.7% growth to €48.74m, with aftershave products alone putting on 3% from January to June this year.
Beiersdorf brand Nivea for Men rolled out five new products in 2009: Revitalising Eye Roll-On, Double Action Aftershave Balm, Revitalising Face Wash, Revitalising Shaving Gel and Revitalising Energy Gel. All contain Nivea’s Q10 technology designed to give skin an extra burst of energy and a fresh and revitalised appearance.
From luxury to discount
While the mass market appears to have been firing on all cylinders, the luxury sector definitely took a hit in 2009 with all areas posting a decline, according to industry association Bundesverband Parfümerien. The biggest losses in 2009 were seen in the male grooming sector, with a drop of 4.3%, while face and body care products fell by 1.4%. Commenting on the losses in its annual statement, the Bundesverband Parfümerien said: “2009 was not as good as German perfumery retailers had hoped but it was slightly better than expected. By the end of the year there was a sales deficit of 1.6% overall but this was seen as a reasonably satisfactory result compared to the 5% deficit in real economic performance which had been predicted by the German Federal Statistical Office.
Art Deco
“In particular the Christmas 2009 sales period was a disappointment, with perfume retailers ending the year with a 1.1% drop in turnover on average. One reason for this was the bad weather with key retail trading days such as St Nicholas’ Day on 6 December literally a washout due to the heavy rain which kept shoppers at home.”
The retail channel in Germany has experienced a lot of unsettling activity in the past couple of years. Department store Hertie went bankrupt in 2008 and this was followed last year by the news that Arcandor, the parent company who owned the Karstadt group of department stores, also went into administration. The group, which includes KaDeWe in Berlin, Ludwig Beck in Munich and Alsterhaus in Hamburg, has just been bought by Belgian investment fund owner Nicolas Berggruen, who is said to have big plans for the group’s image.
Meanwhile Arcandor’s big rival Metro Group, which owns department store Kaufhof, is faring slightly better but it is no secret that the company has been in financial trouble for years. The Metro Group also owns the Real chain of supermarkets and hypermarkets and the Metro Cash & Carry wholesalers and it is currently following its ‘Shape 2012’ programme which aims to cut costs via outsourcing, synergising and a series of redundancies. While Kaufhof is currently in a better position than Karstadt, if it doesn’t start pulling in better retail sales figures soon, it is at serious risk of being sold off by Metro Group.
Woolworths plc also went bankrupt in 2009 and many of the smaller and larger outlets closed, although 160 of the mid-sized stores have continued to trade in Germany. Woolworths now has a new German owner, a retail group called HH Holding, which also owns the discount clothing stores Kik and Tedi. The new owner recently announced ambitious plans to increase the number of stores to 500 over the next few years.
German discounters Aldi (Albrecht Group), Lidl (Schwarz Group) and Netto (Edeka Group) continued to do well, mopping up much of the C&T trade from people who had to economise in the past year. In 2009 Netto bought up the Plus discount chain of 2,300 stores from Tengelmann Group and has recently finished the extensive job of putting its Netto fascia on all the old Plus stores.
And it was business as usual with major players Schlecker, DM and Rossmann all trading well in 2009. This is always the most popular retail channel in Germany, with its terrific promotional deals and extensive choice of C&T lines, and the recession has played into its hands on many levels.
Earlier last year it was predicted that by the end of 2009 Germany would start to turn the corner and pull itself out of the recession and to a large extent this has been the case. While the luxury sector has seen a perhaps somewhat unavoidable downturn, the mass market has been going great guns. And although the C&T market has been rocked by instability within the retail ranks, it is evident that German consumers still want to buy into C&T. With results on the up, there is every reason to be positive and this good news has been a long time coming for German retailers and manufacturers.
Douglas takes stock
Michaela Merk is founder and ceo of Merk Vision and Partners, a strategic consulting company with a special interest in the German market. She talks to SPC about what the recession has meant for Douglas, Germany’s number one cosmetics specialist retailer
“The recession affected all of Europe of course but it hit Germany in an especially bad way. Before the crisis Germany was a very inward looking country and it was very happy to be self-sufficient but now it has been forced to change this as it realises it needs to be more outward looking and not so reliant on itself.
“Perfumery chain Douglas has seen an especially big restructuring period in the past year, looking at its purchasing and private label business in particular. It has gone back and reassessed its core business strategies and this has meant some big changes.
“It has also started to implement a new generation of employees who are not just German speaking because it now knows that it must have a more international outlook in order to compete long-term.
“So although Douglas is present in other European markets it has now started to look outside of the box, so to speak, when it comes to its domestic market. As the number one selective retailer in Germany it has realised it has to make changes to continue to stay in this position.”