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Markets and Dichotomies

By: Briony Davies
Posted: August 26, 2008, from the September 2007 issue of GCI Magazine.

page 3 of 4

Per capita expenditure in Asia-Pacific, Latin America and Eastern Europe in 2006 was $1.8, $7 and $5.1, respectively, in comparison to $16.1 and $18.9 across Western Europe and North America. In Eastern Europe and Latin America, particularly, government initiatives have focused on promoting good oral care generally, while advertising campaigns by manufacturers have concentrated more on promoting greater frequency of changing brushes and higher consumption of toothpaste. In the Philippines, domestic personal care manufacturer Lamoiyan Corp. supported a dental outreach project in 2005, the message being that oral hygiene is a basic human right.

In encouraging sales in rural communities and among less affluent urban dwellers (the United Nations estimates suggest at least one billion people live in slums, mostly in Asia-Pacific, Africa and Latin America), manufacturers also need to concentrate on keeping costs down. Procter & Gamble’s Gillette has launched a cheaper manual toothbrush targeted at less affluent consumers in Brazil. Small pack sizes for toothpastes are also ke y, and the affordable sachet format that revolutionized India’s hair care sector could also be applicable in oral hygiene. Local suppliers are better positioned to offer products for less, and there are also opportunities for retailers in the private label segment, where comparable products are offered at lower prices. However, educational campaigns backed by multinationals are instilling brand loyalty among the world’s emerging market consumers.

Dynamism in Baby Care Fueled by Health and Wellness

Global baby care sales grew at 6.8% in 2006, making the category the second most dynamic behind sun care. Demographics and economic factors are the vital drivers of baby care. Increased wealth clearly is a spur to sales, with parents trading up from adult toiletries, but higher birth rates, which theoretically should spur demand, are not always a positive. In some markets, it has actually been the slowing of the birth rate combined with women giving birth later in life that drove growth. These mothers are more informed, more protective and are generally further ahead in their careers, giving them more money to spend on their children. Health and wellness is one of the key secondary drivers of growth in this area. In baby care, fear about the possible side effects of the chemicals used in cosmetics and toiletries is most acute, given the delicate nature of baby skin. Continuing reports that point to the potential harm of some ingredients is expected to spur demand for natural and organic baby care.

As natural and organic baby care sees increasing demand, new products in this niche are expected to proliferate, causing manufacturers to look for new ways to differentiate their brands from competitors. Food ingredients are likely to be one such way. The links between nutrition and health are already well understood, and many parents would feel more comfortable purchasing products with clearly identifiable ingredients. Local players in countries such as China and India, where there is a tradition of natural medicine, could also exploit health-giving herbs and plants to give their products an edge in their domestic markets. Looking forward, the market is likely to see an increase in ethical brands, those that are sustainably sourced or use biodegradable or recyclable packaging, as well.

Sun Care a Hot Spot

With global sales topping $6.2 billion in 2006, sun care was the most dynamic category over the 2001–2006 period for the entire beauty care market, and is set to head growth for toiletries into the longer term. A huge potential for future development exists, especially in emerging markets where penetration is currently low. Euromonitor International observes that increasing consumer awareness of the risks of sun exposure—including skin cancer, discoloration and aging—is the key to driving demand for sun care. Australia, where the Cancer Council has been vigorous in its attempts to encourage consumers to “slip slop slap,” is a case in point here. Awareness is currently most developed in the mature markets, hotter countries and those where skin tones are more obviously impacted by the effects of UV radiation. However, as governments become more concerned with mounting health issues and manufacturers look to boost worldwide penetration rates, consumer education campaigns are spreading globally.