Contents:

Introduction Definitions Consumer research Abbreviations Executive Summary France Modest growth, but improving Growth in ‘scientific’ formulations encourages trading up… …but consumers are also looking for natural skincare Perfumeries and department stores remain the main distributors L’Oréal leads in its native market Product innovation mixes cosmetics with dermatology High penetration rates Still scope to grow Germany Key facts about the German facial skincare market: Demographic changes are mainly favourable for skincare Solid consumer base for products addressing normal and dry skins Anti-ageing sees most dynamic growth Self-service druggists are the most important distributors Unbeatable Nivea Sophisticated new products Volume use heavily dependent on working status and income Further growth expected Italy Encouraging growth of skincare sales Anti-ageing is most dynamic Technological world of skincare Grocery multiples’ sales growing fastest Natural ingredients also becoming more important L’Oréal and Beiersdorf rule the roost New product development in key position Positive prospects due to improved economic situation Spain Positive macro-economic factors drive demand Strong growth across sectors, especially anti-ageing Scientific skincare claims Selective outlets remains important, despite growth in mass-market L’Oréal brand takes top spot Sophisticated new products, but natural ingredients too Consumer use shows potential for expansion UK Market growth Categorised market Baby Boomers cashing in on extra benefits Formula for growth Wipes are cleaning up on sales Delivering results L’Oréal takes the lead Looking to the future of facial skincare Market Drivers Ageing population expands consumer base for anti-ageing creams Figure 1: Total population, by age, by country, 2005 Trends in consumer expenditure help sales, especially in Spain Figure 2: Consumer expenditure, at current prices, by country, 2001-06 Rising employment in all countries, except Germany Figure 3: Total in employment, by country, 2000-05 Female employment is a main driver for sales of facial skincare Figure 4: Trends in female employment, by country, 2000-05 Perception of skin type shapes demand Figure 5: Women’s skin type, by country, 2005 French and Germans most concerned about personal appearance Figure 6: Attitudes towards personal appearance, by country, 2005 Market Size and Trends France remains by far the largest market Figure 7: Retail value sales of facial skincare products, at current prices, by country, 2001-06 Spain sees the most dynamic growth, but stagnation in Germany Figure 8: Indexed retail value sales of facial skincare products, at current prices, by country, 2001-06 Figure 9: Retail value sales of facial skincare products, % share by country, 2006 French women stand out for their annual per capita skincare spend Figure 10: Annual per capita spend on skincare products, by women (15+), by country, 2001-06 Market Segmentation Italian women spend more on treatments and moisturisers Figure 11: Retail value sales of facial skincare products, by type, by country, 2006 Figure 12: Retail value sales of facial skincare products, % share by type, by country, 2006 Distribution Non-food outlets (perfumeries, pharmacists) dominate distribution of skincare Figure 13: Retail value sales of facial skincare products, by outlet type, by country, 2006 Figure 14: Retail value sales of facial skincare products, % share by outlet type, by country, 2006 The Supply Structure Highly fragmented market, but less so in the UK Figure 15: Manufacturers’ retail value sales of facial skincare products, by country, 2006 Figure 16: % share of leading manufacturers in retail value sales of facial skincare products, by country, 2006 The Consumer Facial skincare Figure 17: Penetration and frequency of using facial skincare products among women, by type, by country, 2005 Figure 18: Penetration and frequency of using face creams and lotions among men, by country, 2005 Marked differences characterise usage across Europe Figure 19: Usage of facial skincare products among women, by type, by country, 2005 In GB, only four in ten women use anti-ageing creams, lower than the other countries Figure 20: Frequency of using anti-ageing creams, by women, by country, 2005 Majority of German and British women prefer standard face creams Figure 21: Frequency of using other face creams, by women, by country, 2005 German men most likely to use face creams and lotions; half of them do so Figure 22: Frequency of using face creams and lotions, by men, by country, 2005 Volume use of cleansing creams peaks among French women Figure 23: Frequency of using cleansing creams and lotions, by women, by country, 2005 Cleansing wipes are struggling to conquer fans Figure 24: Frequency of using cleansing wipes, by women, by country, 2005 Facial washes still have a very low daily usage Figure 25: Frequency of using facial washes and scrubs, by women, by country, 2005 Prospects France Increasing focus on anti-ageing Figure 26: Projections in French adult female population, by age, 2006-11 Increasing polarisation between “natural” and “scientific” products Germany Growth to continue Anti-ageing and anti-wrinkle lines will gain more ground Polarising product offering Brands vs own-labels Italy Consumer confidence is slowly returning Products for the young and the old Figure 27: Projections in Italian adult female population, by age, 2006-11 Far from saturation Growing consumer demand for proof of product benefit Blurring of boundaries between premium and mass skincare Spain Consumer base sets to expand Figure 28: Projections in Spanish adult female population, by age, 2006-11 Growing consumer base for anti-ageing skincare to 2011 Product innovation to remain at the heart of the market Grocers to gain further share Presence of own-labels will remain limited UK Best opportunity for growth in ages Delivering new growth Doctor brands diagnose healthy future The natural alternative Food trends to feed growth? Forecast Markets set to maintain double-digit growth Figure 29: Forecast for retail value sales of facial skincare products, at current prices, by country, 2006-11 Figure 30: Forecast indexed retail value sales of facial skincare products, by country, 2006-11 Spain gains share of Euro facial skincare sales Figure 31: Forecast retail value sales of skincare products, % share by country, 2011

Companies Mentioned

-L’Oréal -Beiersdorf -Nivea