PARSIPPANY, N.J.—While growth in the natural personal care segment during 2011 waned slightly compared to the five-year compound annual growth rate (CAGR) of 13.9 percent, it still consistently outperformed the overall beauty market, according to consulting and research firm Kline & Co.
The firm pointed out that both of these markets are distinctly different, as market leaders vary from region to region; moreover, within Europe, the dynamics of the naturals market varies significantly between countries. In Western Europe, the natural segment is becoming more mainstream, but it’s the largely untapped markets of Central and Eastern Europe where opportunities show great promise. Additionally, Western European and Northern American shares of the total market have been decreasing over the last five years at the expense of the emerging markets of Brazil and China. The latter are expected to draw the focus of astute companies keen to establish critical footholds in these budding markets. Savvy marketers are also opening up and exploring new channels of distribution, allowing access to new consumers and ultimately broadening demand.
Large, predominantly German drug stores, such as DM, Schlecker and Rossmann, represent the fastest growing pan-European channel. In the United States, traditional natural health food stores still lead the way; however, mass outlets, such as Wal-Mart—which as an indicator of the retailer’s faith in the naturals’ market, recently introduced its own private-label products—are quickly increasing in significance.
Indeed, more mass-market brands are recognizing the vitality and viability of the naturals segment with its inherent market cachet and consumers’ increasing readiness to pay a premium for genuinely natural products. The benefits are manifold; by increasing the channels of distribution and allowing consumers easier access to natural products, both ultimately contribute to the segment’s growth.
According to Kline's consumer industry manager, Nancy Mills, the resilience of the natural personal care sector is a result of the ever-growing consumer awareness of health, environmental and sustainability concerns. "These drivers are near universal, but their influence varies significantly between markets," Mills noted. "In Western Europe, consumers have a higher awareness and interest concerning product ingredients, business ethics and sustainability practices, and many are astutely avoiding products that are natural only in positioning. In Eastern Europe, where the movement is starting to blossom, consumers aren’t yet as discerning.
“Natural personal care is not a fad, but a genuine movement that’s manifesting itself in ever diverse product applications. The consumer is better educated, and this can serve the marketer well, particularly as credible certification standards are being implemented and recognized."
The global market for natural personal care products is expected to maintain strong growth with a CAGR of almost 10 percent through 2016. The growth of truly natural products will likely outpace that of natural-inspired brands across most regions; however, natural-inspired brands will continue to dominate the global natural personal care market.
