Irish beauty sector eyes up future growth

The steady rise of Ireland’s natural beauty industry represents one of the quiet success stories of innovation in the SME sector – and the next step for these companies is the fast- growing global market

ALTHOUGH THE beauty industry is a multi-billion-euro global business dominated by big brands, there is a handful of small Irish companies producing niche beauty products.

Fragrances of Ireland, Seavite and the Burren Perfumery are three of the longest-established businesses in the sector, but in recent years a string of newcomers have arrived, including Voya in Sligo, Green Angel in Rathcoole, Tan Organic in Kildare and Human+Kind in Cork.

The value of the Irish skincare market in 2010 was €110 million, according to Euromonitor. The value of the European cosmetics market for the same period was €67 billion. There is no breakdown for the value of “natural” products within this and the lines are also blurred about what constitutes skincare, versus cosmetics versus toiletries.

According to Eurostat, Ireland exported €157 million worth of cosmetics in 2010. This is largely accounted for by multinationals with an Irish manufacturing base.

There is an Irish trade association for the cosmetics industry but its members are primarily the large, mainstream players. There is no representative body for the fledgling natural beauty products sector and no one specifically promoting it.

All producers of cosmetic products must comply with relevant EU legislation on ingredients and labelling, which is policed here by the Irish Medicines Board (IMB).

New legislation from the EU is going to make life more complex and more expensive for small Irish skincare and beauty product companies from July 2013.

From then, manufacturers will have to provide more detailed labelling and product traceability, carry out more detailed testing and provide information on the use of nanomaterials in their products. The new rules also have implications for those involved in the supply chain.

Improved product safety and more streamlining of regulations within the EU are key drivers of the legislation, as is making it easier for consumers to get information about the composition of products they use.

“From 2013, extensive certification of ingredients will be required and this will make it more difficult for small businesses and craft producers in particular,” said John O’Sullivan, owner of Cosmetic Creations in Co Mayo, which has been providing contract manufacturing services to the cosmetics industry for 30 years.

While it seems unlikely that Ireland will produce a truly global skincare brand in the next few years, the new breed of Irish beauty companies are making the most of niche markets.

Where many of their predecessors focused on domestic sales and tourism in particular, new brands such as Voya, which makes organic, seaweed-based spa products, has been export driven since its formation.

“There is certainly growing demand all over the world for natural, organic skincare products and more and more Irish companies are experiencing success in this sector,” says Stephen Hughes, consumer products manager at Enterprise Ireland. “But, really, their success depends for the most part on the scalability of their business, the robustness of the business strategy and the ambitions and abilities of the entrepreneur behind the product.”

By relentlessly knocking on doors worldwide, Mark and Kira Walton of Voya have punched well above their weight in terms of winning high-profile business.

Their customer list includes the Burj Al Arab hotel in Dubai, the Waldorf Astoria in London, the St Regis Princeville in Hawaii and the Cunard Line’s flagship, the Queen Mary 2. The company sells on 30 international markets and has just signed a deal with the Four Seasons resort in Azerbaijan. Its turnover has doubled in the past four years.

“Our focus is exports, not least because of the size of the potential market,” says Mark Walton. “We are competing against the big names, but rather than doing this head-on, we have been focusing more on markets where the level of brandwashing is not as intense.”

Having a quality product with a good story behind it is only half the battle.

“We have seen companies fail even with good products because they didn’t have the necessary commercial skills,” Walton says.

“I have a strong financial background and Kira is a graphic designer, which was a huge advantage when it came to how our products look. People think entrepreneurs make a lot of money and drive a Porsche.

“The reality is not paying yourself for years and driving a Citroen Berlingo.”

Getting established in the Irish market has been a slow burn for skincare company Green Angel.

Its founders Mary and Chris Mitchell first toyed with making their own range nine years ago but really got things moving in 2009 with the help of funding from the South Dublin County Enterprise Board. Since then, sales have been growing strongly and were up 25 per cent in 2011.

“It was sort of a catch-22 situation,” Chris Mitchell says. “We thought we needed a distributor to get volume, but the distributors didn’t want to know us until we had it. In the end, we put our own reps on the road and our products are now in 500 outlets around Ireland.

“We are exporting in a small way to Spain and Australia, but our focus is on consolidating the home market before going seriously after exports in about 12 months time.”

BEAUTY FIGURES THE BARE FACTS

€110 MILLION

The value of the Irish skincare market in 2010.

€67 BILLION

Value of European cosmetics market in 2010.

16 PER CENT

The rise in European cosmetic exports between 2009 and 2010, valued at €12.5 billion.

1.7 MILLION

The estimated number of people employed in the EU cosmetics industry.

400-PLUS

The estimated number of firms working in the natural/organic beauty market, two-thirds of which are SMEs.

Sources: Euromonitor/Eurostat