Soaps belong to the Personal Care sector which includes liquid and solid soaps, shampoos and hair care products, oral care products, shaving products and deodorants. Soaps represent approximately 28% of this market’s sales. In 2012, we could notice a slight increase of 2% compared to the 2011’s turnover. Despite a decline of the households’ purchasing power, this sector is in constant progression (an average of 3% per year in volume). This increase is mainly realized by the mass retailers and the development of their store brand products. In 2010 this market represented 31 billion euros.
In Europe we can find 2 main types of manufacturers:- Small craft companies producing small quantities of soaps (large number of companies but small market shares).- Huge companies owned by international groups (small number of companies but huge market shares).Companies with less than 50 employees represent approximately 80% of the soaping landscape and only 21% of it is represented by companies of 50 employees and more. In opposition, big companies own 86% of the market shares against 14% owned by small craft companies.
Most of these products are sold by mass-market retailers such as supermarkets, then drugstores, selective retailers (such as Sephora) and direct sales share the remaining cake crumbs.The “dominant position” of Mass-market retailers makes things even harder for small companies. Indeed, these distributors are powerful and impose their own drastic conditions. This is why, if you’re a small company, you might choose to sell your products through other distribution channels, at least for the first couple of years.
Who are the main soap manufacturers in Europe?
Italy and France are the 2 main manufacturers of personal care products in Europe and France is the first European country regarding the turnover with 10.7 billion euros in 2010, all personal care products merged. However, concerning the soap industry, France is only in 5th position after Italy, Germany, UK and Spain.
Key success factors:
To succeed in this market, you will need to face European giants such as L’Oreal and Unilever, corporations implanted on this sector for decades or even centuries. If you are a small company, you might target niche markets, advertise wisely, establish your policy according to your product but mostly to your targeted customers. You also need to establish an economy of scale in order to reduce manufacturing costs gradually as the quantity produced increases. Finally you have to find the right partners.
Procter & Gamble
Johnson & Johnson