Things to Consider When Entering the Middle East Beauty Market
20/07/2023 by The Red Tree
Expanding your brand into a new market is exciting and often daunting. Inevitably, each new market big or small presents its own unique opportunities, consumer expectations, retailer requirements and challenges.
The GCC has been a growing hub of international beauty brands for many years and the good news is that looks set to continue for a long time yet with beauty in the region expected to be worth around $2.4B by 2026. So, if you’re looking at where to take your brand next, or already have your strategy focused on the Middle East there’s no time like the present. But have you considered all angles to ensure a smooth and successful launch?
There are a few key things to consider when looking to enter the GCC market:
1. Are you clued up on the consumer?
When you consider the potential of the region are you focusing on the wider Middle East, the GCC as a group or will you go country by country and roll out more strategically? No two ME/GCC countries are alike, while the UAE and in particular, Dubai jumps to mind as the flagship for most brands and retailers it’s not necessarily reflective of the rest of the region in terms of trends and spending. By contrast KSA offers huge growth potential for brands as such an aggressively growing market, but with so many regulations on compliance and import it can take well over a year and lots of complex set ups and investment to get product into the consumers hands.
2. How do you fit in?
he regional trends and retailer positioning vary between each country and very often do not follow what is typical of the US or European markets, so it’s important to do your research and have a clear picture of where your brand will sit within it all. Do your sales come from masstige price point and selling volumes, or do you appeal to the premium-luxury consumer? Does your brand already have an established awareness in other countries that can be seen regularly via tourists or expats to the region? Consider that luxury spa is one of the strongest routes to market for beauty brands in the GCC and the variety of brands and experiences available to spa guests is eclectic and vast.
3. Can you do it alone?
Depending on your planned routes to market and focuses the GCC and more specifically each country within it will require an individually tailored approach and operating model to support your brands growth. Setting up your brand as its own entity is generally slow and costly, many brands find it necessary to partner with a distributor based in the region who can offer compliance, operations, and commercial support.
4. Are you regionally relevant?
So, you have your strategy set out and everything lined up to get going. How will you market your brand? Do you need to regionalise and re-work your in-house plans or would you benefit more from the local experience and expertise of a third party to manage and execute on the ground for you? Understanding how each consumer by country differs in their expectations and responses as well as an awareness of the regional cultural and consumer seasons can make all the difference to a successful campaign.
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Any company entering The Beauty Accelerator™ competition must be based and registered in the UK.
The scheme by which investment into the winning brand will be made is the Seed Enterprise Investment Scheme (SEIS). You must be eligible for SEIS to enter The Beauty Accelerator but you do not need to be registered for SEIS. You can be in the process of applying for SEIS and receiving Advanced Assurance from HMRC, which is free of charge to obtain and certifies to investors that the criteria necessary to qualify for SEIS have been met by the company at the time of the application. You do however need to be SEIS registered at the point of investment.Click here For further information about SEIS
As is the case with all equity investments, the winning brand must be willing to provide equity stakes for both SFC Capital and The Red Tree. In addition, the winning brand might be required to pay a monthly fee for the duration of the 12 month period of assistance from The Red Tree. The size of the equity stakes for both SFC Capital and The Red Tree are unknown at this stage and will be based on the valuation of the business at the time of investment. The value of the monthly fee to The Red Tree will be determined by the scope of work required by The Red Tree and will be agreed in consultation with the winning brand. The equity stake, monthly fee and scope of work will be discussed in further detail with short listed brands during the interview stage.
Brands that applied for The Beauty Accelerator™ 2022 can apply for The Beauty Accelerator™ 2024.
Applicant brands should ideally have proof of concept – the business should ideally be in operation with at least one product currently retailing on the market, an existing website in operation and a number of months of trading.
Under exceptional circumstances, brands that are at concept stage will be considered.
There should be a team in place or a willingness to take on a co-founder at an early stage.
A business plan must be in place and submitted as part of your application to demonstrate the revenue that can be delivered.
The business should not be valued at more than £1,000,000.
All R&D should be completed as funds invested will only be used for marketing and commercial activity.
If you are short listed, you must be available to attend the virtual shortlist interview. It is likely that short listed brands will be required to attend more than one virtual interview.
If you are a Finalist, you must be able to attend The Beauty Accelerator™ Final, either virtually or in-person.
You cannot apply for or already be in the process of applying for another accelerator or incubator during the period December 2023 to December 2024.
If you are selected as a finalist, and if you go on to win The Beauty Accelerator™, you must agree to exposure of you and your brand through The Red Tree’s, SFC Capital’s and Freeths online and social channels and a possible marketing campaign.
Confirmation of the winning brand is subject to SEIS eligibility confirmation, agreement on equity stake and The Red Tree fee, and completion of due diligence.
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