The most successful means of achieving this is through the provision of added functionality and convenience with the inclusion of cosmetic benefits—including added skin care properties, antiaging and exfoliating. The challenge that faces most toiletry manufacturers is that private label looms close behind, offering increasingly sophisticated alternatives at lower prices. U.K. supermarket chain Tesco, for example, launched an organic personal care line with approximately 40 products in February 2007, and Asda and Waitrose have now followed suit.
Emerging Sectors Booming in LA and Eastern Europe
Latin America—with double-digit compound annual growth rates across all toiletries sectors during 2001–2006 and value growth of 73.4% across the same period—is the fastest moving region for personal care products. Eastern Europe, with average annual growth rates of 9.9% and gains of $2.5 billion since 2001, is not far behind. Going forward, growth is set to be driven by underdeveloped sectors—including sun care, baby care and men’s grooming—in both regional markets.
Manufacturers will be pivotal in maximizing the potential that exists in these categories, and there will be a need for them to take on the role of educator and explain the uses and benefits of these products. In Brazil, for example, Beiersdorf’s Nivea brand sponsored campaigns on skin cancer prevention in schools and other institutions in 2006, an effort that included a play showing the importance of using sun protection products regularly. A similar strategy was employed by Russian player Nevskaya Kosmetika to drive growth in baby care; in October 2006 the company implemented a campaign in support of its Ushasty Nian brand in 87 medical establishments in 13 Russian cities, offering baby skin care training for mothers and mothers-to-be.
Bath and Shower Proves a Drain on Personal Care
With global sales of $23.6 billion, the bath and shower products category is among the largest in personal care. However, with average annual growth rates of 3.5%, it is the least dynamic sector in cosmetics and toiletries. In Western Europe and North America, manufacturers seem to have reached a dead end, with maturity of bath and shower products in these developed economies leaving little room for volume growth. In addition, increased competition puts pressure on prices, thus limiting opportunities for value gains. North America, in particular, has been struggling with 0% growth each year since 2001.
Segmentation is one of the key trends driving the sector, with more products designed specifically for women, men, children and seniors. New spins on this include targeting athletic and active lifestyle consumers with convenience formats and strong-acting, refreshing formulations. Examples include Liz Sport Shower Gel (Liz Claiborne) for women and Physio Sport Shower Gel, which moisturizes and uses aromatherapy ingredients to soothe sore muscles. Cleansing is still the primary purpose of bath and shower products, but enhancing mood and offering a holistic, pampering experience have also become key. Spa and aromatherapy claims have, therefore, become commonplace, and textures and formulations are more fragrant, thicker and more luxurious. The at-home spa trend also offers opportunities for segmentation, with products distinguished by their influence on mood. Despite this trend, however, consumers still prefer the convenience of showering, and bath additives are on the decline at the global level.
A look at less-developed markets, in contrast, highlights the different strategies that need to be employed. India’s bath and shower penetration is among the lowest in the world, with spend less than $2 per capita in 2006, and value growth there is being driven by bar soap. Manufacturers are dropping pack sizes to reduce unit prices and place products within reach of the country’s less affluent majority. There is also a push to widen penetration to India’s rural poor. Unilever’s Swasthva Chetna (“health-awakening”), launched in partnership with the Indian government, covers about 18,000 villages in eight states to reach 70 million rural dwellers and teach the importance of hand washing. In the country’s more affluent western states, body wash/shower gel is beginning to find demand, although in the country, as a whole, it remains nascent, with sales of just $9 million, or less than 1% of total bath and shower products sales.
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