Global cosmetics industry Martina Berto IPO Report

Cosmetics Industry Overview

1.1 Global cosmetics industry

The global cosmetics market is a highly diversified U164bn industry, based on 2009 worldwide sales, sub- divided into five main business segments: Skincare, hair care, make-up, fragrances toiletries. It has achieved sustained growth and proved resistant to adverse economic conditions, with sales increasing at a 3-year CAGR of 3 2006-09 and a 15-year CAGR of 4.2. Global Cosmetic Industry Outlook Developing markets drive continued global cosmetics industry growth As macroeconomic conditions improve in coming years, we expect the industry to continue attractive growth at a forecast CAGR of 3-4 to 2013. Such expansion will be driven mainly by increased opportunities in developing economies with their developed counterparts maintaining pre-established preferences and expenditure patterns. Indeed, we expect developed markets to become increasingly mature, restricting further growth opportunities and challenging the innovation and diversity of global companies seeking to sustain growth in such areas. Instead, overall global industry expansion will be driven by developing markets, especially in the BRIC region, reflecting their increasingly large and diverse economies, rising populations, higher disposable incomes and greater per capita cosmetics consumption. L’Oreal currently estimates that at some point between 2020 and 2025, developing countries may account for over 50 of the global cosmetics market. Macroeconomic conditions in developing economies continue to improve as both income and consumption increase. Based on estimates prepared by L’Oreal, Asia, particularly China and India, will be the largest growth driver over the next 10 years. Market Growth by Geography Growth in per capita Cosmetics Consumption 52 32 21 57 48 34 21 61 25 50 Western Europe North America Japan Rest of World U S D b n 2008 2009 157.8 122.6 90.1 9.5 12.6 90.3 122.4 160.1 90 180 Japan Western Europe North America Rest of World U S D 2008 2009 Source: L’Oreal Report 2009 Source: L’Oreal Report 2009 Cross-segment outlook Currently, the outlook for the various product segments, as estimated by Euromonitor, is: ƒ Skin care market is expected to increase its already substantial leading market share of the total cosmetics market to US91bn by 2014, mainly due to strong demand from the Asian markets. ƒ The market for premium cosmetics is expected to be around US86bn in 2014. 3 ƒ The global fragrances market is estimated to increase at a CAGR of around 3 to US35bn by 2011.

1.2 India – China cosmetics industry