What Next for the UK Beauty Industry after Brexit?
One week on.
Brexit is sinking in as a reality, but still there is a huge amount of uncertainty, politically, economically and commercially. How UK beauty companies respond in the coming weeks, months and years, will be testament to their ability to adapt.
Here, we assess the future landscape for the UK beauty industry with views on what likely changes cosmetic brands and retailers can expect once the UK exits the EU.
Britain Out of EU Negotiations
Chris Flower, Director General, CTPA, is concerned that if we are out of the EU, we won’t be party to discussions over the future of the Cosmetics Products Regulation.
“Sadly, I can foresee years of trying to rebuild that which we have currently been enjoying and yet seem determined to cast aside,” he warns.
“Given all that is happening regarding product development and innovation, I find that a very uncomfortable position to be in after so many years of the UK being seen as a practical, pragmatic and constructive contributor to all the past negotiations.
”His concern is that rather than being present by right on the EU market, UK companies will have to compete with all other countries for entry.
“The complexity of managing business, at the same time as dealing with the minutiae of regulatory changes, to comply with EU legislation, when we are no longer a member, and therefore do not have EU addresses, for example, will divert attention from innovation.”
Pai Skincare Contemplates its International Future
In April 2016, sensitive skincare brand Pai won a Queen’s Award for Enterprise for international trade for its growth programme in Scandanavia, Canada and mainland Europe.
“Pai was actively engaged with the EU, lobbying for a legal definition of organic cosmetics,” explains Ed Saper, director Pai Cosmetics.
Founder Sarah Brown took part in a recent European Economic and Social Committee meeting in Nottingham on the European Personal Care Industry.
“At the meeting, Sarah argued for the removal of non-tariff barriers, such as local language requirements,” he comments. Now, he expects that once the UK is outside the EU, there will be a gradual erosion of the level playing field that UK companies have enjoyed, even with a good trade deal.
Ed also anticipates the need for a European office – Pai is considering Amsterdam – particularly if it becomes difficult to recruit EU nationals in sales and marketing roles. He anticipates other UK brands also requiring a European office.
The silver lining for Pai should come in the future if the promised free trade deals happen. “It should become easier to sell and ship to stores and consumers in other wealthy markets, such as Japan, Canada and USA.”
Kevin Price, director, interim management professionals company Frattempo, makes the point that cosmetics businesses selling in pounds could enjoy the benefit of relatively cheaper goods in the overseas market.
“For smaller brands using distributors this can provide a boost of price advantage, as along as the price reflects onto purchasing rate of sale on shelf.
“However, if the regulatory environment changes (e.g. import tariffs are imposed) then those advantages could easily melt away. For now, no one knows.”
He adds: “It is important exporters remain proactive and responsive to do business with and clearly communicate continued commitment to work with any European partner, so their business can prosper and grow. It is very important to retain the confidence of export trading partners.”
London will Remain a Creative Centre
For Stirling Murray, founder of The Red Tree Consultancy, the Referendum result goes against everything he stands for. But as far as working with beauty brands is concerned, it will be business as usual and he will continue to invest more than ever in marketing.
“Creative brands will continue to be successful. London is a centre of entrepreneurship, it’s dynamic and that isn’t going to change,” he believes.
“We have sufficiently creative and corporate brands that will find new ways of doing business. The beauty industry will cope.”
On his part, Charles Kessler, director of brand and retail experts, Kesslers International, maintains that the Referendum was held without a reason and that the result to leave the EU cannot be for the wellbeing of the UK economy. However, London has achieved global success, which cannot be ignored. “People are welcome here and we will continue to build on what we have achieved.
“We need to keep our outward-looking focus. There is a danger if we become too inward-looking.”
For now, the UK remains in Europe and the impact of the Brexit vote is far from clear. All possible options for a new relationship with our EU neighbours will be explored but we are in for big changes in the future.
Please share your views on how Brexit will affect the UK beauty industry below in the comments.