Iran’s cosmetics market is worth around $1 billion, 70% of which are dominated by contraband and fake products, according to the head of Importers of Toiletries, Cosmetics and Perfumes Association’s board of directors.
“The market of skincare products and perfumes is as big as $3 billion, with smuggled and fake products accounting for 65% of the market,” Hamid Moqimi was also quoted as saying by ILNA.
The Ministry of Industries, Mining and Trade has banned the import of toiletry and cosmetic products since May 2019.
“A few months later, the import of perfumes was also banned,” the official said, noting that the decision was made without proper market studies and did not take into account the consequences.
“These measures have led to a sharp increase in smuggling … Currently, we are not permitted to import finished products, but we can purchase raw materials from foreign companies. These are mostly imported from China and India, apart from small volumes from European countries.”
The ban on import of cosmetic and toiletry products has killed 8,000 jobs, the official said last year.
“I dare say the remaining 12,000 jobs in this sector will disappear down the road, if the government fails to fix the current trade rules and regulations. This comes as insurance companies are not financially capable of supporting the unemployed population. Trade bans over the past year, as officials have acknowledged, have done little to improve production,” Moqimi said.
The Ministry of Industries, Mining and Trade has banned the import of toiletry and cosmetic products since May 2019
“By allowing the legal import of cosmetic and toiletry products, the foreign currency that is now being absorbed by contraband market would be directed toward legal imports and consequently job creation.”
According to the Headquarters Combating the Smuggling of Goods and Foreign Currencies, the share of contraband cosmetics and toiletries in the domestic market has experienced a threefold year-on-year rise since the ban came into effect.
Moqimi expressed concern over the low quality of contraband products and the possible health risks associated with their use.
“The contraband cosmetics are mostly smuggled into Iran by sea from the UAE, free trade zones and the western Kurdestan Province,” he said.
“If the private sector is given the opportunity to cooperate with foreign companies for the joint production of cosmetics, skincare and toiletries, we can reach a place where our products would enjoy high quality within two years, generate jobs and revenues, and reduce the volume of contraband in the market.”
Data released by the Islamic Republic of Iran Customs Administration show Iran exports toiletries and cosmetics to Afghanistan, Iraq, Azerbaijan, the UK, Germany, Canada, Austria, Hong Kong, Kuwait, Oman, the UAE, Russia, Bahrain, Turkey, Armenia and Kazakhstan.
The main exported products include shampoo, facial, skin and nail cosmetic products, sunscreen, fixators, hairstyling products, toothpaste and soap.
Iran is one of the leading cosmetic markets in the Middle East and North Africa region.
In the fiscal 2017-18, Iranian households spent an average of 4.96 million rials on “personal services and cosmetics”, indicating that each Iranian spent an average of 1.44 million rials on cosmetics, given the household size of 3.43 in that year.
According to data provided by the Central Bank of Iran, each dollar was exchanged at 40,450 rials at the market exchange rate in the fiscal 2017-18, which means per capita consumption of cosmetics stood at $36.6.
That year, cosmetics expenditure of each Iranian reached 1.73 million rials, indicating a 20% increase compared with the year before which was outpaced by inflation.
As a result, Iranian consumption of cosmetics saw a decline of 56% to reach $16, given the depreciation of local currency against the US dollar.
According to Euromonitor, global beauty and personal care products declined by 3.3% in constant terms in 2020, down from 1.9% in 2019. Western Europe accounted for the highest value shares of absolute value losses in 2020, followed by Asia Pacific and North America.
However, Asia Pacific was the first to enter the recovery phase and is expected to have the most robust growth globally in 2021. Beauty and personal care are expected to rebound by 3.3% in 2021 in constant terms.
