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Philippine Market for Cosmetics, Personal Care Products & Toiletries

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International Market Insight [IMI]
ID: 118569
Regions: EAP;Asia;Southeast Asia;ADB

Country: Philippines

Divisions [Province]: Manila

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Industry: Consumer Goods & Home Furnishings

Sector: Cosmetics/Toiletries

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by: Dey Robles
approver: David Fulton Report Date: 08/07/2003
Expires: 08/01/2006

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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 in 2001 to USD 67 million in 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

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.