The year 2015 turned out to be agood one for the German C&T industry.According to figures by industry associationIKW, turnover for personal care grew 2.4% to a total of t13.39bn and mostproduct categories registered a solidincrease last year.

As far as market dynamics areconcerned, not much has changed over thepast 12 months. Germany’s drugstore

chains remain the most importantdistribution channel for C&T and personalcare, with DM as market leader, followedby Rossmann, the southern GermanMüller chain and northern retailerBudnikowsky.

Perfumery chain Douglas continues todominate the luxury sector, making thingsdifficult for the struggling independentperfumeries that account for the majorityof the German perfumery channel. And asfar as department stores are concerned,Kaufhof and Karstadt are still the two keyretail chains on the market.

HAIR LOSSESTurnover in IKW’s biggest productcategory, hair care (including styling andcolourants), dipped 0.1% to t3.03bn in2015. Figures by market researcher IRIGermany reflect a similar situation: haircare fell 0.2% to t1.72bn, while volume

September 2016 SPC 41

crept up 0.3% to just over 749 millionunits.

According to IRI’s analysts, this resultcan be traced back to ongoing priceerosion in many product categories. In the

germanycountry report

TABLE 1: GERMANYC&T MARKET, 2015*

Category Valuef/m %+/-Total market 13,387 2.4Hair care 3,030 -0.1Skin & body care 2,991 4.9Oral hygiene 1,455 2.3Colour cosmetics 1,605 4.2Women’s fragrances 1,067 1.5Bath & shower care 877 3.9Deodorants 745 -0.4Men’s fragrances 516 1.5Soaps & syndets 370 2.9Aftershaves/ 141 -2.8preshavesShaving preps 98 -1.0Foot care 209 11.8Depilatories 138 -2.0Baby care (excluding 146 2.8shampoo/bath/shower/soaps) *Figures are in million euro except the first six categories,which are in billion. Source: IKW

The make-up market spurred German cosmeticsmarket growth in 2015, while mass marketretailers continue to grapple for supremacy,

as Annemarie Kruse discovers

Germany’sCOLOURBOOST

country reportgermany

colourants sector, for example, shelf pricesdropped almost 20% last year. The hair oiltrend, which had boosted turnover in2014-15 with its more expensive products,is starting to slow down, which is alsoaffecting value sales. And the premiumproducts trend is almost over, IRI says.Procter & Gamble’s Pantene Expertcollection has already disappeared from themarket and DM recently delisted L’OréalParis Hair Expertise from its stores.

However, despite the dismal sales resultsthere was a flood of new launches last year,primarily from German manufacturerSchwarzkopf & Henkel’s hair care brands.Schwarzkopf ’s Schauma was extended witha number of new variants, including ashampoo and conditioner formulated withsea buckthorn extract, a volumisingsub-range and the 7 Flowers Oil rangewith moisturising flower oils.

Stablemate Gliss Kur was extended withPrachtvolle Kräftigung, a five-sku range ofstrengthening products that includes arather unusual self-heating mask. And theEssence Ultîme range of products,developed in 2014 together withsupermodel Claudia Schiffer, wasrelaunched with a number of newsub-ranges.

L’Oréal Paris, the second biggest haircare manufacturer in the German market,has been less active than Schwarzkopf in2015-16: the company’s major hair carebrand Elvital saw just one big lineextension, the four-sku Tonerde Absolueformulated with medicinal clay for greasyand dandruff-prone scalps. StablemateFructis was extended with two new sub-ranges – the strengthening Kraft Zuwachsand the moisturising Wunder Butter – and

Garnier launched the Wahre Schätze rangeof herbal shampoos and conditioners.

The dry shampoo trend continued topick up pace: almost every brand launchedat least one new dry shampoo product lastyear and UK dry shampoo brand Batistewas rolled out to all major C&T retailchains in Germany. And, this January,P&G’s Pantene made headlines with thelaunch of its In-Dusch Foam Conditioners.Foams have already hit the bath andshower and body care categories, so it willonly be a matter of time until other haircare brands follow with their own foamofferings.

In the colourants category, an excitingnew development is temporary root

42 SPC September 2016

colourants. Schwarzkopf ’s Syoss started theball rolling with the launch of ColorRetouch colourant foams in autumn 2015.Kao’s John Frieda followed with RootBlur, a range of four solid powder rootcolouring kits, and L’Oréal recentlybrought out Magic Retouch, a line ofspray-on colour powders.

SKIN CARE SUCCESS Facial skin care was much more successfulin 2015 than hair care. According to IRIGermany, the sector (including men’s andand women’s products) grew 4.7% tot669.39m and 9.1% to more than 217 million units from January toSeptember 2015.

As always, women’s products accountedfor the lion’s share of the sales. Andconsidering Germany’s rapidly ageingpopulation it comes as no surprise thatanti-ageing skin care grew 7.3% tot197.42m and 13.8% to just over 42 million units, while products for matureskin shot up 12.6% to t91.78m in valueand 13.4% to nearly 18 million units in volume.

The keywords ‘brightening’ and‘luminising’ have appeared on many newproducts launched over the past 12 months.P&G’s Olaz extended its RegeneristLuminous range with a skin-perfectingserum and brightening cream, while OlazTotal Effects Feuchtigkeitspflege +Anwendung is an entirely new range formature and menopausal skin. Beiersdorf ’sNivea contributed the four-sku CellularPerfect Skin range formulated withLumicol complex and magnolia extract tobrighten and refine skin tone.

Schwarzkopf ’s Diadermine brandintroduced Diadermine N°110 Crème deLumière in which the brand’s iconicN°110 cream was updated with aningredients complex to brightenhyperpigmentation and even out skin tone.And, last September, L’Oréal Paris extendedits Revitalift range for mature skin withtwo skin plumping filler products.

Another key sub-category was sleepingmasks, a product trend originally fromKorea. One of the first sleeping packs inGermany was the Drops of Youth BouncySleeping Mask launched by The BodyShop in early 2015. L’Oréal’s Garnierfollowed with the Miracle Sleeping Creamand an Anti-Fatigue Night Cream in theSkin Perfection range a few months later.Olaz also launched a sleeping cream lastsummer with the new Regenerist FirmingNight Cream.

BRIGHTENING UPColour cosmetics was one of the key

TABLE 3: GERMANY, WOMEN’S FACIAL SKIN CARE MARKET, BY PRODUCT TYPE*

Category Valuef/m %+/- Volume %+/- m/unitsTotal market 620.00 5.0 10.00 9.4Anti-ageing 197.42 7.3 42.08 13.8Mature skin 91.78 12.8 17.93 13.4Basic 240.71 1.1 109.40 7.7Young skin 90.09 3.7 37.73 7.9* January-September 2015. Source: IRI Germany

TABLE 2: GERMANY, HAIR CARE MARKET, BY PRODUCT TYPE*

Category Valuef/m %+/- Volume %+/- m/unitsTotal market 371.82 -4.8 169.26 0.3Hair care 222.57 0.3 101.96 2.7Hair styling 83.96 -11.7 47.32 -1.7Colourants 65.30 -11.5 19.98 0.1*January-March 2016. Source: IRI Germany

P&G’s Olaz releasedthe Total EffectsFeuchtigkeitspflege +Anwendung range formature andmenopausal skin

Drugstore DM introduced its‘trend IT UP’ label in summer2015 (above); meanwhile,Schwarzkopf extended itsSchauma range with new variants

germanycountry report

growth categories in the C&T market lastyear. According to IKW, the sector grew4.2% to t1.61bn in 2015. Cosnova’s starbrands Essence and Catrice continued tolead the mass market in terms of NPD andlaunch pace while Maesa’s p2 and Coty’sManhattan are two other major players inthe mass market.

The past year has also seen the arrival oftwo entirely new make-up brands:drugstore retailer DM introduced its ownlabel ‘trend IT UP’ last summer whileCosnova has just launched L.O.V, amasstige colour cosmetics brand with aselective distribution.

Looking at product trends, the lipcategory – especially lip stains,highly-pigmented lip glosses and longlasting lipsticks – continued to be popular,as did the eyebrow product sector. In faceproducts, the contouring trend is now amajor influence with contouring palettes,nude foundations and multi-tonal bronzerslaunched by all major colour cosmeticsbrands last year.

L’Oréal Paris weighed in with theIndefectible Sculpt range of blush,contouring palette and liquid make-up,stablemate Maybelline introduced thethree-sku Master Contour line, whileManhattan contributed the three-colourContouring Kit. In addition, Essencebrought out the Shape Your Face Paletteand Catrice has just devoted an entirelimited edition to the contouring trend.

FRESH THINKING REQUIREDWomen’s fragrances are one of the mostimportant product categories in the beautymarket and in 2015, this sector only grew a slender 1.5% to t1.07bn, according to IKW.

There are a number of reasons for thisdisappointing performance, such as theongoing price battle among theindependent perfumeries that are alsovying to keep up with market leaderDouglas. The burgeoning grey market forluxury cosmetics and especially fragrances– product piracy continued to be alive andwell in 2015-16 – also remains a constantthreat to the luxury industry. In addition,there simply weren’t that many excitingperfume launches last year.

Masstige fragrances – celebrity, fashionand lifestyle perfumes – are a key part ofthe German fragrance market and Germanfashion brands Tom Tailor, s.Oliver, BettyBarclay, Otto Kern and Mexx all operatehighly successful fragrance licences. Adidasand Puma cater to the more sports-oriented demographic and in the celebrityfragrance world, German singer HeleneFischer was particularly successful with her

Me, Myself & You fragrance last year. However, there are also a number of

popular selective German fragrance brands,especially the offerings of designerWolfgang Joop and his daughter Jette Joop.Jil Sander and Hugo Boss are two othereponymous fragrance labels that sell verywell and regularly top the rankings ofDouglas’ fragrance bestseller lists.

There was at least one unusual fragrancelaunch in 2016 and from an unexpectedquarter, too. Beiersdorf ’s Nivea introduceda perfume based on the scent of its classicblue-and-white Nivea cream: a warm,powdery fragrance with gentle florals, lightcitrus notes and a soft woody base.Packaged in a round white plastic flaconwith an outer packaging of the typicalNivea blue, Nivea EDT is available inNivea spas across the world, in selectedperfumeries and online via nivea.de.

LUXURY LAPSEThe premium market struggled in 2015,according to industry association VKEKosmetikverband; VKE represents some 60international luxury C&T manufacturers

September 2016 SPC 45

with members including the Germansubsidiaries of Coty Prestige, Chanel, EsteéLauder, Clarins, Guerlain, L’Oréal,Givenchy, Puig and Dior, as well asGerman companies Babor, ArtdecoAlessandro International, Dr. Hauschka andAnnemarie Börlind.

Each year, VKE polls its members on theperformance of the luxury C&T market inGermany and for 2015, the result wasdisappointing: a mere 1.5% increase to t2.04bn.

Colour cosmetics turned out to be thebest-performing category in 2015, with anincrease of 5.2%. Men’s cosmetics was alsosuccessful, growing 4.6%. Men’s fragrancesaccounted for an 4.9% increase, while skincare products grew 1.6%. Women’s facialskin care registered an increase of 2.5%while the comparatively small body caresegment was surprisingly successful,growing 3.6%. The biggest premiumcategory, however, was women’s fragrancesand this sector unfortunately dipped 1.2%.

However, the outlook for next year is alittle more positive: 47% of VKE membersare expecting the market to pick up a little.And VKE President Stephan Seidelanticipates a turnover increase of 2-2.5%for 2016.

MASS MARKET In the personal care mass market, the pricebattle is continuing: over the past yearGermany’s big discounter chains Aldi, Lidland Netto have invested millions intomaking their stores more attractive, offeringa more upmarket shopping experience and,most importantly, increasing their line-upof personal care brands. This is puttingpressure on Germany’s drugstore retailers,especially DM and Rossmann who overthe past 12 months have repeatedly loweredprices for many C&T products.

DM CEO Erich Harsch has alreadyannounced that DM will stick to its strategyof being Germany’s most affordable C&Tretailer. And so far, the DM group is keepingahead of the game. Although turnover hasfallen a few percentage points from its usual

TABLE 4: GERMANY, WOMEN’S FRAGRANCE MARKET, 2015

Category Valuef/m %+/- Volume %+/- m/unitsTotal market 952.93 -0.5 37.36 0.9EDPs 550.53 4.9 17.87 10.0EDTs 371.00 -7.1 17.75 -6.5EDCs 17.28 -5.0 1.35 -4.0Perfume 7.15 -14.0 0.16 -12.4Body fragrance 5.87 -5.2 0.20 4.5Hair fragrance 1.11 16.6 0.03 12.8Source: IRI Germany

Women’s fragranceposted disappointingresults in 2015 due toprice battles and alack of new launches

business, especially into the main onlinestore douglas.de.

Douglas’ organic online store, Natureme,which was launched in 2015, hasn’t donewell and earlier this year, the Douglas

double digit growth, DM’s financialperformance is still remarkably solid.

For the first half of 2016 the retailerannounced turnover of t3.7bn for itsdomestic business, an increase of 6.5%. Totalgroup turnover for H12016 grew 6.8% tot4.7bn, driven by the success of DM’sinternational subsidiaries – internationalturnover rose 7.9% to t1.07bn.

DM is also expanding in Germany. Inthe first half of 2016, the retailer addedsome 40 outlets to its store network. Andconsidering that DM continues to top the“most popular drugstore in Germany”retail rankings and the company’sreputation has never been higher, theKarlsruhe-based retailer will no doubt beable to weather the current price battle.

Competitor Rossmann has also beenkeeping busy. The group has announcedthat it will open another 140 Germanstores this year. For 2015, Rossmann postedgroup turnover of t7.9bn, an increase of9.4%. This result was largely driven by thecompany’s international business. TheRossmann group has a significant presencein Eastern Europe; its subsidiaries inPoland, Hungary, Czech Republic, Turkeyand Albania clocked up turnover oft2.11bn, up 14.1%.

Rossmann’s domestic business, on theother hand, registered turnover of t5.75bn,an increase of 7.7%. This comparativelyslow result can be traced back to theongoing price battle in the German massmarket; like DM, Rossmann has beenfeeling the pressure from Aldi, Lidl and co.

However, bearing in mind that 40% ofRossmann’s shares belong to A.S. Watson,the personal care division of Chineseconglomerate Hutchison Whampoa, theretailer can definitely afford to wait out thesituation.

ALL CHANGE AT DOUGLASThe Douglas chain has seen a lot ofchanges since it was sold to Luxembourg-based investor CVC last summer. Douglas’new CEO, Isabelle Parize, has affirmed thatthe Douglas chain will continue to expandin Germany and Europe, with the goal ofbecoming the European market leader inthe online and offline perfumery businessby 2020.

To achieve this ambitious goal, Douglasis investing some t100m into drivingforward the company’s expansion, with aparticular focus on the multichannelbusiness, adding new exclusive beautybrands and more affordable own labelbrands to attract a younger targetdemographic, renovating and updatingexisting Douglas outlets and furtherinvesting into the company’s online

germanycountry report

September 2016 SPC 47

group quietly discontinued Natureme,integrating the organic brands into theline-up of douglas.de.

It is no secret that Douglas is alsolooking for acquisitions to further boost itsphysical presence in Europe. CVC hasopenly announced that it is pushing thepace of Douglas’ expansion – after all, 2020isn’t too far away – and industry experts arealready speculating about which retail chainmight be an interesting target.

DEPARTMENT STORESThe German department store channel hasbeen comparatively quiet since the GaleriaKaufhof chain was sold to Austria’s Signagroup and Karstadt went to Canadiandepartment store owner Hudson’s Bay last summer.

The respective new owners have alreadystarted to make their presence felt; severalof the larger Kaufhof stores are beingrenovated, and Hudson’s Bay is introducingnew fashion and beauty brands.

The Karstadt chain’s troubles, on theother hand, continued. Over the past 12months, several smaller stores were closeddown, staff numbers were cut even furtherand the remaining department stores were,yet again, restructured.

However, it now looks as if the retailerhas successfully weathered this latest crisis.In June, Karstadt revised its forecast for thefinancial year 2015-16 upward. Karstadt’s135th anniversary, which was celebratedearlier this year, is already clocking upgreater turnover than anticipated.Meanwhile, this July, CEO Stephan Fanderlannounced that Karstadt was actuallyplanning to open a new department storein Berlin in 2018 – the first new Karstadtoutlet in 30 years.

Organic beauty continues to be a best-seller in Germany. With certified organicbrands available in all retail channels –and with prices starting at w2.50 for aface cream – Germany is the largestorganic market in Europe. In 2015, turnover of certified organic

cosmetics across all product categoriestopped w1.1bn, an increase of 10%. Thismeans that organic cosmetics accountfor 8.3% of the entire German C&Tmarket.The biggest distribution channel for

organic beauty is the drugstore one –DM and Rossmann in particular havepopular organic own label brands – butonline retail is also becoming anincreasingly important retail channel,especially for organic niche labels andinternational brands.

GROWING ORGANICALLY

DM continues to top drugstore retail rankings inGermany, and is expanding in the country