The UK C&T market is holding its own thanks to a diverse product offer and consumer willingness to invest in the sector
The UK C&T market is holding its own thanks to a diverse product offer and consumer willingness to invest in the sector
The looming threat of a global credit crunch and the steadily rising cost of living failed to dampen the UK consumer’s spending on C&T products in 2007. Indeed a recent report from Verdict Research indicates that consumer expenditure on health and beauty products in the UK rose by 4.7% to £15.6bn last year.
Figures from market analyst Euromonitor show the total value of the UK C&T market in 2007 to be £8.16bn, up 5.3% on 2006’s £7.58bn. Success stories for 2007 included premium cosmetics, skin care, colour cosmetics, hair care and oral hygiene, which took the greatest market share. Sun care and colour cosmetics saw the best sales growth, up 10.1% and 8.4% respectively. Men’s grooming was up (by 7.3%) as was skin care (+7.3% last year compared with a massive +13% in 2006).
According to Alexandra Richmond, senior analyst, beauty and personal care, Mintel, the boom in sun care sales was due to increased awareness of skin damage caused by UVA rays, which encouraged consumers to buy more sun protection, and to turn to self-tanning products in search of a safer glow. “Consumers are becoming increasingly aware of the dangers of the sun both at home and abroad and the Australian Slip Slap Slop campaign has also (to a more limited degree) reached UK shores to support strong and steady value growth of sunscreens,” she says.
“In turn this is driving sales of self-tans as looking tanned remains fashionable but instead of sunbathing, people are increasingly getting their tans out of a bottle. The market for fake tans (excluding gradual tanners) is estimated to have grown by almost 20% between 2005 and 2008.”
Richmond also credits the quest for a younger appearance as a factor: “It’s generally accepted that using SPF and UV protection can help slow the ageing process. There has been a considerable degree of crossover between skin care and sun care with many skin care products offering anti-ageing benefits in the form of added SPF protection.”
However, if self-tanning products are removed from the picture, other UK sun care product sectors did not fare so well. “Compared to previous years, all brands felt the pinch of a poor summer in 2007,” says Rachael Jones, senior brand manager of Nivea Sun. “Holiday brands have fared better than brands that are stronger in family and UK use.”
But 2008 promises to be a better year, and not just in a meteorological sense. “We expect the sun care market to show growth again in 2008 with a drier and warmer summer than that of 2007, together with an increased number of sunshine holidays taken, consumers responding to safe sun messages and new products launches,” adds Jones.
Some C&T markets however failed to meet expectations. According to Richmond, one such area was the ethnic market. “At the end of last year, Mintel wrote a report on the market for ethnic cosmetics and toiletries and I was really surprised by the lack of investment in this market and just how outdated the products were in terms of packaging,” she tells SPC.
At nearly £1.9bn, premium cosmetics accounted for a 23% chunk of the entire C&T market value, experiencing a 5% growth from 2006 to 2007. Demand for increasingly innovative anti-ageing products was met by Doctor brands. And luxury bathroom products remained popular as consumers attempted to emulate the effects of a spa at home.
But although many consumers traded up to high-tech prestige brands, like skin care products claiming to emulate the effects of cosmetic surgery, value brands dominated the best seller lists. Avon took the top spot with 3.5% of the retail value, followed by Boots No7, Dove and Lynx, vying for second place. Sure, Olay and Rimmel were also in the top ten.
Boots No7’s high position is due in part to the runaway success of its Protect & Perfect range. In April 2007 Protect & Perfect Beauty Serum saw a 2000% increase in sales following recommendation on a BBC 2 Horizon documentary, turning the product, launched in 2004, into a beauty icon.
In response to the serum’s popularity, Boots introduced new Protect & Perfect products including a body care version, Body Beautiful, and the exact same formula in a more masculine packaging as part of the No7 for Men range this year. And more recently, Boots introduced a foundation, hand cream and lip product, all said to impart similar benefits to the serum.
UK women are still seduced by value for money, which explains why less expensive products sell in vast quantities when their efficacy is given sufficient exposure. Aldi’s £1.89 Siana cream, another example, sold 20,000 units in a week.
Fragrance was a different story. Celebrity scents continued to be a notable mass market trend. Accompanying Elizabeth Arden’s M by Mariah Carey were offerings from Britney Spears, Paris Hilton, Jennifer Lopez, Sarah Jessica Parker, the Beckhams, Katie Price and Coleen McLoughlin, whose Coleen X (developed with Robertet) topped the scent charts. Yet it was the premium sector that took the biggest share of the fragrance market – a massive 88.4%, according to TNS Worldpannel.
Verdict Research Analyst Paul Bashford, co-author of UK Health & Beauty Retailers 2008, believes that inflation and rising living costs will have a positive rather than negative impact on the premium end of the C&T market: “With consumers reining in their big ticket discretionary purchases such as furniture and DIY due to macroeconomic concerns, shoppers have been left with a little extra in the purse for smaller indulgent purchases such as health & beauty. Essentially, if you are not purchasing large items of furniture and undertaking DIY projects due to the uncertainty in the housing market, you are more likely to participate in smaller, luxury purchases to help you feel better.”
Bashford’s prediction for value C&T brands is also positive, but not overly so, as a large scale trade down by consumers doesn’t appear to be on the cards. “We expect the value end to fare well and even show a little growth,” he explains. “However, we do not expect the lion’s share of consumers to trade down in health and beauty due to their brand loyalty.”
There was one trend in 2007 from which escape was impossible: natural and organic. An overriding theme at recent trade events, the area looks set to grow and grow, with a European standard expected later this year to better define what constitutes natural and/or organic.
Increasingly, products are being created for less traditionally green consumers. In Autumn 2007 Simon Duffy and Rhodri Ferrier launched Bulldog, a range of natural products exclusively for men, as opposed to male versions of existing natural products aimed at women. “The conventional ‘green’ defaults for natural beauty products are now well established: same niche distribution, predominately female focused target, traditional floral/leafy branding references,” explains Duffy. “We refer to this as Natural 1.0. These brands have been great front-runners.
“In this moment of heightened opportunity for natural products, the successful natural brands will be those that adapt best to new challenges. We refer to these progressive brands as Natural 2.0.”
In 2007, the channels through which natural and organic products were sold evolved as significantly as the consumers to whom they were sold. “Distribution is changing and the opportunity for natural products is increasing,” continues Duffy. “It is no longer the case that shoppers need to pay a premium or to visit a local specialist natural food shop to get access to these products. Major nationwide department stores, supermarkets and high street health and beauty stores are looking for natural brands that are both appropriate to their customers and can compete with the major national brands they currently stock.”
In addition, those natural and organic products available to the UK consumer were increasingly sophisticated. In 2007’s In-Style Beauty Awards, Aveda’s Color Conserve Shampoo and Pure Abundance Potion beat off competition from across the entire C&T industry to win Best Shampoo and Best Texturiser respectively. “There is more emphasis on product performance as well as natural ingredients. People have more choice and therefore want products that are natural and perform,” says Amanda Le Roux, general manager, Aveda Europe. “Aveda has proved that nature works with the launch of Green Science skin care, a line of powerful plant infused formulas and a high-touch professional facial treatment.”
If consumers demand efficacy, they also expect honesty. “Although many cosmetics and toiletries manufacturers have tapped into the natural trend by fortifying products with natural extracts, their products are still not 100% natural,” says Richmond. “Consumers are starting to read the labels of their toiletries now as they would the food when they buy and Mintel predicts that we can expect to see a raft of products that become more authentic and transparent in terms of the ingredients they use.”
Aside from natural ingredients, the big story for colour cosmetics in 2007 was minerals. Nadine Anderson, managing director of mineral make-up specialist Barefaced Beauty, attributes the popularity of mineral make-up to the same factor that fuelled the boom in organic foods, desire for increased well-being. “Mineral Cosmetics is one of the fastest growing sectors of the cosmetics market due mainly to the natural, untainted and chemical-free ingredients,” says Anderson. “These new products aim to satisfy the cosmetic demand for those with sensitive or problem skin types and the many that are looking to change to a more natural and healthy way of life.”
Recently, some of the biggest names in colour cosmetics have wised up to the potential of mineral foundations. Maybelline launched a base and blusher, Pure.Foundation and Pure.Blush, containing micro-mineral micas and Lauder’s Prescriptives now offers 18 shades of foundation containing amethyst and rose quartz.
For Barefaced Beauty, 2008 looks set to be a promising year as consumer interest in mineral make-up increases. “The best selling product is currently mineral foundation but I think that eye shadow and blushes and bronzers will become more popular and also natural lip products,” she predicts.
As far as Mintel is concerned, 2008 will see increased consumer interest in eco-friendly, natural products and ethical trading. “Expect to see locally sourced natural ingredients. Just as many foods such as milk and yoghurt now have 0% fat or 2% fat, expect to see beauty products being more explicit about the percentage of natural ingredients in their products and using less scientific jargon,” explains Richmond.
“In line with growing awareness of product sourcing and manufacturing, Mintel also expects to see more Fair Trade and fairly sourced products creeping in. Carbon neutral brands are likely to emerge and Mintel expects this concept to grow in the coming years.” One company already operating under a sustainable and ethical beauty ethos is Forest Secrets, founded by Dr Barbara Olioso. Its concern about deforestation in south and east Asia, in order to make room for palm tree plantations, means that Forest Secrets minimses the amount of palm oil derivatives used in its products. Olioso’s company believes that being green is also about being fair and therefore supports Fair Trade organisations like Phyto Trade Africa, which ensure social equity.
Following the hype surrounding men’s grooming in recent years, a boom in sales value growth has long been expected. But market research suggests that men are still sluggish when it comes to changing their C&T buying habits and no dramatic increase materialised. Mintel recently found the average UK man to spend less that £2.50 on skin care per year, while separate statistics revealed that a mere 21% use facial moisturiser.
More traditional products fared better. Deodorants and razor blades, for example, took £246.7m and £272.9m respectively. Skin care, in contrast, took just £58.3m. The consistent demand for shaving hardware was obviously not lost on KMI’s King of Shaves, which recently unveiled its first razor: the Azor. Its sales will doubtless benefit from a five-year, £35m marketing campaign, beginning with a major promotion this autumn.
According to Mintel, only 35% of men buy their own products. The female consumer is therefore still an important customer for any male grooming manufacturer. However, the ratio of male/female purchasing power in the male C&T market is expected to even out. Stand-alone environments, like Space NK Men and Whole Man, appeal to male shoppers, providing surroundings in which men can buy grooming products without compromising their masculinity.
There has also been a shift in the kind of man grooming products are geared towards. In contrast to the metrosexual media stereotype, 2007 showed that tough guys also indulge in C&T products. Unilever cannily enlisted a troupe of sport’s hardest men – rugby star Lawrence Dellaglio, Olympic rower James Cracknell and swimmer Mark Foster – to promote its Vaseline Men range. And it wasn’t the only company to target the bloke market. “No natural brand has ever managed to win over the number of male consumers that we have,” boasts Duffy, whose Bulldog men’s grooming was designed for such consumers. “This is due to the wide appeal of our brand for guys.”
Duffy believes that part of the brand’s appeal lies in the way it speaks to your average guy. “The Bulldog represents all of the positive attributes of men. He may not have a rippling six-pack, in fact he’s a little overweight and quite wrinkly, but he’s also tenacious, loyal, honest, hard working and protective. He’s man’s best friend and we probably all like to think that we have a bit of the bulldog spirit.”
L’Oréal took similar note of this demographic, signing up former James Bond Pierce Brosnan and Lost star Matthew Fox as the faces of L’Oréal Men Expert, and actor Clive Owen for its Lancôme brand.
For modern consumers convenience is crucial and supermarkets, the kings of convenience, are now nearly neck and neck with pharmacies, 28.9% and 33.9% respectively, in the race to be the UK’s top C&T distribution channel. According to Mintel’s Richmond: “Supermarkets represent the main threat to the pharmacies, offering convenience, branded and own brand options, competitive prices and rolling promotions. In recent years, many have also developed a selection of premium own brands.
“Beauty sales have been driven in supermarkets by a combination of factors: smarter beauty areas, more sophisticated ranges, and they generally have longer opening hours than the likes of Boots and Superdrug.”
Alex Holt, category manager, beauty, Tesco cites supermarket own brands as another factor: “Supermarkets have become more adept at responding to trends and implementing innovative NPD. Indeed, C&T brands that are exclusive to Tesco can be a pulling point in themselves; Skin Wisdom for example has always attracted dedicated customers since its launch in 2001.” To keep it up to date, Skin Wisdom is getting a major relaunch this September, with Tesco giving the brand a more sophisticated feel and putting greater emphasis on what the company sees as its natural roots.
Supermarkets may offer a hassle-free, cost effective way for consumers to buy C&T products along with their groceries but the ultimate channel for easy shopping is fast becoming the worldwide web, something that more C&T consumers wised up to in 2007. Last year 4% of consumers purchased products this way, nearly as many as via direct selling and with more and more retailers providing an online offer (the department store House of Fraser is the latest chain to go online) this trend looks likely to develop further.
Richmond believes there are two reasons for this. “Rising broadband penetration means that the internet is experiencing dynamic growth as many of the leading retailers and brands now also sell via the web,” she says. However, she also cites shy male consumers as a major factor: “Being able to hide behind their computer screens may help men feel more comfortable browsing and buying men’s toiletries that they may otherwise be too embarrassed to buy in-store, such as hair removal products or tinted moisturiser.”
The UK C&T market managed to escape the general malaise afflicting many retail sectors in 2007, and with the public forsaking big spends in favour of smaller luxuries, it’s actually looks quite possible that it may benefit from the further tightening of people’s purse strings in 2008.
Over the coming months expect to see increased consumer interest in ingredients that promote Fair Trade and in products that show the manufacturer’s environmental awareness; locally sourced and carbon neutral will be the buzz terms throughout this year and the next.
If the cosmetics and toiletries market becomes the UK’s fastest growing retail sector in 2008, as Verdict Research suggests, this could be one sector that rides out the recession storm. However, rising raw material costs are now forcing an increase in retail prices and the industry can only wait and see how consumers will react.