28-Jul-2009

The rough and the smooth

Abstract

The UK C&T market has suffered over the past year, but not every sector is struggling and some even appear to be thriving, reports Julia Wray

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The UK C&T market has suffered over the past year, but not every sector is struggling and some even appear to be thriving, reports Julia Wray

?Recession is supposed to be a decline. To be exact, the Oxford English Dictionary denotes recession as “a temporary decline in economic activity or prosperity”. But in the real world things are not so simply defined and one man’s disaster can prove to be another man’s opportunity and nowhere is this more apparent than in the UK C&T market right now.

“One thing we’ve found is that women will continue to buy beauty products whatever the economic situation. In times of recession people often feel less secure about themselves, so cosmetics are a way of making people feel better,” says Alexandra Richmond, senior analyst, beauty and personal care, Mintel. “If women are going to save money by not going out, then they’ll treat themselves to pamper nights and women also employ many tricks to trim down their beauty product spending.”

TNS Worldpanel figures show that the total UK toiletries market, which was worth nearly £6.9bn in the year to 17 May 2009, grew sluggishly rising just 2.9%. Casualties included men’s hair care and depilatories, the latter seeing a year on year loss of 11.5% possibly due to an increase in women turning to hair removal solutions like electric shavers and epilators, which don’t require frequent replacement.

In contrast, the smaller UK cosmetics sector (worth £816.9m and encompassing colour cosmetics for eyes, face and lips as well as palettes and make-up accessories) grew 15.4%, buoyed by a rise of 18.1% in colour cosmetics. The concept of a lipstick economy, in which women who cut back on larger purchases during periods of economic downturn buy make-up to compensate, is once again proving founded as women choose a new eye shadow instead of a new outfit as a cheaper way to update their look.

However, the colour cosmetics sector is not just faring well because cash strapped consumers are downsizing or compensating. Richmond stresses that some consumers are actually in a position to increase their spending. “There are lots of people with tracker and variable mortgages. In the fourth quarter of 2008 16% of women had a fixed rate mortgage and 13.1% a tracker or a variable mortgage and these women have seen their mortgage payments drop by over £100 per month, so they have more money to spend on cosmetics,” she explains.

BUDGET BEAUTY

Wisely, the industry has not sat back, relaxed and banked on the prediction that consumers will flock to cosmetics counters for an emotional pick-me-up. A significant number of new products launched this year cater for consumers on a budget. In April Avon, the best selling brand in the UK, introduced a make-up collection billed as “great value glamour” featuring eye shadow quads for £8 and lipsticks for £6.50, while the C&T business of value clothing chain Primark underwent a major extension, with five new collections – Very Sexy Important Person, Naturals, Ooh La Spa, Beauty Blitz and Beautiful Colour Cosmetics – joining the Irish retailer’s existing £1 Essentials line.

In addition, the Core Business developed Grace Your Face, a range of teen skin care products sold through UK pharmacy chain Superdrug, ranging from £2.49 to £4.99.

According to Carrie Lennard, cosmetics and toiletries analyst, Euromonitor International, the UK market has experienced a shift towards lower end brands and private label. “Even the colour cosmetics sector, which previously had a minimal share of private label products, has seen a trend away from premium brands and the launch of private label cosmetics brands such as Aldi’s colour cosmetics range,” she says.

The Lacura line from budget supermarket Aldi, which launched last year, includes £1.99 lipsticks, lip glosses and eye shadows. Sainsbury’s also increased its own brand offering, adding two anti-ageing lines to its Skin Therapy range – Age Defence and Age Reverse – which feature nine skus between them ranging from £3.90 to £6.84.

Indeed supermarkets have benefited more from C&T consumer downsizing than other retailers, generally at the expense of pharmacies and department stores. Although UK consumers are still more likely to buy their cosmetics from chemists, TNS says 56.3% of all toiletries in the UK are sold through supermarkets. “While Boots and Superdrug have good offers, a woman going shopping with three kids is going to want to get food and toiletries as quickly as possible from the same store,” says Richmond. “And for people looking for bargains, there are so many special offers at supermarkets.”

ONLINE DEVELOPMENT

Meanwhile TNS says that more UK consumers than ever are using the internet to buy toiletries. In the year to 19 April 2009, web-based grocer Ocado and the online retail businesses of Tesco, Sainsbury’s and Asda were responsible for 3.2% of UK consumers’ toiletry expenditure, compared to just 2.8% the year before.

And many C&T companies, UK-based or otherwise, are taking advantage of this trend. “Clarins [Clarins Group] has ramped up its online presence, as has Simple [Simple Health & Beauty Group],” Richmond says. “Once you’ve paid for your broadband, the internet is effectively free, so people can search for deals and compare prices online.”

Procter & Gamble made its interest in web-based retail clear back in November when it purchased a 1% stake in Ocado for £5m, in order to deepen its understanding of online consumers.

“Ocado has a unique online-only business model that is unlike others, which are more hybrids of traditional bricks and mortar institutions,” comments Damon Jones, communications director, P&G UK & Ireland, on the investment. “This relationship is an opportunity to deepen our understanding of the unique shopper knowledge available through Ocado and we see their business model as a fertile testing ground for new ideas.

“The UK market is the global leader in online retailing and the ideal market for this test and learn opportunity.”

UPS & DOWNS

Unfortunately, such bargain hunting has had a negative impact on commodity sectors like bath and shower, hair care and general purpose body care, which have all been “victims of trade down and discounting,” according to Euromonitor’s Lennard.

However, brands at the premium end of the spectrum have also been stung. Guerlain recently launched a £5,215 fragrance, Fontaine Impériale, sold exclusively through London emporium Harrods, while Swiss brand La Prairie added several new products to its portfolio, the most recent of which (Advanced Marine Biology Day Cream SPF20) is worth €150. But Lennard points out that products launches are not necessarily synonymous with success. “La Prarie reported far lower sales in the first quarter of 2009 than the previous year,” she comments. “That said, many people prioritise anti-ageing and perhaps see these super premium anti-agers as a cheaper, less drastic alternative to surgical procedures, which explains why nourishers and anti-agers have performed well.”

Indeed several international brands launched nourishers in the UK. Origins added an Age-correcting serum to its Youthtopia collection and La Prairie introduced Skin Caviar Crystalline, while L’Oréal Paris launched Age Perfect Intensive Reinforcing Serum as part of its Age Perfect Skincare Line.

L’Oréal Paris also extended its men’s skin care portfolio – and further contributed to the UK’s £93m men’s skin care market, which grew 23.3% in 2008 – with L’Oréal Paris Men Expert Hydra Sensitive Multi-protection 24HR Hydrating Cream.

The new face of L’Oréal Paris Men Expert, actor Patrick Dempsey, also brought out a fragrance, Patrick Dempsey Unscripted in the US in collaboration with Avon. British celebrities offerings in 2008 included Katie Price’s Besotted, Kerry Katona’s Outrageous, Jade Goody’s Controversial and Alex Curran’s Alex, all created by Jigsaw, as well as Ice by Suzanne Shaw (Fragrance & Toiletries International) and Vivacious by Kelly Brook (Baylis & Harding).

However, the vogue for celebrity scents may be waning, with UK pop band Girls Aloud breaking the mould and teaming up with Eylure to launch a range of false lashes instead. “I think the celebrity fragrance trend is already seeing something of a backlash from the industry in the form of tailored personalised fragrances such as Diesel's Fuel for Life,” comments Lennard. “That said, celebrity fragrances continue to top the best selling lists although success in the market is intrinsically linked to the fortune of the celebrity whom the fragrance is linked with; Shhh by Jade Goody is a case in point.”

RETRO INSPIRATION

Several companies have tapped into the growing vintage trend spearheaded by the fashion sector. In February, Boots celebrated its 160th anniversary and, like Marks & Spencer and Sainsbury’s whose recent adverts trace store history, it has underlined its heritage with Boots Original Beauty Formula, a line based on Florence Boot’s (daughter-in-law of Boots founder, John Boot) original formulas such as Rose Cold Cream and Vanishing Day Cream. Meanwhile personal care brand Soap & Glory, which mixes a vintage feel with a modern twist, extended its portfolio with a range of skin care products. A men’s line will follow later this year.

November 2008 brought Elizabeth Arden’s its ongoing Celebration of the Decades – limited edition versions of its iconic Eight Hour Cream and Lip Protectant – beginning with a 50s inspired version. Johnson & Johnson expanded its classic Johnson’s Baby range, introducing a cream and a bath wash to complement the iconic baby lotion. And even the most Parisian of brands, Chanel, evoked 90s cool Britannia with its London Madness collection, designed for the UK market and featuring a Union Jack compact highlighter.

The fragrance industry is also embracing nostalgia, says Mintel’s Richmond, who cites Giraud, which has re-released one of its 1920s fragrances, and Kate Moss, who is launching a fragrance in September called Vintage as examples.

The recession may also be responsible for this wealth of relaunches and retro-inspired products, as stressed consumers reminisce about the brands and products from their less complicated childhood. “There’s a lot of security associated with products that evoke nostalgia,” Richmond says. “Manufacturers know this and brands like Persil and Milkybar have re-released retro adverts.”

Another unusual TV advertising concept was P&G’s Max Factor Makeover Break comprising three 90-second clips shown over consecutive ad breaks and featuring a makeover using P&G products. This hit screens in the UK and Ireland after successful trials in the US.

HIGH TECH INNOVATION

Counterbalancing this surge of retro inspired cosmetics and toiletries, however, were plenty of new products featuring either innovative ingredients or high-tech concepts. Several boasted exciting application methods. For example, Revlon’s Custom Creations foundation and Piz Buin’s Self Tanning Lotion + Colour Dial both feature double chambers with dial systems that enable users to select five different shades of product. Avon meanwhile is claiming seven shades in one for its adjustable Spectracolor Lipstick and three looks in one for its adjustable Spectralash Mascara.

Manufacturers also made increased use of battery power. Estée Lauder launched the world’s first vibrating mascara, TurboLash All Effects Motion Mascara, quickly followed by Lancôme with Ôscillation, while Neutro-gena introduced The Wave, which uses a vibrating motion for a deep cleansing effect.

Ultragen’s Stop uses TriPollar Radio Frequency to stimulate collagen production in fibroblast cells. Although Stop has a £396 price tag, Dr Zion Azar, Ultragen’s co-founder, believes it has an economic advantage over other skin care solutions. “If you go to the salon for a rejuvenation treatment at £150 per treatment and you need four to six treatments, then Stop is a much better alternative.”

Advanced formulations also imparted additional benefits to traditional products. Bliss incorporated a hair-minimising complex into its Get Out of Hair! moisturiser, while Unilever added similar technology to its Dove Wild Rose and Dove Nature Fresh deodorants as well as its Sure Skin Friendly products. It also launched Sure Maximum Protection, an antiperspirant with a TRISolid cream formula, claimed to provide 48 hours of protection.

ETHICAL CONSIDERATIONS

But consumers are increasingly demanding more from C&T manufacturers than effective products; they want to buy from brands that are aware of their responsibilities, and where ethics are concerned the UK is holding its own.

The natural and organic sector fared very well, with the Soil Association’s 2009 Organic Market Report stating that the UK’s organic cosmetics market soared 69% in 2008. Yet Richmond predicts tougher times ahead as consumers cut their spending: “Many special offers in supermarkets are on the big brands owned by companies like P&G and Unilever. There are fewer on niche brands.

“The other thing is that there are so many shades of green. Consumers want to know they’ve got value for money; if people are going to spend more money on a natural product then they’ll want to know that what they’ve brought is actually natural, rather than containing some natural ingredients and posing as a natural product. I think there will be a move towards greater transparency.”

Indeed the move towards greater transparency is already in motion, with mainstream brands like US natural skin care line Jergens, which recently launched in the UK, clearly displaying the percentage of natural or organic content on pack.

The sector is also striving to make itself less niche and more accessible. Conquest Personal Care, the UK division of Scion International, created One Planet after it was approached by supermarket chain Asda to create a range of affordable, mostly 100% natural products targeted largely at men.

“People care more about the environment and want products that are natural so we could see a big market opportunity,” says Conquest’s managing director, Bill McManus, of the range, which also features recycled and recyclable packaging. “Who would’ve thought five years ago that a 100% natural male moisturiser would be our best selling product? It shows that men are interested in this sector.”

In addition, many companies are making an effort to be more socially responsible, often through equitable trade schemes and charitable works.

Last Month, the Fairtrade Foundation began certification of beauty products. Boots, Bubble&Balm, Essential Care, Lush and Neal’s Yard are the first to have products bearing the Fairtrade mark.

September 2008 saw Boots collaborate with This Works co-founder Kathy Phillips to produce Good Works Good Karma Shower Gel, from which £2 per unit sold went to Camila Batmanghelidjh’s Kids Company.

Cornish brand Spiezia Organics, which underwent a rebranding in April, went one step further, creating the Made for Life Foundation 2009, which organises free and crucially, enjoyable support days for women suffering from breast cancer.

“The results of our Made for Life days have been amazing,” says Amanda Barlow, who co-owns Spiezia with Sally Read. “Many of our stockists are now linking with us and hosting events; Harvey Nichols is launching Made for Life Days with us across the UK in October during Breast Cancer Awareness Week.”

But Barlow has even more ambitious plans for the initiative in the future. “My ultimate aim is to run Spiezia as a non-for-profit company,” she tells SPC. “The objective is… to plough any money this business makes into the Made for Life foundation.

“Spiezia will become, commercially, a means to the end, the end being Made for Life. My drive is to set up a Made for Life centre in Cornwall in the next five years.”

An equally topical issue was environmental responsibility. Many UK brands boast packaging materials that are either recycled, recyclable or both, but several are also improving their green credentials with further sustainability initiatives.

“The onus has shifted from consumers to manufacturers,” Mintel’s Richmond comments. “Previously manufacturers would tell consumers ‘recycle this packaging’. Now it is manufacturers who have to source responsibly, manage their carbon footprint, use less water.”

Sourcing as many ingredients as possible locally was one way that some UK brands chose to reduce their carbon footprint. The natural bath and body products from new brand Green & Spring, for example, include many herbs and flowers native to the British Isles. The Organic Pharmacy, meanwhile, launched The Organic Pharmacy’s Garden Collection, which features toiletries inspired by the gardens at Highgrove House, the Prince of Wales’ ancestral home.

According to Richmond, however, environmental responsibility is not confined to green packaging and manufacturing processes. “Another future trend is for biodegradable products,” she says. “There has been an increase in the use of environmentally friendly packaging, but now people are asking ‘what is my shampoo doing when it goes down the plug?’ The question is can these command a premium in the current economic climate? Consumers want to be environmentally friendly but they want balance.”

Ultimately, this consumer desire for value for money will continue to shape the whole of the UK C&T market through 2009 and into 2010. And the greatest change will be from British women, who are beginning to pare down their beauty regimes – Richmond believes that they are “buying toiletries like a man” – and who are paving the way for a boom in multifunctional products, such as Neutrogena’s New Norwegian Formula Multi-Repair Cream and Problem Salved 20-in-1 Wonder Balm by Bliss. The beauty industry should consider what else it has to offer this growing band of more practical, prudent consumers.

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