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State of the Industry: Bright Spots Remain in Down Market

By: Carrie Lennard, Euromonitor International
Posted: June 5, 2009, from the June 2009 issue of GCI Magazine.

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Premium baby care bucked the general trend away from the premium segment, leaping from 7% in 2007 to 11% in 2008, as the boom in natural baby care products drove value sales. Organic baby food has seen a similar immunity to the credit crunch in many countries, as parents refuse to cut corners when it comes to their babies’ health.

Bath and Shower Kept Afloat by Latin America

According to Euromonitor International, Latin American shoppers traded up to more sophisticated bath and shower products, and this caused a sharp growth rate rise to 14% 2007–2008—double the 2006–2007 increase. Shower gel is still experiencing strong growth in Latin America because the category remains very small. Penetration is limited to middle-high and high-income households, and even among these, many still use bar soap. The tendency to shower more often and purchase soap with more value-added features, such as moisturizing or antibacterial properties, are the two principle factors that buoyed sales of bar soap.

However, in more mature markets such as North America where the majority of consumers made the transition some years ago, value sales dipped as bath and shower product manufacturers discounted heavily, and price-sensitive consumers simply opted for whichever brand happened to be on special offer or for private label alternatives.

Trading Up in Deodorants Sparks Global Growth

Convenience was crucial in deodorants maintaining strong growth in 2008. In most regions, sales of deodorant sprays increased to produce a global rise of 9%, up 2% from 2007. This was largely at the expense of other formats—sticks and pumps either stagnated or declined.

Because deodorant sprays are typically more expensive and run out quicker than other formats, this generated the higher value sales seen in the sector overall. Latin America was, by far, the biggest contributor in this segment. At 17%, growth here was nearly two-thirds larger than the 2007 rate, fuelled by the widespread consumer transition from cheaper deodorant pumps to sprays. The Natura brand has had a major impact on driving sales of deodorant brands in Latin America because of its higher prices, due to its natural positioning.

Hair Care Hit by Discounting