in-cosmetics - Ahead of the game

Published: 3-Jan-2007

An incredibly busy show meant that many of the trends presentations were full to capacity in the enlarged Marketing Trends theatre. The Paris show included three days of global C&T insight and analysis

An incredibly busy show meant that many of the trends presentations were full to capacity in the enlarged Marketing Trends theatre. The Paris show included three days of global C&T insight and analysis

Global sales of cosmetics and toiletries reached US$270bn in 2006, their highest level for five years, according to Euromonitor International. Euromonitor’s Briony Davies highlighted several reasons for this buoyant state of affairs, including the shift towards an older demographic and consumers’ fast pace of life which demands convenient solutions. Developed markets have experienced sustained increases in disposable income, so consumers can afford premium prices for all types of product. Consumers are becoming more concerned about what they put in, on and around their bodies and showing increasing concern for environmental and ethical issues.

Over the past five years, there have been big changes in the global C&T markets, including the recovery of Japan and the US, both mature markets. However, it is China that has had the most dramatic impact, pushing Asia Pacific ahead of North America in value terms and now accounting for 24% of global C&T sales. Latin America and Eastern Europe are the two fastest growing regions, up 12.6% and 12.5% respectively. Brazil is now the third largest market, behind the US and Japan.

Davies pointed to China as a hotspot, worth $11.7bn and up 11% in 2006. “It is the third largest economy, whereas India is not even in the top ten,” she said. Future growth is assured as the middle classes are expected to double over five years. Skin care is the largest and fastest growing market in China, with consumers trading up to segmented products and premium brands. Other growth sectors include men’s, sun care, deodorants and direct savles, which are now opening up in the region. “China continues to be an attractive market, but manufacturers must understand its peculiarities to maximise potential,” warned Davies.

Some of the emerging trends highlighted by Davies included: natural and organic, which some multinationals and private label companies are now addressing; the crossover with other industries, such as food and drink; and the need for micro segmentation. Among the examples she gave were targeting mixed race men with products to minimise in-grown hair and anti-ageing hair care.

The Millennium generation

Marvin Wilkinson, new business director for marketing consultancy Anterior:Insight, focused on how technology is shaping the way today’s younger generation is behaving. Teenagers have never known a world without technology and it affects everything about them, even down to the way their brain works. Wilkinson described this phenomenon as “grasshopper brain”, as these youngsters hop from one technology to another. “This has implications for employers and brands, which must learn to engage with a new type of consumer,” he maintained.

Anterior:Insight has conducted research into teenage consumer behaviour and discovered that they remix information they find online, through websites such as My Space and YouTube, to create their own concept. “They remix into a mash culture, which is a very important trend,” stated Wilkinson. “How do you deliver information to people who get their influences from all over the world, without necessarily having visited those places?”

Wilkinson explored virtual worlds such as Second Life and assessed their impact on young people, predicting that they will become an important means of communication for brand owners. Already, the 3D virtual world has 5 million residences, up from 3 million in January. He singled out the Korean website Cyworld as one which could make business meetings more engaging. People are using it to put up their own design ideas which others pay for. “Pixel trading uses people’s own creativity and we are just at the beginning of this trend,” he said.

Focus on spa

Three speakers provided their perspective on professional spa products and how they are an important influence on the C&T markets.

Carrie Mellage, of research company Kline & Co, showed how professional hair and skin care products are a very dynamic, high growth segment and outgrowing the total market. In Western Europe and the US there are half a billion hair salons, generating $80bn in revenues. Fast growth is recorded in emerging regions, including Latin America, China and India.

The largest professional sector globally is skin care, growing in excess of 10% year on year (manufacturers’ sales). Europe is the largest market for professional skin care, accounting for 40% of global sales, followed by the US at 17% and China at 13%. “All these markets outpace traditional skin care and are projecting growth in the next five to ten years,” stated Mellage. All three markets focus on anti-ageing, but natural and organic are more in demand as consumers become more savvy. Media hype, baby boomers and doctor brands at lower prices than cosmetic procedures were all identified as helping to produce dynamic growth.

Veronique Liaboeuf, md of French design company Dragon Rouge, listed the four spa models from around the world as being Asian, Oriental, European and American. “Deep and wild nature and Aboriginal traditions could also be sources of inspiration,” she suggested.

In Europe, water therapy is part of the well-being tradition, influenced by Roman and Greek spas, including in terms of mosaics and dry stone techniques used in their architecture. She maintained that modern approaches are linked with traditional usages, such as Caudalie’s vinotherapy, developed around grape polyphenols, and the art of wine and food from the Bordeaux region.

In the US, medispas are influenced by plastic surgery. “They reflect the body oriented trend for control and perfection, with design references being surgery and hospitals,” said Liaboeuf. She suggested that in the US women spend a minimal amount of time when they go to a spa, whereas European women see spas as a place to waste time in order to feel well.

This idea was also raised by indpendent beauty consultant Wendy Lewis in her presentation on the impact of the growth of the professional sector on retailers in Europe and America. “Me-time is very important in Europe, where people take their leisure time very seriously. In the UK women feel guilty, in the US there are no apologies,” she said.

Lewis argued that medical and beauty are converging as consumers move into bio-actives in order to avoid the scalpel, at least for a while. Boomers are a key driver and anti-ageing an important desire. This has led to the term “medispa” becoming increasingly watered down and Lewis challenged the audience: “The industry needs to come up with a new phrase as medispa has come to have a different meaning to the consumer.”

Lewis described these consumers who differ from beauty buyers. As they become increasingly dissatisfied with cosmeceuticals and non-surgical procedures, some may get to the point where they consider surgery. “Trigger events such as divorce, a new job or kids at university are likely to encourage these consumers to go under the knife.”

However, there may be a time when consumers turn their back on expensive anti-ageing treatments and opt for premium mass brands. “What we are seeing is a reverse chic in skin care. There is something cool about buying mass brands,” maintained Lewis. “You don’t have to be a £200 customer; there is a lot of good value amongst mass brands.”

Understanding ethnic differences

Attitudes towards beauty and personal grooming vary from country to country, despite the trend for globalisation of brands. Euromonitor’s Davies illustrated this point with examples from across the world. “Brazilians are very concerned with appearance and have an awareness of personal hygiene which is cultural,” she said. “Here it is accepted to spend a high percentage of income on looking good and even the lower classes regularly go to salons.” Tanning is also something Brazilian women aspire to, unlike in Asia where pale skin and whitening procedures are the norm.

In India, 33% of C&T spend is on bath and shower products, compared to the global average of 9%, according to Euromonitor. The majority of consumers use bar soap as it is both cheap and easier to use in a country where water shortages can be a severe problem. “Manufacturers are looking at how to make products more affordable by decreasing unit size,” said Davies. Talc is also ingrained in Indian culture and is used on the face as an alternative to powder.

The growth of ethnic minorities in developed countries is also an area that C&T manufacturers are starting to address. Mintel’s Nica Lewis and Lynn Dornblaser gave examples from Mintel’s global new products database of the increasing segmentation of markets, with more launches aimed at ethnic consumers than ever before. An interesting development is the partnering of Walgreens with Dr Jan Adams Women in a new skin care line, which Dornblaser believes is helping to bring legitimacy to the ethnic market. “Mainstream companies are further segmenting existing lines, so J&J’s Ambi, for example, was originally for black women only but now targets all ethnicities,” she observed.

Nica Lewis pointed out that marketing to ethnic women needs to be different. “When considering NPD, brands need to think about mattifying textures to control shine, darker shades of foundation and adding more pigment to make a bright palette.” Examples of key black make-up brands include Black UP, the first Parisian make-up artist brand created for women of all colours. “There are a lot of ethnic brands in the US which are now coming to Europe, as well as European brands developing ethnic lines,” she said. “But there is also a growth in racially mixed people and it’s important to develop for that consumer too.”

Design agency Pearlfisher has been conducting research through its Life Modes programme into underlying cultural shifts, their causes and future trends. The most recent findings come from Body Mode, which revealed that the body is the most important asset we own. Mike Brunson, managing partner, Pearlfisher, maintained that how we integrate the body, mind and soul is of key importance. He used the metaphor of the corset for external ideals and maintained that the way it is being lifted has implications for brands. In the past, the corset was represented by the state and religion which were imposed externally and limited our freedom. Nowadays, people are becoming more inner directed and use products to express themselves rather than to impress other people. “There is a need to internalise the corset,” he stated. “We still need our own code and parameters which become individual ones and are not imposed externally. Brands that capture desire are those that enable us to express our true selves.”

Natural & organic

Amarjit Sahota, director of research consultancy Organic Monitor, highlighted the pitfalls brands face in launching into the natural and organic beauty markets. “Anyone can use the term natural so it’s difficult to understand what is natural and what is fake natural,” he explained. As there is no pan-European standard for organic or natural products, companies must choose which one to use - eg Ecocert, BDiH, The Soil Association. “The reason is that they cannot agree on what’s allowed and what isn’t.”

Sahota suggested that when marketing natural and organic products, companies must specifiy what their products contain and what is left out. They should promote themselves and educate consumers on what is different about their products. “Consumer demand for naturals/organics will strengthen and more will move from health food shops into mainstream retail outlets, such as supermarkets and drugstores.”

Sahota handed over to Christian Ecker of French organic cosmetics brand Melvita, which was one of the first to work on guidelines from Ecocert and carries the stamp Ecocert “Bio” on its products. Melvita is growing by 30% year on year and does not contain silicones, petrochemical or GMO ingredients, nor is it tested on animals.

Food trends have been around for a while, but have mainly been superficial and largely seen as a gimmick, maintained Jean-Marc Levy, director of research agency Le Marketing Studio. “Women are becoming experts in food and read the labels. If they transfer this knowledge to beauty products they will become more knowledgeable and switch between products more easily,” he said. “Dissatisfied and critical consumers will set up their own beauty routine rather than follow what the brand tells her.”

Beauty dichotomies

Mintel’s presentation focused on four key dichotomies in the beauty market that are leading to a blur of definitions, with nothing being quite as it seems any more. The super science approach, consisting of new ingredients and unique claims, is sharply contrasted with brands launching with an ultra organic positioning. “The dichotomy is that the consumer wants both at the same time,” commented David Jago. Similarly, as consumers become more knowledgeable they may also become confused, so turn to very simple solutions. This has led to the launch of ranges such as Swedish skin care Hakansson’s The Remover and The Moisturiser products that claim to exclude anything unnecessary for the skin.

The tug between anti-ageing and pro-ageing can be seen in the large number of products that feed the desire to look younger by delaying or freezing age. However, there is a trend, led by Dove for its Pro-Age skin care and toiletries range, which shifts negative perceptions of age towards a more positive one.

Mintel has noted more launches focusing on the ultra feminine or the ultra masculine. However, Nica Lewis sees an opportunity for a gender-neutral skin care line. “When you get into high science, there is much less differentiation between men and women,” she suggested.

Global mergers & acquisitions

The last 30 years has seen a big change in the structure of the C&T markets as a result of mergers and acquisitions. Gillian Morris of Kline & Co gave examples from 1975 up to the present day, demonstrating that many of today’s leading companies - including P&G, L’Oréal, Estée Lauder and LVMH - have grown through M&A. Others have grown organically - such as Avon, Beiersdorf, Clarins, Mary Kay and Colgate Palmolive. Morris maintained that the key drivers behind M&A activity are to get into leading growth segments by entering new product categories, to acquire and exploit new technologies and to grow geographically.

Kline finds there have been far fewer mergers & acquisitions amongst raw material suppliers, with less than ten in the past four years. “The competitive base has increased and we are seeing the in-cosmetics show expand due to new suppliers,” observed Morris. “There are a lot of niche companies ripe for acquisition. Private equity companies like chemicals and are looking at this market and small sized privately held raw material companies in Europe may be more willing to sell,” she concluded.

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