Twenty years ago, Warsaw’s inhabitants could catch the bus to the western end of one of the city’s main arteries, Aleje Jerozolimskie, and reach ﬁelds full of cabbages and potatoes. Today, the avenue is better known for its shiny new shopping malls. Instead of mud and vegetables, it’s a consumer district, and on the shelves of the shops inside the Reduta and Blue City malls are the biggest names in international beauty.
This story first appeared in the December 10, 2010 issue of WWD. Subscribe Today.
The setting is appropriate: In Poland, beauty is a big—and growing—business. The research company MEMRB estimates the value of the market around $2.6 billion a year, not including direct-sales giants such as Avon or Oriﬂ ame. Euromonitor puts the total market at closer to $4 billion. In 2009, according to MEMRB, the market grew 13.1 percent.
“Beauty is very healthy,” says Wojtek Inglot, founder and president of the thriving color cosmetics business Inglot. “It’s one of the healthiest businesses in the country.”
L’Oréal is the market leader, with sales close to $580 million. Other major players include Avon, with an estimated turnover of $290 million, and Nivea at $270 million. But it’s not a market dominated solely by multinational giants. There are 400 active manufacturing companies in Poland, a large number for a country with a population of 38 million. Oceanic, Laboratorium Kosmetyczne Dr Irena Eris, Ziaja, Soraya and Inglot are all key players, with sales between $40 million and $60 million.
“Poland is a large country experiencing a period of dynamic growth,” says Jean-Noël Divet, who oversees L’Oréal’s Polish operations. “The Polish market has been, and will remain in the future, highly important for the L’Oréal Group.”
No wonder. The Polish capital, Warsaw, is a booming European city, its streets teeming with foreign cars and a ﬂ ourishing club and restaurant scene. Together with other major cities—such as Poznan, Wrocław and Gdansk—Warsaw is experiencing a construction boom as the country prepares itself for one of the world’s largest sporting events—the European Soccer Championships— in 2012. There are more than 300 shopping malls across the country, and their number is expected to double within the next ﬁ ve years. After a miserable history, full of wars, uprisings and massacres, Poland is enjoying a period of unprecedented prosperity.
This all began in 1989, when the communist economic system collapsed under pressure from the charismatic Lech Walesa and the Solidarity trade union. Poland was left with a ruined economy and mountains of foreign debt. Recovery was painful, but the reforms introduced by Leszek Balcerowicz laid the foundation for a modern market economy. In 2004, Poland joined the European Union, opening itself up to the common market and $93 billion of direct subsidies between accession and 2013. This led to solid economic consolidation, and Polish GDP recorded record growth of 6.7 percent in 2007. During the worldwide crisis, it managed 1.8 percent growth in 2009. Such growth is essential, as Poland is still the ﬁ fth poorest member of the EU, with a per capita GDP of $18,072 in 2009 and an unemployment rate that edged over 9 percent earlier this year.
Poland’s beauty industry has deep roots, however. Even in the harsh years of communism, people took care with their appearance. Some cosmetics produced by state-owned company Pollena enjoyed enormous popularity not only at home but also among customers in other communist states. Polish-made creams, eau de toilettes and shampoos were even smuggled by Polish tourists traveling to the Soviet Union, Bulgaria and Hungary, 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 ﬁercely competitive, particularly in skin care, an $800 million category. “The skin care segment has experienced strong growth in Poland and is even more competitive than in some of the richer Western countries,” says Divet. “Also, the makeup products segment has continued to grow.”
According to MEMRB, skin care accounts for 30 percent of the overall market, hair care 28 percent, fragrance 27 percent and makeup 14 percent.
One of the key inﬂuencers of the market is Krystyna Kaszuba, the founder and ﬁrst editor in chief of Twój Styl, the most popular Polish monthly magazine for women. Shortly after the collapse of communism, Kaszuba understood that the beauty section had to be one of the most important parts of the newly launched Twój Styl. The problem was that there were no journalists with the expertise and knowledge to write about beauty products. The Polish language itself was short on the necessary words. But the education process was fast.
“In the early Nineties, we published an article explaining how a woman should shave her legs,” remembers Kaszuba. “Readers ﬂooded us with protest letters, arguing that women had the right to keep their legs as they wish.”
In 2010 those sentiments are long gone. Women in all the major cities all take obvious care over their hair, skin, face and clothing, and look to magazines as key sources of information. “Since then, media have been playing a key role in shaping demand for beauty and personal care products,” says Sergiusz Osmanski, the artistic director of Sephora Poland.
Elzbieta Hübner is a 40-year-old freelance English and Norwegian translator who is a regular customer of Sephora. “When I have extra money, I prefer to buy a beauty product rather than a piece of clothing,” she says. In early October, she received a text message from the retailer on her cell phone, announcing a weekend of 20 percent discounts. She rushed to the store only to be surprised at how many others were taking advantage of the offer. She left with two products from Estée Lauder: Night Repair Eye ($60) and Extreme Radiant Lifting Makeup ($49). She also buys her creams in pharmacies and carefully reads the booklets that come with the products, trying to work out which cream or lotion would be best for her. “I love to experiment with the new products recommended by friends 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 about new products. They like to experiment. Only the older generation remains brand loyal.”
According to the CBOS polling organization, 45 percent of Poles believe that a healthy look helps to achieve private and professional success. Hair and makeup are more important than one’s ﬁgure. In the Polish corporate world, employees are expected to take good care of themselves, and even in the schools and universities, young women would never turn up without proper makeup.
In fact, 40 percent of Polish women put on makeup every day, with the percentage of those under the age of 24 considerably higher. Their opportunities for purchasing products are myriad. There are about 80,000 outlets selling cosmetics products in the country. The cities are dominated by large chains of drugstores, with independent businesses controlling the smaller localities. According to A.C. Nielsen, in the ﬁ rst half of 2009 the drugstores’ share of the market grew from 43.1 to 44.3 percent. The German retailer Rossman, with more than 500 stores, now controls 14 percent of the total market. Pharmacies currently have a 5.5 percent share, which is increasing, and hypermarkets remain big players with 37.5 percent market share. In the specialty store sector, Sephora has more than 80 doors, making Poland its second largest market after France.
“The beauty industry and market here are absolutely unique,” says Dorota Soszynska, the owner of the skin care line Oceanic, which has 9.4 percent market share in the facial care sector. “The offer on the market, especially of face and body care products, is very rich and diversified.”
A 2010 Euromonitor report conﬁrms the ﬁndings, noting, “There is growing interest in specialized beauty and personal care products that are speciﬁ cally targeted at different genders, age groups, skin types and skin problems.”
In all, experts expect the market to keep growing at a steady clip. “I see a bright future,” says Inglot. “The biggest challenge will be to keep up the pace of growth and the price structure, because of the value of the euro and dollar, but I think that difference will diminish.”
Largest City: Warsaw
Official Language: Polish
Area: 120,728 square miles
Currency: Zloty (PLN)
Population: 38,43,689 (2010)
GDP per capita: $18,072 (2009)
Inflation: 3.5 percent (2009 est.)
Unemployment: 8.9 percent (2010 est.)