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The largest regional personal care markets, Western Europe and North America, with 2006 sales of $27 billion and $19.6 billion respectively, are plagued with low growth rates, each with less than 15% value growth between 2001 and 2006. Consumers in these markets are far more willing to economize on personal care than they are on cosmetics products, trusting that the quality of even cheap brands is of a high enough level to deliver basic hygiene—meaning that price competition is fierce between toiletries, brand loyalty is low and private label is a greater threat within these sectors. This is further exacerbated by the retail distribution of personal care in Western Europe and North America, which is dominated by price-cutting retailers such as supermarkets and discounters; in Western Europe, almost 50% of all toiletries are sold through these channels. It is therefore not surprising that encouraging consumers to trade up is central to the strategy of personal care brands in the more mature markets.
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.
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.
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.