Germany - Light at the end of the tunnel


Germany is now coming out of recession but it has been a tough year for the C&T industry. Annemarie Kruse reports

Germany is now coming out of recession but it has been a tough year for the C&T industry. Annemarie Kruse reports

Like everywhere in Europe, 2008/09 was a tough year for Germany. The crisis in the international financial markets hit the German economy hard and the country is just coming out of a recession. A number of bankruptcies in the retail sector over the last 12 months hasn’t helped the situation; Woolworth Germany, the Hertie group and Arcandor with its Karstadt chain of department stores all went into administration and the fate of these retailers is still up in the air. However, while the German C&T market didn’t have a particularly strong year in 2008/09 and results varied across the different categories, the sector as a whole has suffered less than other fmcg categories.


Hair care is the biggest category in C&T and, according to industry association IKW, turnover (including styling and salon sales) reached €3.04bn in 2008, up 2.2%. Sales figures by IRI Germany put the category (including colourants) at €1.16bn, an increase of 6.2%, while volume climbed 1.09% to 164.07m litres. Hair care accounted for the lion’s share of this total with €845.46m, up 2.3%, whilst colourants grew 1.9% to €318.51m.

About half a dozen manufacturers dominate the sector. C&T giant L’Oréal is represented with its Elvital, Fructis and Garnier brands while fellow multinational P&G contributes Herbal Essences, Pantene and Head & Shoulders. Beiersdorf’s Nivea brand and Schwarzkopf & Henkel (S&H) with its Gliss Kur, Schauma, Syoss and Poly brands have a very strong market presence as does Kao with its premium Guhl hair care portfolio.

And there were plenty of new launches across the board. L’Oréal introduced a smoothing Elvital range and the anti-damage Anti-Schädigung line while S&H updated its entire Gliss Kur range with new ingredients and packaging design, launched the four-sku Gliss Kur Hair Active with Carnitintartrat for thinning hair and in March 2009 brought out Syoss, an entirely new brand described as offering salon care at affordable prices. Two other S&H launches, this time in the Schauma brand, were the four-sku Q10 product range with co-enzyme Q10 for mature and thinning hair and the Color-Glanz line-up for coloured hair.

Competitor Nivea introduced the Volume Sensation care and styling range and P&G decided to go for a complete overhaul and relaunched Herbal Essences with nine lines and a brand new look. Head & Shoulders was extended with four conditioners especially for dandruff prone hair and Guhl contributed Locken Kraft for curly hair with gingko and jojoba and Pur & Belebend, a three-sku deep cleansing range.


IKW’s figures peg the skin and body care category at €2.92bn, up 1.3%, and IRI confirms that the facial skin care market grew 2.8% to €751.180m in 2008. Volume reached 12.96m litres, an increase of 2.7%. And first quarter sales for 2009 have so far registered €196.123m and 3.371m litres respectively, on a par with turnover at the same period last year.

The big names in the mass market include, of course, Nivea and stable-mates Florena and Eucerin, a brand only retailed in pharmacies. S&H’s Diadermine and Aok brands are also very strong as are L’Oréal Paris and Garnier, P&G with Oil of Olaz, and Dr. Scheller with Manhattan Clearface and J&J with Bebe in the young skin care segment.

With an increase of 8.7% anti-ageing creams accounted for a large slice of skin care turnover in 2008 and there was a correspondingly high frequency of launches in this sub-category. In the luxury sector Coty’s Lancaster extended its high-tech Retinology range with an eye product and an intensive night cream. Over in the mass market S&H’s Diadermine introduced a Goldpflege wrinkle filler and day cream in its Age Excellium range for mature skin. Another new Diadermine launch was the two-sku anti-age Falten Expert 3D line.

The anti-ageing trend has reached the young skin care sector too. Aok is S&H’s brand for younger women and comprises several lines targeted at different ages. A couple of months ago the Pur Lift range for ages 30+ was extended with an anti-wrinkle day and night cream. And L’Oréal Paris weighed in with several new launches in its Revitalist, Age Perfect and Collagen ranges and recently added the moisturising Hydra Aktiv 3 for normal and sensitive skin.

The naturals trend is also increasingly influencing the conventional C&T sector. P&G, for example, introduced Olaz NaturAktiv und AktivPflege with ginseng, green tea and grape seed extract while Nivea launched the new Natural Beauty range and J&J’s Bebe Young Care brand was extended with a new cleansing range featuring lemongrass extract.


This sector clocked up turnover of €1.33bn, an increase of 6.9%. And IRI figures show that the market was worth €1.104bn in 2008, up 6.5%, while volume grew 9.5% to 182.215m. Figures for first half 2009, however, look slightly less solid although they are still registering a slender plus with value growing 1.3% to €555.575m and volume climbing 1.8% to 92.044m.

Besides Coty’s Rimmel and L’Oréal’s Maybelline Jade and L’Oréal Paris the main players in the category are German brands. Nivea Beauté is one of the top selling labels but Coty’s Astor, P&G’s Max Factor by Ellen Betrix, Dr. Scheller’s Manhattan and budget beauty brands P2 (Palmers) and Essence (Cosnova) are also fighting it out for market share. And in 2008/09 two entirely new brands joined the fray. Last year DM’s proprietary Alverde natural C&T brand branched out into make-up with a colour cosmetics line and in March 2009 Coty launched Esprit Cosmetics, available exclusively at DM drugstores.

The minerals trend is still alive and kicking with Artdeco introducing a range of mineral-based eye and face products. Max Factor brought out Naturals Mineral Bronzer and Esprit introduced the Perfect Veil foundation range. For consumers preferring liquid foundations there were also plenty of new products including Nivea Beauté Teint Delight Makeup, P2’s Natural Touch Makeup and Max Factor’s Second Skin Foundation. Mascaras remain a firm favourite with German women and there was a plethora of new launches in this sub-category with contributions from Astor (Volume Diva), Nivea (Volume Nanodefinition and Extreme Resist), Manhattan (No End), P2 (Duo Power) and Essence (Carbon Black Volume).


The female fragrance market wasn’t overly successful in 2008/09 and the category grew just 1% to €74bn in 2008. IRI figures confirm that turnover was more or less static last year, with value dipping 0.1% to €823.7m and volume climbing a slender 0.6% to 33.86m units. The majority of fragrance sales took place in perfumeries and the favourite format were edps which put on 1.7%.

The big fragrance distributors in Germany include Albrecht & Dill with a range of luxury and niche brands such as Floris, Annick Goutal, Lalique and Penhaligon’s. Mäurer + Wirtz has a more masstige portfolio including the famous 4711 label and the fashion fragrance brands Betty Barclay, s.Oliver, Gin Tonic and Otto Kern while the Nobilis Group distributes premium labels like Elizabeth Arden, Etro, Bond No.9, Bvlgari and Versace.

Amongst the latest launches in the luxury sector are Coty’s Jil by Jil Sander, L’Oréal’s Eau Mega by Viktor & Rolf and Max Mara’s Le Parfum Zeste & Musc with bergamot and magnolia. Prada brought out the amber-based L’Eau Ambrée, YSL launched the floral Parisienne and Lalique introduced Encre Noir Pour Elle, a female version of its iconic men’s fragrance.

The masstige segment is also traditionally very strong and celebrity and lifestyle perfumes are perennially popular with German fragrance shoppers. New offerings in the market include Kate Moss’ latest fragrance launch Vintage, Celine Dion with Chic, Kylie Minogue’s musk-based Couture and Halle Berry’s woody oriental Halle. Adidas contributed the floriental Free Emotion, Esprit launched the fruity floral VIP Life and sports brand Chiemsee launched Wildcard! with apricot blossom and pear.


Male grooming has been one of the most consistently successful C&T categories but in 2008 this sector dropped 0.3% to €881m. IRI Germany’s figures on the other hand show a slight improvement with turnover (including skin care, shaving preps and fragrance) reaching €498.36m, up 0.67%.

As in previous years the trend is towards further product segmentation with a particular emphasis on anti-ageing action. Clinique’s Skin Supplies for Men was extended with Age Defense for Eyes containing hyaluronic acid and vitamins C and E while L’Oréal with its Men Expert range introduced a dual action eye lifting cream with Latexyl and Pro-retinol VX as well as an intense moisturising gel fluid.

Competitor Nivea for Men has also had a busy year. Last December the brand signed national football team trainer Joachim Löw as spokesperson for its men’s product range and has since launched several new products in its Q10 anti-ageing line, including a hydrating gel, eye roll-on, aftershave balm and face wash. And Clarins introduced two new aftershave soothing products and a moisturising UV protection oil.


Bath & shower additives grew 2.4% to €840m according to IKW, and IRI Germany has posted similar figures with bath products reaching €624.12m in January to October 2008, up 1.4%. Volume grew 0.3% to 157.03m litres.

Leading the market are German brands including Merz’s TeteSept, Kneipp, Nivea and Florena, the Fa range from S&H, Chefaro Pharma’s Claire Fisher, Sara Lee’s Duschdas, J&J’s Bebe and Colgate-Palmolive’s Palmolive brand.

Wellness and exotic ingredients are still the leading trends in the sector. There were two new product ranges in the Fa brand, the moisturising Cream & Oil in the variants Silk & Magnolia and Cocoabutter & Coconut Oil and the sparkling Fresh & Oil range in Green Melon & Litchi and Hibiscus & Cranberry respectively. And just a few months ago S&H brought out the Gelée Royal bath and shower range, while Claire Fisher, a brand sold only in pharmacies, introduced the three new Aromabad additives Green Pear, Pomegranate and Honey. And classic German brand Duschdas, which has been around since 1973, introduced Soul Harmony shower gel with green tea extract and jasmine and a set of three Body Smoother shower scrubs.


Given the economic situation it is not surprising that the luxury C&T sector has also had a difficult year. According to industry association Bundesverband Parfümerien total perfumery turnover in 2008 grew just 0.7% to €2.67bn with volume slipping 0.5%. Although the first quarter 2008 began on a high note turnover dropped sharply in the summer and sluggish Christmas sales further depressed the sector’s overall performance. There were numerous store closures in 2008 and constant price battles between perfumeries and a steadily increasing grey market haven’t helped the performance of the premium segment either.

Looking at the different product categories all sectors except female fragrance and male grooming registered slight increases. Women’s fragrance, which accounts for 29.3% of total luxury sales, fell 0.3% for the second year in a row. Facial skin care (21.8% of the total), on the other hand, managed a comparatively respectable increase of 1.1% and body care (6.1%) grew 0.2%. Colour cosmetics (13.8%) posted a plus of 2.7% but men’s cosmetics dipped 1.2%, a somewhat surprising result considering the strong performance of this category in recent years.


The situation in the department store market on the other hand really is dire. As a retail channel the segment has been consistently losing market share over the last decade and retail experts are already saying that the department store format is on its way out. The recent insolvencies of the Hertie store chain, the Woolworth Germany group and Arcandor with Karstadt have further weakened the sector. Most of Hertie’s stores have already closed down. Woolworth’s insolvency administrators recently announced that while some of the mid-sized branches will continue under the Woolworth brand the remainder of the stores will be sold off. And whatever happens with Karstadt will depend on how quickly Arcandor’s administrators find a solution for the group’s component parts. The disappearance of Hertie and possibly Karstadt is set to significantly change the German department store industry and what the market will look like this time next year is anyone’s guess.

But there does at least appear to be a silver lining. The buying habits of female consumers are often a good economic indicator, and according to a recent online poll by VKE-Kosmetikverband and the Burda Community network among female internet users, most German women plan to continue to buy C&T products as always. Only a quarter of the women polled said they were going to spend less on cosmetics in 2009, although every second consumer said they were paying more attention to price than before.

Recent media reports that the worst of the crisis is now over have also brightened the mood of the market. According to researcher GfK’s monthly consumer climate study for September, German consumers are becoming increasingly optimistic about the financial situation. The economic expectation indicator registered an increase of 10.9%, income expectation grew 7.2% and propensity to buy climbed 5.4%. The fmcg sector and particularly the C&T market will profit from these developments.


While the grey market, the sale of luxury C&T outside of authorised retail channels, has been the bane of the premium C&T sector for several years, product piracy and counterfeiting has now also become a serious issue for the German, and European, C&T industry.

While the value of fake perfumes and cosmetics seized by German customs shot from €495.288 in 2005 to €2.82m in 2007, the official figures for 2008 reached a staggering €13.2m. Considering only about 10-15% of the shipments that arrive at Germany’s borders by sea or air can be checked by customs officials the real figure will be much higher. Some 41% of fake perfumes are sold in open air markets but internet auction houses like eBay are fast becoming the preferred retail channel for pirated C&T products.

In order to increase awareness of product piracy and counterfeiting, several German industry organisations and premium C&T association VKE-Kosmetikverband decided to invest in a major public education campaign and in early 2009 launched a travelling exhibition. The organisers want to spread the message that buying counterfeit products supports organised crime, money laundering and exploitation, weakens local economies and can pose health risks.

Entitled ‘Schöner Schein. Dunkler Schatten’ (beautiful appearance, dark shadow) the exhibition features statistics, information and pictures about the worldwide product piracy business, its mechanisms and distribution channels and also displays fakes from different sectors side by side with the original products. The exhibition will tour different shopping centres over the next 18 months and hopefully reach some 10 million consumers.