Sectoral Outlook on Cosmetics and Cleaning Products

 

Sector Analysis: Cosmetics and Cleaning Products

Cosmetics and cleaning products occupy an indispensable place in our lives. It is impossible to imagine a day without using personal hygiene or environmental cleaning products. In this context, the cosmetics and cleaning products sectors in Turkey represent one of the most important industrial branches that meet consumers' daily needs to sustain their quality of life. As the Association of Cosmetics and Cleaning Products Manufacturers (KTSD), we serve as the voice of these sectors, raising awareness among producers and consumers about product safety and correct usage, and drawing public attention to identified gaps. Due to our established cultural practices, cleaning products are consumed more in our country than in many other comparable nations. When cleaning products are mentioned, laundry and dishwasher detergents, fabric softeners and bleach are among the primary products that come to mind. Beyond these, products used generally for kitchen and bathroom hygiene are of importance. As noted in the Ministry of Economy's Cosmetics Sector Report, the cosmetics and personal care products market in Turkey grows on average 10% annually depending on economic developments in the country. The market share of natural cosmetics and personal care products is estimated at around 5%.

In recent years, natural soaps, shampoos, other hair care products and hair dyes, skin care products, body care products and other natural cosmetics have begun to see demand in our country. In particular, natural soap and shampoo production is carried out by numerous small-scale firms across the country.

Laurel and olive oil soaps, products appreciated and sought after in many countries around the world, are also produced in Turkey. As fabric and floor technologies advance and become more sophisticated, detergent technology also progresses. Products that clean without damaging fabric and floor texture, provide protection and ensure hygiene are offered to consumers in many different forms such as powder, liquid and capsules. In addition to continuous product performance improvement through R&D investments, environmental sensitivity is increasing, and products are designed and manufactured with a sustainability perspective. Targets such as less waste, less raw material waste, sustainable sourcing and energy consumption are set and encouraged. We believe that this progress will continue at an accelerating pace in the coming years. The drive to produce innovative and sustainable solutions in response to demands arising from increasing needs in the developing world leads research and development activities in our sector and makes our sector dynamic. Considering the value that our association's activities in the cosmetics, cleaning and hygenic paper products sectors add to Turkey's economy, exports and employment, we can say that it holds an important position in the country. It is estimated that there are approximately 5,000 registered firms operating in the aforementioned sectors within the country and that approximately 120,000 people are employed in these activity areas. It is observed that over 95% of these firms consist of SMEs. With the alignment of our legislation with the EU starting in the early 2000s, numerous meetings and trainings have taken place, to which our association has also contributed, particularly to enable SMEs to comply with the new legislation. Significant progress has been made in ensuring that the alignment process is well understood and adopted by our country's industrialists and authorized authority personnel. Our work on legislative compliance continues at an accelerated and diversified pace. In this context, our association successfully fulfills an important bridging role by creating dialogue between its own members and firms operating in the sector and representatives of authorized authorities, and by keeping existing communication channels open and diversified. It will continue to fulfill this role in the face of changing technological and economic conditions.

Our product portfolio, which ensures trade in our sectors at 220,000 retail points every day, touches consumers' daily lives.

As of the end of 2016, our sectors' turnover is estimated to have reached TRY 21.8 billion (some data are currently provisional), with the distribution by sector estimated as TRY 8.6 billion cosmetics, TRY 7.2 billion cleaning products and TRY 6.0 billion hygenic paper sector. The removal of installment payment options via credit cards in cosmetics product sales through a regulation published by BRSA in September 2016 was an important factor with a negative impact on turnover in 2017, as not only consumers but also significant numbers of small retailers benefited from credit card convenience when purchasing goods from distributors and wholesalers. We can see from comparing TÜİK data that the installment restriction on credit cards, intended to reduce Turkey's cosmetics imports, had no effect on our country's cosmetics imports, as the first seven months of 2017 imports ran at 2016 levels (and slightly above).

In addition, we cannot fail to note that cosmetics sales slowed in 2017 compared to 2016 data.

With the Supplementary Decision to Decision 2017/9647 on Import Regime published in early 2017, packaging material imports for certain colored and fragrant cosmetic products were subject to increases between 17% and 25%, raising already high packaging costs in these products to levels that would seriously impact the sector. A different picture emerges when looking at foreign trade. According to TÜİK data, our 2014 cosmetics exports were USD 1,163 million, declining to USD 977 million in 2015. In 2016, our exports fell even further below 2015 levels to USD 916 million. Looking at the first five months of 2017 data, our exports stood at USD 380 million and are estimated to reach 2016 levels by year-end. If a stronger push can be made for cosmetics exports in the remainder of the year, it would be possible for our 2017 exports to exceed the previous year. Cosmetics imports during the same period declined from USD 818 million to USD 778 million and ran at the same levels in 2016 at USD 782 million. Our imports at USD 354 million in the first five months of 2017 are estimated to exceed the previous year's amount if they maintain their first five-month pace. Our cleaning products exports were USD 437 million in 2014, declining to USD 405 million in 2015 and standing at USD 350 million in 2016.

Our exports at USD 139 million in the first five months of 2017 could exceed the previous year if a stronger push is made in the remainder of the year.

Our cleaning products imports declined from USD 513 million in 2014 to USD 442 million in 2015 and remained at the same levels in 2016 at USD 445 million. Our imports at USD 198 million in the first five months of 2017 are expected to exceed 2016 values by year-end. Our hygenic paper products exports were USD 987 million in 2014, declining to USD 890 million in 2015 and dropping further to USD 790 million in 2016. Our export value at USD 331 million in the first five months of 2017 could exceed the previous year if a stronger export push is made in the remainder of the year. Our hygenic paper products imports declined from USD 125 million in 2014 to USD 115 million in 2015, increasing somewhat to USD 153 million in 2016. Our imports at USD 53 million in the first five months of 2017 are expected to decline compared to the previous year by year-end. Having said all this, as we face the remaining three months of 2017, we should not forget that, provided there are no other adverse decisions that would particularly impact the cosmetics sector, we still have the opportunity to close 2017 ahead of the previous year.     Vuranel Okay General Coordinator KTSD - Association of Cosmetics and Cleaning Products Manufacturers