JEDDAH — Recent studies have shown that Saudi Arabia's many affluent and beauty conscious women are spending on average SR14,256 a year on cosmetics. The Saudi cosmetics market is the largest in the Middle East, estimated at over SR60 billion annually, with a forecast of 11 percent annual growth rate, according to Euromonitor. The KSA market achieved exceptional growth in 2014, partly due to high disposable income in the country, in addition to the growth of the young population - the main consumer of cosmetics and personal care products. The sector is further supported by the variety of widely spread sale and distribution channels in the country, including standalone stores in malls, in addition to over-the-counter sales in salons, pharmacies, supermarkets and hypermarkets as well as bazaars and souks. Even the cosmetic clinic sector has grown 10 fold in 5 years. Speaking on the sector's outlook for the current year, Mohammad Madi, President of Madi International - a leading distributor of Internationally renowned professional beauty brands in the Middle East, said: "In light of the current regional situation, it is difficult to determine exact growth outlooks for 2015, considering the increase in real estate prices and school fees, which all affect consumer spending and reshapes priorities. Despite all the challenges, we are confident that sector growth will not go below 4.5% in 2015." "The beauty and cosmetics sector in KSA registered significant growth due to the strong purchasing power of the residents, and the availability of varied products that suit all budgets and tastes. Latest statistics suggest sales of skincare products in Saudi Arabia are expected to reach $502.9 million in 2015," he added. While Italy, Germany, France and the US lead the cosmetics industry in terms of production volume and standards, the strategic location of the Saudi Arabia as a trade hub enabled many to invest in cosmetic manufacturing. Madi International is a leader in this arena, as it implements the most stringent international standards to maintain the safety of the product, staff and environment, while complying with the leading industry guidelines. Clearly, the sector was not isolated from the impacts of fluctuating currency prices, mainly EURO, which led to higher competitiveness of European products against those imported from East Asia. On the other hand, those trends created a heavy burden on companies that stocked up on products during the high euro rates, causing them to incur heavy financial losses. However, this has not impacted growth forecasts, as individual consumption would maintain Saudi's high position in the sector, while the market is expected to touch over $1 billion in 2017. KSA, UAE and Iran together represent a total value of $9.5 billion - almost 37% of the total Middle East and Africa market. "Although the market in KSA is saturated in terms of new stores, competition has become remarkably stronger with new products being imported from East Asia at very competitive prices, while products of European origin gained better edge with the lower value of the Euro. This resulted in fiercer competition among products of Asia, European and local origin, ultimately benefiting customers who seek the best quality at affordable prices," Madi noted. — SG
