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KLINE STUDY PEGS GLOBAL COSMETICS AND TOILETRIES MARKET AT NEARLY $150 BILLION

(press release from Kline and Company)

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LITTLE FALLS, NJ, July 6, 2005 – The global market for cosmetics and toiletries reached nearly $150 billion in 2004, up by more than 4% from 2003, according to a new study soon to be published by Kline & Company.

The study, www.klinegroup.com GLOBAL COSMETICS & TOILETRIES 2004, presents sales and market data across 20 product categories in 16 countries throughout Asia, Europe, North America, and Latin America. Kline’s research shows that sales of skin care and hair care products were the main drivers of growth, boosted by increasing penetration in developing countries.

“Europe is the largest market for cosmetics and toiletries, but countries like Argentina, Brazil, Russia, and China are showing the highest rates of growth,” says Carrie Bonner, industry manager for the Consumer Products practice for Kline’s research division.

All four of these countries saw their sales at the manufacturer level expand by double-digit rates in 2004, according to Kline’s study. Argentina increased its sales by more than 17% last year, albeit from a small base. This contributed to overall growth of nearly 12% for the Latin American countries examined in the study.

While on a regional basis, Asia had an increase in cosmetic and toiletry sales of less than 4%, impressive advances were made by China and India. From 2003 to 2004, these markets saw growth of 12.5% and 7.7%, respectively, and together surpassed the $10 billion mark.

Bonner notes that marketers of cosmetics and toiletries have eyed the developing markets in Asia, Latin America, and Eastern Europe and their growth potential for some time. Penetration rates for some personal care products are still relatively low, especially in rural areas. But leading marketers are now starting to capitalize on these developing markets.

“Channels of distribution are developing quickly, and a greater variety of consumer products are becoming more readily available to more people,” Bonner says. “We expect to see strong growth in these countries over the next five to ten years as marketers look outside of the mature regional markets for new sources of revenue.”

Skin care products represent the largest product category examined in Kline’s study and demonstrated the strongest growth from 2003 to 2004, estimated at nearly 5% on a global basis. Hair care followed close behind, thanks in part to strong growth in Asia and Latin America.

Asia is the leading region in terms of skin care product consumption, accounting for approximately $17.5 billion in manufacturers’ sales in 2004. While Japan accounts for the bulk of sales, China and South Korea each contributed more than $2 billion to the total and represent larger markets for skin care products than any single country in Europe.

“Even in developing countries, skin care is helping to drive overall market growth, and in the mature markets, the anti-aging trend is still going strong,” says Bonner. “New formulas usually carry a high price tag, and consumers are willing to pay more for higher-performance products where they see added value.”

In addition to covering sales by product category, each country-specific volume of Kline’s study analyzes the market share of leading multinational companies as well as regional cosmetics and toiletries marketers.

“More companies are starting to look outside the mature markets in North America, Europe, and Japan for growth opportunities,” says Susan Babinsky, senior vice president and head of Kline's Consumer Products consulting practice. “They’re now extending their major brands to the developing markets, introducing regional varieties, or acquiring existing regional brands.”

www.klinegroup.com/y559.htm GLOBAL COSMETICS & TOILETRIES 2004 presents sales data in 21 separate volumes and more than 400 product category profiles, including sales value by product type and brand, retail outlet distribution, and five-year forecasts. The study is based on data collected from approximately 1,000 interviews with cosmetic and toiletry marketers, distributors, and retailers, as well as government agencies and trade organizations.

For more information on this study, go to www.klinegroup.com
www.klinegroup.com/y559.htm or contact lenka_contreras@klinegroup.com
Lenka Contreras at +1-973-435-3407.
In Europe, contact Jonathan Duff
jonathan.duff@kline-europe.com at
+32 2 776 0738.

To learn more about Kline’s customized consulting capabilities for the consumer products market, contact Susan Babinsky
susan_babinsky@klinegroup.com at +1-973-435-3365.

Established in 1959, www.klinegroup.com Kline & Company is an international business consulting and market research firm serving clients worldwide in the consumer products, specialty chemicals, life sciences, and energy industries.


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