POLAND COUNTRY REPORT

3.2%. Oral hygiene reached a turnover of $333.81m(t247.65m) last year and will increase 4.2% to$393.30m (t291.78m) by 2017.

Feminine hygiene products are an important partof the Polish market. This sub-category isdominated by domestic brands; it was worth$268.01m (t198.83m) in 2013 and will grow 4.1%to $315.33m (t233.94m) by 2017, according toCanadean. Men’s care is also a growing field. Lastyear this sub-category reached $236.04m(t175.11m) and will grow a further 3.2% to$268.13m (t198.92m) by 2017. Sun care, on theother hand, is a worryingly small market. In 2013sales of sun care products reached just $67.94m(t50.40m). By 2017, however, the category willhave grown 4.9% to $82.14m (t61.68m).

Brand nationUnlike some other Eastern European markets,Poland has very strong domestic beauty brands. A2013 report by German economic developmentagency Germany Trade & Invest (GTAI), estimatedsome 400 national beauty companies. Only around100 of these companies are medium-sized or largecompanies but even so, Polish brands have corneredsome 50-60% of the cosmetics market.

The biggest domestic manufacturers includeZiaja, Dr Irena Eris, Dax Cosmetics, Oceanic andBielenda. Ziaja was founded in 1989 and thecompany’s portfolio comprises some 900 productsacross different categories, including face and bodycare, hair care, men’s and baby care, sun care andfeminine care. There is also a salon range which isretailed under the brand name Denovo Pro. Likeother Polish C&T companies Ziaja also has a largeinternational distribution and is currently present insome 49 countries.

Among the company’s biggest product lines arethe Goat’s Milk range of skin and body care andthe Olive Oil range of skin and hair care – twoclassic ranges which are also amongst thecompany’s best sellers, according to ExportManager Lidia Ziaja.

Ziaja’s facial skin care portfolio is highlysegmented, with product ranges for different skinages rather than skin types. The Safran range, forexample, is aimed at skin aged 60+, Jasmine is forwomen aged 50+, Lifting is an anti-ageing rangefor skin aged 40+ and Rose Butter is for dry skinaged 30+. There is also the fragrance-free Sensitiveline for allergy-prone skin, PhytoActive for

With its 38.5 million inhabitants Poland is thebiggest market amongst the Central and EasternEuropean (CEC/CEEC) countries. The Polisheconomy has shown excellent growth rates over thelast few years, outperforming several otherEuropean countries.

Poland is also the sixth largest personal caremarket in the European Union. According topersonal care association Cosmetics Europe,Poland’s C&T market reached a turnover oft2.862bn in 2013, a slight dip of 0.4% compared to2012, while research company Canadean valuedPoland’s personal care market at USD $3.4bn(t2.52bn) in 2013, forecasting a rise to $4.0bn(t2.97bn) in 2017, with an overall CAGR of 4.2%.

In a recent study, market research group ACNielsen pegged the C&T retail market at Polishzloty zł8.1bn (t1.96bn) in 2013. However, thisfigure only looks at mass market retailers and doesnot include perfumery, online and direct sales.Market researcher PMR Publications, on the otherhand, has estimated the personal care market atzł20bn (t4.84bn) in 2013, an increase of 2%compared to 2012. By 2016, PMR says, the marketwill have reached zł23bn (t5.56bn).

Sector breakdownLooking at the Canadean figures in more detail,skin care was the largest sub-category in 2013. Thissector accounted for turnover worth $615.93m(t457.42m) and is estimated to grow 4.3% to$728.89m (t541.31m) by 2017.

Hair care was next in line with sales of $589.01m(t436.88m) last year and a prognosticated value of$692.08m (t513.34) by 2017, up 4.1%. Personalhygiene, including bath and body care, reached$469.21m (t348.04) in 2013 and will grow 3.5% to$538.00m (t399.07) by 2017.

Fragrance is one of the fastest-growing sub-categories. Canadean estimates that this sector willbe worth $603.25m (t447.50m) in 2017, up 5.9%compared to last year’s $479.74m (t355.90m).Colour cosmetics was the fifth-biggest sector in2013, with turnover of $340.43m (t252.55m) andan estimated $386.54m (t286.76m) in 2017, up

September 2014 ECM 29

POLESAPARTWith its strong domestic brands and excellentgrowth rates over the past few years, Poland’sC&T market is one of a kind, reportsAnnemarie Kruse

Poland: Country facts

Size 312.685 sq km

Inhabitants 38.5m

Capital Warsaw

GDP 2013 €389.7bn

GDP 2014 (est.) €407.8bn

Source: Germany Trade and Invest (GTAI)

Provoke is a new rangeof colour cosmeticsfrom Dr Irena Eris, oneof Poland’s strongestdomestic brands

COUNTRY REPORT POLAND

Cucumber & Lime, the lifting Liquid Crystal rangeand Pharm Acne for problem skin.

Although Poland doesn’t have any major certifiedorganic brands to speak of, natural-inspiredcosmetics are definitely a trend, says Lidia Ziaja:“One of the major developments in the Polish C&Tmarket are product formulations with naturalingredients.” And indeed, most Polish brands haveat least one natural-inspired brand in their line-up.

Skin specialistsThe domestic brands are especially strong in theskin care category. Besides those already mentionedthe market also includes manufacturers like DeliaCosmetics, Eveline and Soraya.

Delia Cosmetics was founded in 1998 andspecialises in products formulated with hyaluronicacid and argan oil. The line-up includes face cream,facial serums, masks and scrubs and the companyhas a small colourant, home perm and stylingportfolio as well as a range of colour cosmetics.

Eveline was founded in 1983 and produces skinand body care products and colour cosmetics. Thebrand is active in some 70 countries worldwide andits highly segmented portfolio includes 18 face careranges, 16 hand and body care ranges, six sun careranges, a small hair care portfolio and a men’s carerange. And skin care company Soraya was originallyfounded in 1985. A few years ago the company wasacquired by Swedish retail group Cederroth, whoalso snapped up fellow Polish brand Dermika.Soraya’s portfolio focuses on face care but thecompany also manufactures bath and body care.Besides these Polish brands the biggest internationalskin care brands include Beiersdorf’s Nivea andL’Oréal’s Garnier and L’Oréal Paris brands.

In colour cosmetics, on the other hand, there arefew domestic brands. This category is dominated byinternational labels like Bourjois, L’Oréal Paris,Essie, Rimmel, Revlon, Max Factor, Catrice andEssence. The notable exception is Inglot which notonly has some 150 stores in Poland but also operatesaround 300 outlets in more than 50 countries.

In hair care, western brands also reign supreme.The ranges of German C&T manufacturer Henkel& Schwarzkopf – especially Gliss Kur andSchauma – are popular and L’Oréal with Elseve,Fructis and Garnier Ultra-Doux is also strongly

sensitive skin and the company’s most recent launch,the Manuka range for combination and oily skin.

The Irena Eris group specialises in mass marketand luxury cosmetics as well as salon products whichare retailed under four different brands. Dr IrenaEris includes premium and professional products,Pharmaceris is a dermatological brand primarilyretailed in pharmacies, Lirene is the firm’s umbrellabrand for mass market cosmetics and Under Twentyis a mass market teenage skin care range.

The Dr Irena Eris premium portfolio includes 12facial skin care ranges for different skin ages, withthe majority of face creams priced between t18 andt28. There is also the ten-sku Body Art firmingcare range and the six-sku Men Platinum men’s carerange. One of the company’s latest launches wasProvoke, a range of colour cosmetics. The line-upincludes some 25 products and 94 colours.Foundations are priced at around t20, twin eyeshadow palettes at t16 and mascaras at t18.

Dax Cosmetics was founded in 1984 andmanufactures mass market and luxury products.Dax’s ranges have a very wide distribution and areespecially strong in drugstores and supermarkets/hypermarkets. The company’s main mass marketbeauty brand is Perfecta. The Perfecta portfoliocomprises some 20 facial care ranges – like otherPolish brands, the company’s face care line-up issegmented according to skin ages. Perfecta offersdedicated ranges for 35+, 40+, 50+, 60+, 65+ and70+, as well as 11 skin care ranges for different skintypes. There is also a baby care range, a productrange for pregnant women, ten body care rangesand a line of foundations.

The group’s portfolio also includes sun care rangeDax Sun and men’s products line Dax Men as wellas premium skin care brands Cashmere and Yoskine.Cashmere comprises seven face care products, arange of cream masks and several foundations andprimers. Yoskine offers segmented product rangesfor skin aged 30+, 40+, 50+, 60+ and 70+, body careand a range of cleansing products. Yoskine facecreams are priced at around t30 which makes this adistinct luxury brand. Dax’s brand stable alsoincludes colour cosmetics range Celia. Thecompany acquired the brand in 2007; Celia itselfwas launched in 1959 and is considered one of theclassics in the Polish make-up market.

Oceanic is the manufacturer of AA and itsselection of product ranges are present in alldistribution channels. AA stands for “anti-allergic”and products are formulated for sensitive andallergy-prone skin. The AA portfolio comprises AACosmetics which is the main skin care label and alsoincludes body care and liquid foundations, AAPrestige, a more high end anti-ageing face carebrand with nine different ranges, AA Men, AASensitive Nature Spa with its six fruit-inspired bodycare ranges, Me and Mommy, a range whichincludes baby care and pregnancy cosmetics, and AAEco, an organic face and body care range.

Bielenda is another company which is very activein the mass market. It was founded in 1990 andspecializes in natural cosmetics. The company’sportfolio comprises seven skin care ranges, each ofwhich is built around a main ingredient. Besides theAloe range there is Cotton, Collagen, Chestnut,

30 ECM September 2014

One of domestic brandZiaja’s best-sellingproduct lines is itsGoat’s Milk range ofskin and hair care(below)

Poland: C&T market by categories,2013

Sector 2013 $m 2017 $m +/-%

Total 3.4bn 4.0bn 4.2

Skin care 615.93 728.89 4.3

Hair care 589.01 692.08 4.1

Personal hygiene 469.21 538.00 3.5

Fragrance 479.74 603.25 5.9

Colour cosmetics 340.43 386.54 3.2

Oral hygiene 333.81 393.30 4.2

Feminine hygiene 268.01 315.33 4.1

Men’s care 235.04 268.13 3.2

Sun care 67.94 82.14 4.9

Source: Canadean

September 2014 ECM 31

POLAND COUNTRY REPORT

report, more than half of all personal care sales in Poland take place in drugstores. PMRPublications has estimated that in 2013 this channelaccounted for 43.4% of sales, reaching a total of zł8.7bn (t2.1bn).

The Polish drugstore market is verycompetitive. The sector is dominated by big retailchains which offer spacious, modern stores and awide product selection. The biggest drugstoreretailer in Poland is actually from Germany: theRossmann group, which is partially owned byHong Kong based AS Watson. It has just openedits 900th store in the country.

Rossmann first entered the Polish market in 1993.Since then the retailer has become the nationalmarket leader. For Rossmann, Poland is the mostimportant international market; the majority ofRossmann’s international sales are generated here.And in 2013, Rossmann’s business went very wellindeed: the Polish subsidiary posted turnover ofzł5.8bn (t1.4bn), an increase of 13% compared to2012. Rossmann Polska has also announced furtherexpansion plans; by the end of 2014 there will be anadditional 100 Rossmann outlets in Poland.

represented. Other important hair care brandsinclude Nivea, P&G’s Pantene and Wella andUnilever’s Timotei and Dove. And as far ascolourants are concerned, Henkel & Schwarzkopfand L’Oréal rule the roost.

Bath and body care is another category which issplit between local and international brands.Domestic bath care brands include Ziaja, Luksja andSoraya as well as J&J’s brand Le Petit Marsellais, butalso western favourites Dove, Palmolive and Nivea.

Men’s care is a thriving segment in Poland. Ziajasays: “Beauty care products for men are gainingmore and more importance. This category developsin terms of sales and number of products introducedto the market”. Although shaving preps and razorsstill account for the majority of men’s care sales, skincare products are becoming increasinglysophisticated. Market researcher Euromonitor notesthat the men’s sector grew 4% in 2013, with anti-ageing products being a main driver.

Drugstore dominanceDrugstores are the most important retail channelfor personal care. According to a recent GTAI

Poland: growth mindsetLidia Lewandowska, Editor-in-Chief of Polishbeauty magazine Magazyn Kosmetyki, talks toECM about the current state of the cosmeticsmarket in Poland

How is the Polish cosmetics market performing?The cosmetic market in Poland is constantlygrowing, and currently valued at zł19-20bn.Certainly the market is growing both internally,powered by stronger consumer knowledgeregarding cosmetic use – although the growth isnot as dynamic as it was couple years ago. Exportrates are growing thanks to no trade barrierswithin the EU and because Polish companies areready to sell to the developing markets in Asia,Africa or Middle East. In addition Polishcompanies are encouraged to develop export bythe Programme to Promote Polish CosmeticsIndustry on Foreign Markets, run by SPC House ofMedia for the Polish Ministry of Economy.

Poland’s ten years of EU membership was wellused. Producing companies benefited fromvarious EU funds, modernising factories,laboratories, investing in R&D, new productionlines and equipment. Cosmetics manufactured inPoland fulfil the highest EU quality standards.Also, the strong position of Polish brands on thePolish market is an achievement worthmentioning. Polish consumers appreciate localbrands and often choose them over global ones.

What are the biggest trends in the market?Today the Polish market is quite similar to otherdeveloped markets. As elsewhere, consumers buyproducts that incorporate natural ingredients withlatest technology developments. A boom forcosmetics based on natural oils, used in skin, faceand hair care, is still visible. Recently, cosmeticsinspired by aesthetic medicine (with hyaluronicacid, ingredients causing laser-like effects etc) sell well. Polish women spend a lot on make-up

and colour cosmetics. Two out of five Polishwomen wear make-up every day and the colourcosmetics market is forecast to reach the level ofzł1.5 billion in a couple of years. Recentdevelopments of BB and CC cosmetics gainedpopularity in Poland. According to Nielsenresearch, the biggest sales groups in colourcosmetics are: foundations – 23.2%, mascaras –20.7% and nail polish – 13.2%. Eco and organiccosmetics are popular mainly within a small butgrowing group of consumers. The sales ofselective brands are growing visibly, as a result ofboth growing resources and growing aspirations incertain social groups.

Which distribution channels are experiencing thebest performance?The cosmetic distribution market in Poland isestimated to reach the level of zł23bn in 2016,growing from almost zł20bn in 2013 (2% growth),according to PMR research. The fastest growingdistribution channel over the last few years hasbeen discount stores. Both discount stores anddrugstores are opening new points of sales inPoland, with double digit growth every year.Discount stores recently broadened their offer ofwell recognised brands, drawing clients away fromhypermarkets and drugstores.

The growth of drugstore points of sale is mainlya result of new locations being opened by largeinternational drugstore chains, especially themarket leader – Rossmann. However, alsofranchise chains like Drogerie Laboo and DrogeriePolskie are growing and altogether the number ofchain drugstores grows by several hundred ayear, displacing independent stores. Today,almost 1800 stores operate under franchise orpartner system. According to PMR, consumersasked about preferred cosmetic shoppingchannel, pointed to Rossmann (63%), Avon (20%)and Drogerie Natura (10%).

Polish C&T brandEveline is available in 70countries worldwide

COUNTRY REPORT POLAND

In 2012 another international drugstore chainappeared on the Polish market. After Germandrugstore retailer Schlecker went bankrupt in 2012,Austrian retail chain Dayli had taken overSchlecker’s drugstores in Italy, Austria, Poland,Belgium and Luxemburg.

Just one year later Dayli announced its owninsolvency and the Dayli stores disappeared fromthe European retail landscape. However, since thePolish stores had been operated as a joint venturewith Polish partner Hygienika, Dayli Polska wasthe only subsidiary to survive the cull. Today Daylioperates some 160 stores across the country, witha modern drugstore portfolio similar toRossmann’s offering.

Local flavourThe strongest local chains include Drogerie Naturawhich stocks primarily Polish brands, and DrogerieAster which has some 128 stores across the country.Both chains belong to domestic retail groupInterchem. Natura is positioned as a more premiumstore brand and is present in all larger cities inPoland. Aster drugstores, on the other hand, aremore mass market oriented and usually found insmaller towns.

Drogerie Hebe is a 75-strong perfumery chainspecializing in mostly international mass market andupper mass market beauty brands. The Hebe chainbelongs to Portuguese retail group JéronimoMartins which also runs the Biodronka chain ofdiscounter hypermarkets.

Another important personal care retailer is Super-Pharm, a Canadian chain which entered the Polishmarket in 2011. Today Super-Pharm runs some 25stores across the country. The Super-Pharm outletsoffer a pharmacy department, a drugstore area and aperfumery section. Super-Pharm stores also stock awide selection of primarily French pharmacybrands, including Avène (Pierre Fabre), La Roche-Posay and Vichy (both L’Oréal).

In addition to these international and nationalchains, Poland has many independent drugstoreswhich are often located in rural areas and smallertowns. For the last few years these small retailershave been struggling against the power of the bigchains. The increasing importance of own labelbeauty is also making life difficult for theindependent drugstores. Proprietary brands,particularly those of international retailers likeRossmann, are becoming very popular withPolish consumers. As a direct result, a pricebattle is developing on the market which isfurther affecting the economical situation of thesmaller stores.

However, some of these retailers have now begunto fight back. In 2010 a number of independentdrugstores formed the network Drogerie Polskie.The goals of this association are to strengthen theeconomic position of independent drugstoreretailers, counter the influence of the big westernchains and focus all efforts on developing a strongdomestic sector to keep the traditional Polish retailheritage alive. Today some 200 drugstores areorganised in Drogerie Polskie and the memberstores all feature the association’s logo andcorporate colours.

32 ECM September 2014

Supermarket successSupermarkets, hypermarkets and discounters arealso becoming important retail channels for C&T.Discounter market leader Biedronka with its 2400stores has already started to extend its offering ofbeauty brands, as has German chain Lidl whichoperates some 550 stores in Poland.

According to a retail ranking by marketresearcher Planet Retail, Jéronimo Martins was thebiggest supermarket retailer in Poland. Biedronka isan especially successful business; in 2013 thecompany opened 280 new stores and domesticturnover grew 15% to t7.5bn. The second place inthe ranking was occupied by the German Schwarzgroup with its Lidl and Kaufland chains and t4bnturnover in 2013.

The Polish Eurocash group was in third place,followed by the UK’s Tesco with 450 outlets and theGerman Metro group with 98 stores and turnoverof just under t2bn. French retailer Carrefour withits 600 hypermarkets and t1.59m turnover was in7th place.

Like in other Eastern European markets, direct-selling companies like Amway and Avon from theUS and Oriflame from Sweden play a veryimportant role in C&T retail. According to a 2014report by Euromonitor, direct sales of beauty brandsin Poland have seen a steady demand over the lastfew years.

In 2013, Avon led the market with a 38% retailvalue share, followed by Oriflame with 15%. TheEuromonitor report predicts that direct-selling will

The personalcare market inPoland willremain highlycompetitiveover the nextyear as thereare manyimportantplayers, bothlocal andinternationalLIDIA ZIAJA, EXPORTMANAGER, ZIAJA LTD

Poland: Supermarket retailer ranking, 2013

Company Turnover Outlets Retail space €m 2013 in sq m

Jéronimo Martins (Biodronka) 7,505 2,393 1,500,038

Schwarz group 4,114 689 1,109,861

Eurocash 3,712 5,196 10,322,300

Tesco 2,381 454 901,453

Metro group 1,935 98 852,500

Lewiatan 1,724 2,800 504,000

Carrefour 1,592 635 731,165

Auchan 1,108 62 355,800

Zabka 899 3,310 284,000

Polomarket 834 385 288,750

Source: Planet Retail

Dosmetic brands areparticularly strong inskin care, althoughNivea, L’Oréal Paris andGarnier are the biggestinternational players

September 2014 ECM 33

POLAND COUNTRY REPORT

And over the last few years many onlineperfumeries have appeared on the market. Forobvious reasons these retailers are especiallypopular with consumers living in areas whereDouglas or Sephora stores are few and farbetween. In order to counter the onlinecompetition, Douglas and Sephora are bothtrying to draw customers into their stores byoffering added value services, such as free make-up consultations, beauty treatments andexclusive offers.

Both retailers are also investing into their ownonline stores. Douglas’ e-commerce portalwww.douglas.pl offers almost 200 beauty brands,including the usual international favourites as wellas domestic premium brands like Inglot, Dr IrenaEris, Yoskine, AA Prestige and fragrancemanufacturer Pani Walewska.

Sephora launched its online store just a coupleof months ago. So far www.sephora.pl only listssome 115 labels. Compared to Douglas’ muchbigger brand choice this might seem like a poorshowing at first. However, Sephora sells moreniche labels than the mainstream Douglasportfolio and Polish consumers appreciate this.

Positive positioningPoland has been a major recipient of the EU’sstructural and cohesion funds in the legislativeperiod of 2007-2013. This is one of the reasonswhy the Polish C&T market has been doing sowell over the past few years. And from 2014 to2020, the country will receive some furthert100m, which will also boost the economy andwith it the retail industry.

The increase in EU funding also makesPoland a popular country for foreign investors.In 2014 the member companies of the GermanChamber of Commerces voted Poland as thebest country for investments in the entireCEC/CEEC region, for the second year in arow. L’Oréal has one of its largest Europeanfactories in Poland, as does Oriflame andcompetitor Avon is also producing a large part ofits cosmetics here.

And US consumer goods manufacturerColgate-Palmolive considers Poland one of itsmost important European locations for productmanufacturing. The group recently announcedthat it would invest some t100m into itsSwidnica factory for oral care products.

All of this bodes well for the Polish economy.Industry observers believe that in 2014 GNPwill grow 3% and might even reach an increaseof 4% in 2015. This will also benefit the retailindustry and with it of course the C&T market.

Ziaja says: “The personal care market inPoland will remain highly competitive over thenext year as there are many important players,both local and international.

“In the longer term the situation will dependon the changes in the retail trade. Due toconsolidation processes the access to trade maybecome more difficult. On the other hand, thegrowing role of internet and social media in the sales and promotion of cosmetics creates new possibilities.”

continue to develop well, with an expandingconsumer base especially in rural areas and small towns.

The luxe factorAlthough the C&T market has slowed down a bitover the last years, the luxury market is in prettygood shape. According to Euromonitor, luxurycosmetics grew 2% to zł329bn (t79.5bn) in 2013,and although consumers are starting to look moreclosely at prices, Polish women still love theirpremium cosmetics.

The luxury sector only accounts for a smallshare of the entire C&T market so far but retailersare hoping that the category will continue to growstronger over the next few years. Euromonitorestimates that turnover of premium beauty willreach zł330m (t79.4m) in 2014, an increase of 3%compared to the previous year.

The two largest perfumery chains are Douglasfrom Germany – with 110 stores the Douglasgroup is the perfumery market leader in Poland –and US chain Sephora with 93 outlets. Bothchains are locked in a battle for market share, notjust with each other but also with the growing roleof e-commerce in Poland.

Online retail is becoming very popular amongPolish consumers and although the national e-commerce average is still lower than in otherEuropean countries, Poland is catching up fast.According to Polish market research companyGemius, 55% of internet users purchase cosmeticsonline, or said that they were planning to do so.Among female consumers this percentage waseven higher, with 66% of women saying that theybought beauty products online.

Poland: C&T retail channels % share,by value, 2012/2013

2012 2013

Drugstores/beauty 55.1% 55.8%

specialist retailers

Supermarkets 17% 18.8%

Hypermarkets 15.9% 14.3%

Pharmacies 3.5% 3.6%

Groceries 3.2% 2.8%

Larger groceries 2.3% 2.1%

General stores 2.1% 1.9%

Kiosks 0.9% 0.7%

Source: AC Nielsen

Super-Pharm runs 25personal care storesacross Poland, andoffers a wide selectionof French pharmacybrands such as LaRoche Posay and Vichy