LITTLE FALLS, N.J.—The market for natural personal care products has persevered through the recession, posting strong gains around the world. Spurred by growing consumer awareness, better raw material supplies and wider availability of more affordable products, the naturals market posted double-digit gains in 2009. It is a sustained pattern of strong growth that has personal care product marketers of all sizes looking to seize the growing opportunities in worldwide markets to tap into this attractive industry.
Naturals Here to Stay
With more than a 15 percent CAGR (compound annual growth rate) over the last five years, the naturals trend seems to have solidified its position as more than just a passing fad. While the trend is growing steadily worldwide, what makes it most interesting is the diversity of impact in each region. Kline’s Natural Personal Care 2009 report—a study that examines the naturals industry in the United States, Europe, Asia and Brazil—reveals significant differences among the major markets with regard to consumers’ adoption of the trend, the popularity of products, the competitive landscape, and the degree to which so-called natural products really live up to their billing.
As a clear indication of the growing naturals appeal, manufacturers are pushing the envelope of what passes for natural in order to get on the bandwagon. Kline’s ingredient analysis found nearly 75 percent of so-called natural personal care products are not so natural after all. The overwhelming majority are considered “natural-inspired,” comprised mostly of synthetics with just enough natural ingredients thrown in to take advantage of low consumer differentiation. Unfortunately, the lack of explicit standards that define the degree of naturalness in most markets makes it possible for manufacturers in some countries to call their products “natural” just by adding a flowery label to the package.
Booming in Brazil
As the second-largest single country market for naturals in the world, Brazil is one of the most attractive opportunities for natural personal care marketers. Growing consumer purchasing power and greater supply of products have also made it the fastest growing, up more than 15 percent from 2008.
Attractive in Asia
By the sheer size of its population, growth in GDP (growth domestic product) and disposable income among consumers, the Asian market is quite attractive to global marketers. Posting a healthy growth rate in 2009, the region collectively commands a 40 percent share of the global market for natural personal care products.
In Asia, as in most other parts of the world, makeup is a fast-growing category. In January 2010, Tokyo-based cosmetics giant Shiseido acquired mineral makeup pioneer Bare Escentuals in a move that will no doubt continue the proliferation of natural makeup products across Shiseido’s already strong presence in the regional marketplace.
Truly Naturals Growing in Europe
The European naturals market is thriving on an increase in the supply of products and the expansion of specialized skin care offerings with anti-aging and sun protection benefits. While less than one-third of the overall market comprises truly natural products, this segment is growing here as marketers reformulate their products to meet increasing demands of certifying bodies. In Europe, a pan-European standard for natural certification is brewing, which presents a great opportunity for international brands that rank at the higher end of the naturals scale.
Value Drives Growth in the United States
Stymied considerably by the recession, the U.S. market for naturals posted relatively modest growth in 2009, but was still remarkable compared to the cosmetics and toiletries market as a whole. Here, as in Europe, marketers are reformulating their products to beef up their natural positioning to appeal to more skeptical consumers and meet increasing scrutiny over the true naturalness of ingredients.
Challenging this move to more natural ingredients, the recession forced U.S. consumers to seek out more mid-range, mass-marketed products that provide greater value and cost less. Hair care is the fastest growing category in the United States, with new product innovation in shampoos, conditioners and even hair styling products boosting growth in this category. Manufacturers have struggled with limited availability of raw materials that produce the cleaning, lathering and shining qualities consumers are accustomed to with traditional synthetic surfactants and polymers, but recent advances are helping to drive gains in the category.