By  on May 9, 2008

During the dark days of Communism, three Soviet companies were the sole marketers of beauty products. Those days are long gone, as a historical affinity for luxury and glamour combined with a rapidly rising middle class put Russia squarely in beauty’s spotlight.

Russia, with a landmass almost twice the size of the U.S., has always been a country that ignites the imagination.

Now, thanks to an ever-increasing middle class population that’s got money to burn, the fantasy is becoming a reality. And it’s a reality promising enough to make the growth in China, India and other emerging nations seem almost stagnant in comparison.

“Russia is now. Not the future,” says Chris Good, general manager, Russia and CIS, or Central Independent States, for the Estée Lauder Cos. “When Russia is lumped with BRIC,” he continues, referring to the acronym for Brazil, Russia, India and China, “it’s not necessarily an accurate description.”

“Russia is developing very rapidly,” agrees Wahan Gasparian, general manager of Douglas. “If in the West a phase of development took 10 to 15 years, that happens here within three to five years. We are catching up very quickly on the Western market. And, in certain instances, we’re even ahead.”

Consider the figures: Over the past decade, Russia’s fragrance and cosmetics business has expanded by a tremendous 90 percent in dollar terms. (In rubles, it increased 463 percent.) Last year alone, the $10.55 billion industry gained 13 percent. Between 2008 and 2012, it’s expected to grow at a constant average rate of 4 percent yearly, according to Euromonitor.

Driving down Moscow’s central boulevards at breakneck speed, it’s impossible to keep a tab on how many perfumeries—L’Etoile, Arbat Prestige, Douglas—whiz by, not to mention the futuristic megamalls and single-branded beauty stores that have sprung up in only a handful of years.

The country’s vibrancy is palpable everywhere, from its swiftly rising middle class to the Moscow skyline itself. From the window of Good’s office in the Paveletskaya district spreads a sweeping vista, a visual embodiment of his words. A modern opera house stands in the foreground, an old-style church, its blue and gilded onion domes glistening against the sky, features in the background, as do two factory smokestacks.

At street level, shiny new Mercedes, BMWs and Hummers zip about the avenues, jockeying for position with rickety trams and domestically made Ladas and Volgas.

Step into the spanking-new Europa mall and find freestanding stores for MAC, The Body Shop and Lush, plus perfumeries, a pharmacy and a supermarket, all selling beauty. Here, shoppers—well-groomed women in full makeup, wafting fragrance behind them—run the gamut from teenagers to oldsters. They’re living evidence that the typical Russian woman wouldn’t dream of leaving the house without top-to-toe beautifying.

This all contrasts sharply with a mere decade ago, when money was so scarce following the country’s economic crash that daily life was a scramble and only a precious few could think of buying a beauty product with a foreign label. Stores were more likely to be ramshackle roadside kiosks or open-air markets, while beauty choices were mainly limited to a broad selection of parallel-market and me-too goods. (Think fragrances with names such as Forengeit and J’Aime.) Today, a well-developed beauty retail channel exists—in fact, a new perfumery opened every three days somewhere in the country until very recently, according to Coty.

The swift rise of a middle class eager to spend means that there are shoppers to fill those stores. According to Symrise, 44 percent of Russia’s 141.4 million-strong population is potentially a luxury-goods consumer, representing 14 percent of the European beauty market. And financially speaking, Russia has lost no time in accruing wealth in less than two decades following the Soviet Union’s collapse. Russia today boasts 87 billionaires, taking—for the first time—the number-two spot behind the U.S. with combined wealth of $471 billion, according to the most recent Forbes’ World Billionaires list. (Sixteen percent of the 226 newcomers to the list hail from Russia.)

Moreover, deep-pocketed consumers aren’t simply in the major cities anymore. “One common perception is that Russia is just Moscow-centric, it’s oligarchs and that’s where the disposable income lies,” says Good. “But the trickle-down effect has been enormous, and there’s a very large emerging middle class. These are our new consumers.”

These new consumers not only have money, they have an existing affinity for beauty products. Ninety-three percent of all women in Russia wear lipstick and 92 percent, fragrance. Eighty-six percent use facial moisturizer and 55 percent, hair colorant, according to Alex Nasard, Procter & Gamble’s general manager for personal care for Central Eastern Europe, Middle East and Africa.

Be it class or mass (whose sales split is estimated by Euromonitor at 11 percent versus 89 percent, respectively), beauty is an integral part of a Russian woman’s daily life. Russian women boast one of the highest spends on beauty products in the world versus their income, says Nasard. And their beauty regimens, which include from three to six steps per day, are among the most elaborate anywhere.

“It’s not strange to go into the bathroom of a 65-square-meter [about 722-square-foot] Soviet heritage apartment and find three to five bottles of shampoo, a couple of bottles of conditioner, a hair colorant and possibly a bottle of Hugo Boss perfume,” says Nasard, noting that Russian woman are hungry for product knowledge. They read every word of text appearing on product packaging and listen closely to advertisements. “Russian women are very invested in the category,” he says, “and very interested in it.”


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