Several Western cosmetics and toiletries players have pulled out of Russia due to the ongoing conflict with Ukraine despite it being a key market, and more brands are likely to follow suit pressured by consumer expectations and faced with an increasingly challenging and uncertain environment, says GlobalData. According to the leading data and analytics company, almost half of global consumers (41%) agree that they will boycott a brand if it does not align with their personal beliefs or values.
Brands taking a firm stance will be favored by consumers who are willing to boycott those that do not align with their values. LVMH, for example, is exiting the Russian market despite it being estimated to have provided 6.6% of its 2020 cosmetics and toiletries sales, equivalent to over $300 million, according to GlobalData estimates.
Lia Neophytou, Senior Health & Beauty Analyst at GlobalData, comments: “This is a drastic but necessary move when considering not only the evolving complications of doing business in the market, but also the potential backlash from consumers around the globe if this decision was not made.”
GlobalData estimates that 5.3% of Henkel’s cosmetic and toiletries sales, equivalent to almost $400 million, were attributed to Russia in 2020. It announced it would freeze all future investment plans in the market, stop advertising and sponsorship activities, and offer financial aid to Ukraine. Various firms including Henkel, however, will continue to supply essential products to Russian consumers, and could therefore be relatively cushioned from the implications of cutting ties with Russia compared with other companies, as they will still benefit from receiving some sales in Russia.
Globally, consumer access to products of Russian origin is also diminishing, with several UK retailers removing such products from their shelves.
Neophytou adds: “While Russian brands and country-of-origin claims are not mainstream in the global cosmetics and toiletries industry, retailers and brands are beginning to explore their entire supply chains to review products which potentially contain components of Russian origin. Brands with transparent ingredient lists and brands that communicate product origin clearly may therefore be favored by consumers seeking to ‘vote with their dollar’ and spend only on brands not associated with Russia.”
