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State of the Industry: Will Megabrands Rule?

By: Briony Davies
Posted: August 15, 2006

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Megabrand was the word on everyone’s lips in 2005, with major players such as Shiseido, Avon, Unilever and Procter & Gamble focusing innovation on a handful of high-impact brands. The trend continues in 2006. Brands have been split into new categories and even extended into different sectors to scoop up sales and broaden appeal among a wider consumer base.

The year saw a number of skin care brands reach out into hair care. In April, Accantia launched a new range of perfume- and color-free hair care products under its leading Simple brand. In the same month, Estée Lauder levered its Clinique brand into the sector with the launch of True. Tapping into the ethnic category will help extend other big brands across a range of sectors. In September, Unilever filed a trademark for Sunsilk Anti-Sponge shampoo, suggesting that an ethnic hair care launch is on the cards for the Sunsilk brand; via the megabrand, manufacturers can milk broader industry trends and target new lucrative groups such as ethnics, teens, ’tweens and grays while reinforcing brand equity.

Celebrity Cosmetic Star

Arguably, 2005 has cemented the most effective cosmetics and toiletries advertising technique of all time—that of the celebrity endorsement. Film stars, musicians and sports heroes have been backing beauty launches for decades. The move has proven so powerful that manufacturers, notably Coty and Elizabeth Arden, have begun using the famous to brand their products. Celebrity labels are most heavily concentrated in the fragrance sector—with Hilary Duff, Sarah Jessica Parker and Danielle Steel among the long list of stars who have put their names to scents in 2005. And so far, the strategy is paying dividends. Coty’s Glow by J-Lo has been the world’s most dynamic premium women’s fragrance since 2001.

However, manufacturers need to recognize the potential backlash that this strategy could unleash. Indeed, via such campaigns as Dove’s “Real Beauty,” a rise in self-esteem marketing is being seen. Unilever says sales of Dove’s skin firming range ballooned by 700% worldwide as a result. Encouraging women to feel comfortable in their own skin, Unilever positions Dove as a way for consumers to enhance their own unique beauty rather than squeeze into an unrealistic mold—an attempt to create a new mechanism for generating feelings of loyalty and trust. The market is seeing a rise in customized labels, promoting the idea that every consumer is a star. Recent launches include L’Oréal’s True Match foundation with opti-match technology and Estée Lauder’s customizable eye shadows and blusher. Manufacturers looking to stand out in 2006 could do well to ditch the celebrity and focus on the real beauties instead.

Organic C&T Dawns

As trends in food transfer into the personal care industry, consumer awareness of health risks rise and a general shift toward more holistic health and beauty continues, an increased demand for natural and organic C&T products is evident in 2005. Currently, organic C&T products—subject to different levels of certification depending on their country of origin—are the preserve of niche players such as Jason Natural Products, Burt’s Bees and Green People, with launches of private label ranges expected in 2006. However, mainstream companies definitely are embracing the naturals trend that parallels organic but is subject to much less rigid scrutiny, as governing bodies have yet to arrive at a standard definition of the term. Key sectors for natural products include baby care (as such products are perceived as inherently safer) and bath and shower, as manufacturers exploit this trend to increase prices and drive growth. Food ingredients (such as milk, honey and olives) and time-proven favorites including cocoa butter and aloe are an easy way to get into the game. In 2005, many C&T multinationals attempted to take advantage of consumer ignorance by using natural or herbal in their marketing when, in reality, the products are anything but. As consumers become increasingly savvy, this tactic could start to fall flat on its face, and is likely to become subject to regulation in the not-so-distant future.

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