Twenty years ago, Warsaw’s inhabitantscould catch the bus to the western endof one of the city’s main arteries, AlejeJerozolimskie, and reach ﬁelds full of cabbages andpotatoes. Today, the avenue is better known for its shinynew shopping malls. Instead of mud and vegetables, it’s aconsumer district, and on the shelves of the shops insidethe Reduta and Blue City malls are the biggest names ininternational beauty.
The setting is appropriate: In Poland, beauty is a big—and growing—business. The research company MEMRBestimates the value of the market around $2.6 billion ayear, not including direct-sales giants such as Avon orOriﬂ ame. Euromonitor puts the total market at closer to$4 billion. In 2009, according to MEMRB, the marketgrew 13.1 percent.
“Beauty is very healthy,” says Wojtek Inglot, founderand president of the thriving color cosmetics businessInglot. “It’s one of the healthiest businesses in thecountry.”
L’Oréal is the market leader, with sales close to $580million. Other major players include Avon, with anestimated turnover of $290 million, and Nivea at$270 million. But it’s not a market dominatedsolely by multinational giants. There are 400active manufacturing companies in Poland, alarge number for a country with a populationof 38 million. Oceanic, LaboratoriumKosmetyczne Dr Irena Eris, Ziaja, Sorayaand Inglot are all key players, with sales between $40 million and $60 million.
“Poland is a large country experiencing a period ofdynamic growth,” says Jean-Noël Divet, who overseesL’Oréal’s Polish operations. “The Polish market has been,and will remain in the future, highly important for theL’Oréal Group.”
No wonder. The Polish capital, Warsaw, is a boomingEuropean city, its streets teeming with foreign carsand a ﬂ ourishing club and restaurant scene. Togetherwith other major cities—such as Poznan, Wrocław andGdansk—Warsaw is experiencing a construction boomas the country prepares itself for one of the world’s largestsporting events—the European Soccer Championships—in 2012. There are more than 300 shopping malls acrossthe country, and their number is expected to doublewithin the next ﬁ ve years. After a miserable history, full ofwars, uprisings and massacres, Poland is enjoying a periodof unprecedented prosperity.
This all began in 1989, when the communist economicsystem collapsed under pressure from the charismaticLech Walesa and the Solidarity trade union. Poland wasleft with a ruined economy and mountains of foreigndebt. Recovery was painful, but the reforms introducedby Leszek Balcerowicz laid the foundation for a modernmarket economy. In 2004, Poland joined the EuropeanUnion, opening itself up to the common market and $93billion of direct subsidies between accession and 2013.This led to solid economic consolidation, and PolishGDP recorded record growth of 6.7 percent in 2007.During the worldwide crisis, it managed 1.8 percentgrowth in 2009. Such growth is essential, as Poland isstill the ﬁ fth poorest member of the EU, with a per capitaGDP of $18,072 in 2009 and an unemployment rate thatedged over 9 percent earlier this year.
Poland’s beauty industry has deep roots, however.Even in the harsh years of communism, people tookcare with their appearance. Some cosmetics producedby state-owned company Pollena enjoyed enormouspopularity not only at home but also among customersin other communist states. Polish-made creams, eau detoilettes and shampoos were even smuggled by Polishtourists traveling to the Soviet Union, Bulgaria andHungary, and sold for great proﬁ ts on the black market.Industry legend Helena Rubinstein was born in Kraków,before moving to Australia.
Today the market is ﬁercelycompetitive, particularly in skin care,an $800 million category.“The skin care segment hasexperienced strong growthin Poland and is evenmore competitive thanin some of thericher Westerncountries,”saysDivet. “Also, the makeup products segment has continued togrow.”
According to MEMRB, skin care accounts for 30percent of the overall market, hair care 28 percent,fragrance 27 percent and makeup 14 percent.
One of the key inﬂuencers of the market is KrystynaKaszuba, the founder and ﬁrst editor in chief of Twój Styl,the most popular Polish monthly magazine for women.Shortly after the collapse of communism, Kaszubaunderstood that the beauty section had to be one of themost important parts of the newly launched Twój Styl.The problem was that there were no journalists with theexpertise and knowledge to write about beauty products.The Polish language itself was short on the necessarywords. But the education process was fast.
“In the early Nineties, we published an articleexplaining how a woman should shave her legs,”remembers Kaszuba. “Readers ﬂooded us with protestletters, arguing that women had the right to keep theirlegs as they wish.”
In 2010 those sentiments are long gone. Women in allthe major cities all take obvious care over their hair, skin,face and clothing, and look to magazines as key sourcesof information. “Since then, media have been playinga key role in shaping demand for beauty and personalcare products,” says Sergiusz Osmanski, the artisticdirector of Sephora Poland.
Elzbieta Hübner is a 40-year-old freelanceEnglish and Norwegian translator who is aregular customer of Sephora. “When I haveextra money, I prefer to buy a beauty productrather than a piece of clothing,” she says.In early October, she receiveda text message from theretailer on her cell phone, announcing a weekend of 20 percent discounts. Sherushed to the store only to be surprised at how manyothers were taking advantage of the offer. She left withtwo products from Estée Lauder: Night Repair Eye ($60)and Extreme Radiant Lifting Makeup ($49). She alsobuys her creams in pharmacies and carefully reads thebooklets that come with the products, trying to workout which cream or lotion would be best for her. “I loveto experiment with the new products recommended byfriends and specialized staff in stores,” she says.
The majority of Polish women are similar to Hübner.“Polish women are very concerned about how they look,”says Osmanski. “They are very conscious and crazy aboutnew products. They like to experiment. Only the oldergeneration remains brand loyal.”
According to the CBOS polling organization,45 percent of Poles believe that a healthy look helpsto achieve private and professional success. Hair andmakeup are more important than one’s ﬁgure. In thePolish corporate world, employees are expected to takegood care of themselves, and even in the schools anduniversities, young women would never turn up withoutproper makeup.
In fact, 40 percent of Polish women put on makeupevery day, with the percentage of those under the ageof 24 considerably higher. Their opportunities forpurchasing products are myriad. There are about 80,000outlets selling cosmetics products in the country. Thecities are dominated by large chains of drugstores, withindependent businesses controlling the smaller localities.According to A.C. Nielsen, in the ﬁ rst half of 2009 thedrugstores’ share of the market grew from 43.1 to 44.3percent. The German retailer Rossman, with more than500 stores, now controls 14 percent of the total market.Pharmacies currently have a 5.5 percent share, which isincreasing, and hypermarkets remain big players with37.5 percent market share. In the specialty store sector,Sephora has more than 80 doors, making Poland itssecond largest market after France.
“The beauty industry and market here areabsolutely unique,” says Dorota Soszynska, the ownerof the skin care line Oceanic, which has 9.4 percentmarket share in the facial care sector. “The offer on themarket, especially of face and body care products, isvery rich and diversified.”
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