Philippine Market for Cosmetics, Personal Care Products & Toiletries -------------------------------------------------------------------------------International Market Insight [IMI] ID: 118569 Regions: EAP;Asia;Southeast EAP;Asia;Southeast Asia;ADB Asia;ADB Country: Philippines Divisions [Province]: Manila
-------------------------------------------------------------------------------Industry: Consumer Goods Goods & Home Furnishings Furnishings Sector: Cosmetics/Toiletries
-------------------------------------------------------------------------------by: Dey Robles approver: David Fulton Report Date: 08/07/2003 Expires: 08/01/2006 -------------------------------------------------------------------------------INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2004. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES. The brief provides a market overview of the Philippine market for U.S. manufacturers and suppliers of cosmetics, personal care products and toiletries. The report includes market size, competition, distribution, trends and best prospects that will help U.S. exporters determine the feasibilty of doing business in the country. Market Overview. The Philippines' importation of Cosmetics and Toiletries rose by a phenomenal USD 19 million or 40%, from USD48 million million in 2001 to USD 67 million in 2002. 2002. This may be attributed to the reduction in tariff rates and on the increased number of women with purchasing power. Imports supplied 30% of total market. (In USD Millions)
2001 2002 Growth Rate in % Projected Growth in %
A. Total Market Size 200 225 12 10
B. Total Local Production 131 181 38 15
C. Total Exports 21 23 11 5
D. Total Imports 48 67 40
10
E. Total U.S. Imports 7 19 170 10
The U.S. is the leading source of foreign-made cosmetics and toiletries. U.S. market share is a strong 28%, owing to the high quality, popularity and acceptability of U.S. cosmetics, personal care and toiletries products. Some cosmetic brands are Revlon, Avon, Max Factor, Elizabeth Arden, Clinique, Estee Lauder, Maybelline, Mary Kay and Nu Skin. These brands are well established and have distributors/representatives. Some U.S. brands, such as Avon and Sara Lee, are manufactured in the Philippines under licensing agreements with their U.S. principals. Avon is the biggest domestic manufacturer of cosmetics. Industry players predict a moderate 10% increase in imports in the next 2 years as the economy slows down and purchasing power shrinks. On the other hand, most domestic producers are into toiletries (soaps, shampoos and hair conditioners) and other personal care products. Many local manufacturers import raw materials. Local production, which increased by 38% in 2002, is expected to grow by a modest 10% the following year. Local manufacturers are expected to cut their importation of raw materials to save dollars and use local raw materials to augment imported stocks. The recession in major markets will cause exports to grow by only 5%. Best Prospects. Make-up preparation for the skin (such as colored pressed powder, liquid foundation, rouges and blushers) and preparations for skin care (cleansers, toners and moisturizers) have the best sales prospects. Scents (toilet water/colognes, body sprays) are gaining popularity even among young (below-13-year-old) consumers. Distribution Channels.
Generally, local and imported cosmetic products are sold in retail outlets -department stores and most drug stores and supermarkets. In some instances, these are also sold through direct marketing or through dealer networks. Companies wanting to introduce new products in the market should appoint a distributor with a sales network covering the entire country. This will ensure broad exposure for their products. Print and broadcast media are important when introducing a product. Media helps build brand name and product recall. The Philippines imposes 3%-5% tariff duty and a 10% value-added tax (VAT) on imported cosmetic products. The VAT is based on the valuation determined by the Bureau of Customs for the application of customs duties, plus those duties themselves, excise taxes, and other charges (i.e., charges on imports prior to release from customs custody, including insurance and commissions). The Bureau of Customs (BOC) has the full responsibility for all customs valuation, classification, and clearance functions. Cosmetics importers or their agents are required to file import entries with the Bureau of Customs (BOC), which will then process these entries through its Automated Customs Operating System (ACOS). The BOC has issued a series of regulations governing the implementation of transaction value and outlining procedural steps importers need to follow. Regulatory Issues. Foreign suppliers usually appoint a local distributor to represent their interests in the Philippines. The distributors handle all aspects of importation from registration, to obtaining a license and a clearance for the products. Distributors not only help facilitate the product's entry into the market, they will also take care of advertising and promotion through sales personnel and dealer networks. Distributors must register with the Bureau of Food and Drugs before operating. The Bureau of Food and Drugs monitors and regulates the cosmetic industry in the Philippines. Cosmetics may be distributed only after having been officially registered with the Bureau of Food and Drugs. The registration process at the Bureau of Food and Drugs is from 6 to 18 months. The local Bureau of Food and Drugs, which monitors and regulates food, drugs and cosmetic products, adopted the U.S. pharmacopoeia when regulating cosmetic products and raw materials for cosmetic production. The following are the regulations on cosmetics and raw materials/ingredients for cosmetic products:
Administrative Order No. 150 s. 1971 Regulation Part D-4 Cosmetic: Listing of Cosmetic
Specialties
Administrative Order No. 29-A s. 1994 Regulation Part D-5 Cosmetic: Listing of Cosmetic Specialties Administrative Order No. 13 s. 1999 Use of Hydroquinone and Tretinoin (Retinoic Acid) *Bureau Circular No. 12 s. 1997 1997 Updated Listing of Cosmetic Ingredients Bureau Circular No. 6 s. 1999 Revised BC 4 s. 1999 "New Protocol for Registration of Drugs, Foods, Cosmetics and Medical Devices" Bureau Circular No. 8-A s. 1999 Guidelines in the Collection and Submission of Samples of Foods, Drugs, Cosmetics and Medical Devices for Physico-Chemical Analysis Bureau Circular No. 23 s. 1999 Exfoliant and Exfoliate as Permissible Claims for Cosmetics Bureau Memorandum No. 21 s. 1995 List of Permissible Claims for Cosmetic Preprations Memorandum Circular No. 3 s.1992 List and Amount of All Ingredients Used As a Component of the Finished Cosmetic Specialty *Memorandum Circular No. 19-A s. 1992 Specific Standards and Requirements
*&nb sp; These circulars are subject to change upon the implementation of the ASEAN Harmonized Cosmetic Regulatory System. Information on these regulations and registration requirements for cosmetics, toiletries and fragrances are available on the Bureau of Food and Drugs website: www.doh.gov.ph/BFAD Update on Asia's Cosmetics Markets Plus Cosmoprof Asia 2003
The following figures reflect substantial and growing demand in Asia for American cosmetics, toiletries and beauty supplies. (Source: U.S. Commercial Service, Industry Sector Analyses, 2002-2003) Access Asia's Booming Beauty Markets Via . . . Country Market Size 2002 Projected Annual Growth Value of U.S. Imports Australia $770 million 5% $101 million China $5.6 billion 10% $49 million Hong Kong $500 million 2% $92 million India $600 million 20% $120 million Korea $3.6 billion 25% $157.1 million Philippines $225 million 10% $67 million
The Commerce Department Initiative at Cosmoprof Asia 2003!
As a U.S. cosmetics business, you can access these and other Asian markets, with the help of the U.S. Department of Commerce, at Cosmoprof Asia 2003, November 12-14, Hong Kong--the most prominent beauty trade show in Asia. The Commerce Department's U.S. Commercial Service offices throughout Asia are organizing buyer delegations to Cosmoprof and will match delegation members with U.S. companies exhibiting at this key industry event. See http://www.buyusa.gov/hongkong/en/cosmoprofasia.html . This new program-called Asia Now--focuses on U.S. small & medium sized companies that wish to reach multiple markets in Asia at one time. Please use the following link to indicate your interest in participating in this opportunity: http://www.buyusa.gov/hongkong/en/cosmoprofasia.html.
For additional information regarding market research specific to your products and services, ask about our Flexible Market Research and Customized Market Analysis programs by contacting us at 1-800-USA-TRAD(E) or www.export.gov or www.buyusa.com. Both reports provide timely, customized, reliable answers to your inquiries about a market and its receptivity to your products and services. To the best of our knowledge, the information contained in this report is accurate as of the date published. However, The Department of Commerce does not take responsibility for actions readers may take based on the information contained herein. Readers should always conduct their own due diligence before entering into business ventures or other commercial arrangements. The Department of Commerce can assist companies in these endeavors.
