The revenue is seen to increase by 3.5 per cent in 2016-17, which has not happened for a decade.
Strong export growth pushed manufacturers to rebound from a revenue contraction in 2011-12. It is driven majorly by the growing Asian middle class.
Organic and natural cosmetic manufacturers have driven export growth as well with Australian manufacturers gaining a reputation for high-quality, environment friendly products.
Eylem Mustafoff, IBISWorld Senior Industry Analyst, said many industry products are reformulated to meet the rise in green consumerism.
“This strategy has proved successful for companies that focus on eco-friendly and cruelty-free cosmetic products, while companies that heavily rely on imports will likely struggle to capitalise on the popularity of eco-friendly products,” he said.
Unilever Australia with leading well-known brands like Dove and Rexona has the largest share in the cosmetics manufacturing market. In 2016-17, its market share is expected to total 18.1 per cent of total revenue for cosmetics, perfume and toiletries manufacturers.
The multinational company has underperformed relative to the wider industry because of the limited Australian manufacturing operations and strong reliance on imports from its international manufacturing facilities. Their industry-specific revenue grew by 1.2 per cent in 2015, significantly lower than the industry’s average revenue growth.
Natures Organics is an Australian-owned natural consumer goods company with products that have an eco-friendly image and brands including Organic Care and Earth Choice. The organic beauty company focuses on using natural ingredients as alternatives to artificial preservatives such as parabens. Their product range addresses increased demand for natural and organic certified products among millennial consumers and an increasingly environmentally conscious Asian middle class.
“Social media platforms made it easier to access the millennial consumers’ interests in cosmetics, perfumes and toiletries. Eco-friendly cosmetics that target environmentally conscious millennial consumers have driven domestic growth among cosmetic manufacturers,” said Mustafoff.
In 2016, they launched a digital campaign with social media influencers to reach the millennial customer base. Celeste Rochelle, a lifestyle blogger, and Dan Churchill, chef and co-host of ABC’s Surfing The Menu, have a combined Instagram following of approximately 121 thousand people.
Natures Organics have benefited from this following to promote the benefits of their natural and environmental products. The focus on eco-friendly products has proven successful for the company, with its total revenue growing by 6.9 per cent for 2015-16, positioned slightly higher than the industry’s revenue growth of 5.2 per cent during the same year.
“Imports play a strong role in the Australian cosmetics, perfume and toiletries manufacturing industry, with major players such as Unilever relying heavily on imported products. Exports will likely continue to drive growth in the industry,” said Mustafoff.
“Although baby boomers form a significant portion of cosmetic consumers, some manufacturers have capitalised on green consumerism trends by targeting environmentally conscious millennials.
“While Unilever has a strong global presence and market share, Natures Organics has shown that focusing on green consumerism to meet growing demand for environment friendly products is a positive growth strategy for cosmetics, perfume and toiletries manufacturers.”