Russian manufacturers complained about the infringement of their cosmetics on the shelves

Public fears associated with a possible shortage of perfumery and cosmetic products in Russia after the departure of a number of Western brands have not materialized. This was stated by Deputy Minister of Industry and Trade of the Russian Federation Mikhail Yurin during his speech at the St. Petersburg International Economic Forum (SPIEF). According to him, there are enough products on the shelves of stores, and new brands are constantly appearing.

In 2022, the state allocated almost 1 billion rubles to support the perfumery and cosmetics industry, Yurin noted. Of these funds, 500 million were spent on loans for the development of industry, about 300 million were allocated as subsidies for advertising domestic products, and 120 million were spent to compensate for transportation costs when exporting products.

“The key, main directions of our work are the replacement of scarce components, the creation of favorable conditions for domestic companies and products, and the maintenance of the industry’s growth rates,” Yurin said at the panel “Development of the national perfumery and cosmetics industry – the path from a molecule to a consumer, from production to building a strong brand.” The discussion was moderated by Anna Dycheva-Smirnova, Managing Director of ExpoVisionRus, member of the board of the Russian Perfume and Cosmetic Association.

About 95% of Russian cosmetic companies are in the segment of small and medium-sized businesses (SME), said Tatyana Puchkova, chairman of the board of the Russian Perfume and Cosmetic Association. In Russia, there are now about 700 enterprises involved in the production of cosmetics and perfumery, 100 of them were created over the past few years, she noted. Among them, according to Puchkova, only about 20 have a turnover of more than 2 billion rubles, another 50 – in the region of 800 million rubles.

“The problems of small and medium-sized businesses are relevant for our industry as they are for no one else. <…> Still, for now, the focus is on the development of those enterprises that are able to seriously support the activities of state corporations or large enterprises of large industries. <…>. Industries like ours, consumer industries with a large percentage of people involved, have so far been left unattended,” she stressed.

Competition among medium and low price cosmetic brands remains very high, Russian companies still have to compete with foreign ones, Felix Lieb told Natura Siberica. “Here, they say, against the backdrop of the departure of large cosmetic brands, transnational corporations, there is an opportunity for Russian manufacturers to enter the market. And you go to the store. Who left? Where did he leave? No one left anywhere, everything is in place,” he said.

The growth of competition is also facilitated by an increase in online sales, including through marketplaces, Lieb said. “It is very easy for a manufacturer to enter the marketplace. We recently looked at Ozon, if you score “shampoo”, then 70,000 offers will be issued. And you have to compete in this whole field,” said Lieb.

Domestic manufacturers “generally positively” assess the idea of ​​​​creating a “Russian shelf” in stores, added Andrey Samoilov, director of the National Council for Perfumes, Cosmetics and Household Chemicals. “Going into a store, especially in the mass market segment, we see that Russian goods, even if presented on the shelf, are sandwiched between the goods of transnational companies,” he complained.

Tatyana Butskaya, First Deputy Head of the State Duma Committee on Family Affairs, spoke about the preparation of the draft law on “Russian regiments” in March 2023. It proposes to fix the share of domestic goods on the shelves, the parameters are proposed to be determined by the Ministry of Industry and Trade.

Changes are already visible in the behavior of buyers, said the head of Roskachestvo Maxim Protasov. According to his department, Russified design (name, logo, packaging design) is one of the key criteria for choosing perfumes and cosmetics for 73% of buyers.

“Consumer patriotism, which we saw in food products, but did not see in many other categories – in light industry, perfumery and cosmetics, now we notice and fix it,” Protasov said.

Edgar Shabanov, President of the Rive Gauche Federal Perfume and Cosmetics Network, described a portrait of the average consumer of perfumes and cosmetics. According to him, 90% of all buyers in this segment are women who pay attention not only to the price of the product, but also to the brand’s philosophy and its environmental characteristics. The highest average check, according to him, is observed among buyers in the age category over 45 years.

In order to become successful, a Russian cosmetics brand must develop a concept, a stylish attractive packaging design, and confirm the quality of its products with laboratory tests, Shabanov is sure. In addition, it is important to maintain a balance of price and quality, ensure the presence of natural ingredients in the composition and develop a balanced product line, he said.

In 2022, a number of major foreign brands announced their withdrawal from Russia. For example, supplies stopped Shiseido (brands Dolce & Gabbana, Elie Saab, Avene), Estee Lauder (Clinique, By Kilian, Le Labo, Tom Ford, Origins, Jo Malone, MAC), LVMH (Christian Dior, Givenchy, Kenzo, Sephora), etc.

At the same time, at the end of the year, the volume of production of perfumery and cosmetic products in Russia increased by more than 10%, and the share of domestic producers in the domestic market increased by 7-8% in monetary terms, informed press service of the government of the Russian Federation in January 2023, citing data from the National Council on Perfumery, Cosmetics and Household Chemicals.