Finland, a country which has a population of around 5.3m people concentrated mainly in the south, has a small but dynamic C&T market which is gaining momentum as each year passes. For example, in 2005 the prosperous economic situation in the country impacted on the C&T industry in a big way, registering solid sales as a result. While 2003 and 2004 had been slow years for the sector, sales of C&T products rose by 6% in 2005 and this growth has continued every year since then, according to the Finnish Cosmetic, Toiletry and Detergent Association (Teknokem).
The year 2005 marked a turning point for Finland in C&T terms as that was when the Nordic country effectively started to catch up with the rest of Europe. The recovery of exports in Finland also began in 2005, reverting the trend for the low level of exports that had been typical of previous years. Exports in 2005 were valued at €60m, which was a noticeable 8.5% growth on 2004. Here it was again the C&T market which was to prove a driver for growth, accounting for about 85% of the total value of techno chemical product exports in the country.
The Finns have progressively and steadily increased their focus on health and beauty with these being important factors in driving the sales of cosmetic products in recent years.
In 2007 sales of cosmetics and toiletries in Finland were 4.9% higher in value terms than in 2006, according to Teknokem. Sales by actual members of Teknokem accounted for over 90% of the C&T total for this year which was also very encouraging. Looking at the technochemical product sales in more detail, cosmetics and toiletries make up the largest slice of this pie by far, taking up a huge 68% which totals €410m.
Eava-Mari Karine from Teknokem says: “The cosmetic market in this country still has room to grow and no real decline is forecast. The market in Finland is highly concentrated, meaning that a few, select companies dominate. At present all of the main players operate on a very steady footing meaning that any decline probably wouldn’t have a very strong impact anyway, at least to begin with. One trend that we have noticed however is that consumers here have become a bit more price sensitive due to the economic situation and though Finland is an affluent country and hasn’t really seen any direct effects, people are aware of the situation.”
In 2008, the C&T sector saw a 0.3% drop in sales on 2007 which is the first of its kind since before 2005. The market in 2008 totalled €409m compared to the slightly higher t410m of the previous year, though industry insiders say this is no cause for concern.
And despite this slight dip in 2008, the hair care, oral care and intimate care sub-sectors remained very successful, according to Teknokem’s figures. Hair care went from holding a 1% slice of the market in 2007 to 2.7% in 2008 while oral care recovered from the previous year’s 2% loss inching up by 0.7%. Intimate personal care products also had a great year, moving from a 0.4% loss to an impressive 7.8% increase.
However, other sectors did experience a tougher time. Among them, skin care saw a disappointing 2.6% fall while the segment had shown a staggering 9.9% growth in 2007. Deodorants also slipped going from a 3.9% growth in 2007 to a 1% loss in 2008.
Making up for lost time
Certainly the C&T market in Finland has been catching up with the rest of Europe in the last four years. In 2007 the average per capita expenditure in the C&T sector was €151, an increase from 2005’s average of €137. In 2005, and for the first time ever, Finland was ahead of Germany for per capita consumption and it was also ahead of Greece, Portugal and Ireland.
Given the relatively small size of the C&T industry in Finland, a small country in itself, competition between local brands really involves just a couple of manufacturers that have built up their expertise over the years. The main Finnish beauty brands are Lumene and Sim Finland Ltd while the presence of global multinationals clearly remains strong in this country, as in every other European market.
In terms of retail channels, Dermoshop Ltd is a Finnish direct seller founded in 1987 which also develops skin care and colour cosmetic products. Dermosil is its main product and all products can be bought online at www.dermoshop.com. This style of shopping is very popular in Finland – Dermoshop Ltd is in the top five list of internet brands in Finland with a turnover of €17m in 2008 alone. Comments Karine: “We have some strong local brands but Finns don’t favour them in particular over foreign ones, they like to be consumers of both domestic and international goods now they have the choice.”
Keeping up with the bigger homegrown companies, smaller Finnish manufacturers are certainly making their presence felt. And they have been springing up in greater numbers across the country during the past decade.
Among them, Nordic Cosmetics bills itself as the fourth biggest cosmetics distributor and the country’s biggest homegrown fragrance importer. Run by a team of 50 young Finnish women, Nordic Cosmetics is located in the capital Helsinki. The company also imports make-up, skin care and sun care products for distribution around the country in a variety of retail outlets. Key brands which Nordic Cosmetics distributes include Gucci, Valentino, Hugo Boss, Puma, Piz Buin and Max Factor.
Meanwhile, Nordic BioCosmetic Production was founded just under ten years ago in 1999 and manufactures private label skin care brands for sale at varying price points at retail. Nordic BioCosmetic Production prides itself in its product development and in recent years has developed products especially for the natural and organic market. This is a key growth area in Finland and prestige, masstige and value manufacturers have all realised this is a way to make a substantial amount of sales. The natural range of C&T products offered by Nordic BioCosmetic Production comprises face and body creams, lotions, tonics, cleansing masks, facial oils, liquid soaps, hair styling products and shampoos.
Finland, in keeping with other Nordic countries, is very eco-conscious. Many Finns enjoy a green lifestyle, recycling their waste, cycling everywhere and also using natural beauty products with environmentally sound packaging where possible. Trekos Oy is a Finnish company which is a popular choice in this area – it manufactures skin care and hygiene products based on environmentally- friendly choices using natural ingredients and packaging made from a variety of sustainable sources. A strong belief of the company is that it feels that Finland’s C&T market is becoming saturated by international brands and it wants its products to represent the best that Finland itself has to offer. Among the lines manufactured by Trekos Oy are Emännän käsivoide hand cream and the Divello, White Dent and Pesol lines. After hair care, skin care was the second largest sector in value terms in 2007 with a 27% market share. Growth here was driven by anti-ageing products and products sold in pharmacies, a popular Finnish retail channel. “While there is not any one niche segment booming in particular at the moment, the sales of C&T lines in pharmacies are growing at the most rapid rate. But on the other hand the sales volume is much smaller here than in other distribution channels so it doesn’t have as great an impact on the overall picture,” comments Karine.
Catering to all tastes
Male grooming represents one of the fastest growing sectors in the Finnish cosmetics and toiletries market, although non shaving related products continue to remain small in terms of market value. Sales are forecast to grow however as men become more aware of the plethora of products available to them and are more willing to spend time and money on their looks. On the other hand, the lowest amount of money was spent on men’s and women’s fragrances as habitually Finns aren’t concerned with wearing perfume and very few of them actually do. Finnish consumers even tend to choose fragrance-free products over fragranced ones if they are available.
While Finland’s cosmetics sector experienced a particular boom in innovation from 2005 to 2007, some industry insiders say it has now reached its peak and the market has levelled off. However, popular sectors such as hair care and oral care are still riding the crest of the wave and there has been much innovation in these sectors.
Hair today, hair tomorrow
Hair care and hair styling have always been of great importance to the Finns. As opposed to other European consumers who often prefer to spend their money on skin care and fragrances, a typical Finnish consumer would spend their money on hair care and hair styling products instead. In 2006, hair care held a 33% market share in Finland compared to 23% in the rest of Europe and was the largest single product category in the entire sector. Karine comments: “Hair products tend to sell well in Finland because Nordic hair is often fine and flat and can do with some help in this department. It’s not that easy to handle and doesn’t have much natural volume. Finnish people like outdoor activities and normally compete in lots of sports. They also go to saunas frequently, which requires a lot of showering and washing of the hair which can take its toll. It’s also worth noting that we have four proper seasons in terms of weather in this country. This means intense sun exposure in the summer changing to cold and windy weather in the winter, all of which can make hair stressed and tired looking. Interestingly in 2007, for the first year ever, sales of professional hair care products exceeded retail product sales – traditional shampoos were the only hair product that sold better in retail chains than hair salons.
Another trend in the Finnish market is that professional products are widely available to consumers through special stores. Sim Finland Ltd is a manufacturer of professional hair, skin care and personal care products. The company operates mainly in professional hair salons and pharmacies. All products are fragrance-free and suitable for sensitive and allergy-prone skin. The Sim Sensitive brand offers several lines including System 4 Therapeutic Hair Spa created for the hair and scalp. Whereas the Bio Botanical line deals specifically with hair loss and features natural extracts, promising to help remove dandruff and renew scalp cells. Sim Finland Ltd also offers a technical product range with advanced hair colours for professional use. Colours available are Silk & Shine Pigment, Silk Red Unique, Silk Contrast and Color & Light which have been created to refresh coloured hair and to provide nourishment and moisturising benefits to the hair and scalp.
Lumene also offers professional products in its Cutrin Nordic Hair Expert range. All products have been developed specifically for the Nordic hair type and taking into account the changeable Nordic climate. In the styling line, Sweet Paste contains microcrystalline wax and is best suited for short hair, and the Booster Balm is a waxy base said to give hair volume and structure to hair which has a tendency to be flyaway.
While categories like hair care might form a strong enough structure to support the rest of the Finnish C&T market for the time being, the rest of the market would be bolstered by as much innovation and development as possible.
The luminous touch
Can you tell us more about Lumene and its ethos?
Our brand was named after and inspired by a bright and sparkling lake in Finland back in 1970. In our products we use arctic wild plants and mineral extracts. Lumene s proven effectiveness has always been based on natural ingredients, a very strong trend at the moment throughout Europe including Finland. We are also against animal testing and believe in sustainability where our ingredients and packaging are concerned. Apart from Finland, our main markets are Russia, the US, the Baltic states and Scandinavia.
Are there any particular trends in the Finnish C&T market?
Typically Nordic women tend to use products for sensitive skin as this is not only something their skin can be affected by but also a trend that we have seen emerge recently. Natural products are also a growing market in Finland. To our knowledge there is no other market in Europe where a local cosmetics brand like Lumene has a market leading position, even over the multinationals, so this is a unique position to be in for us in our home market.
Which are the most popular beauty products among Finnish women?
Foundations, powders, mascaras and highlighter pencils are among the most popular products in our country. Beautiful looking skin seems to be very important to Finnish women and they will equip themselves with the right tools to achieve it. In November last year Lumene launched its Sensitive Touch Automatic Mascara with arctic linen seed oil that is ideal for contact lens users and eyes prone to irritation. Make-up primer products and anti-ageing skin care products are among the booming niche segments in Finland.
What is your forecast for the future of the C&T industry in Finland?
As we at Lumene are selling luxury cosmetics with a very good price/quality ratio, our outlook is positive. Lumene is expecting more and more consumers to switch from very expensive products to lower priced selective brands such as Lumene, so this makes us very optimistic for the coming year and beyond – we have lots of plans up our sleeve.