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Markets and Dichotomies

By: Briony Davies
Posted: September 6, 2007

page 3 of 4

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.

Manufacturers are working not just to raise awareness of sun overexposure, but are also beginning to make it easier for consumers to protect themselves. A major barrier to sun protection use is the inconvenience of many products, which are difficult and time-consuming to apply. Portable products, continuous sprays, longer-lasting formulations and even sun protection pills are just some of the innovations coming onto the market that are designed to leave consumers with no more excuses not to protect their skin. A notable example is Johnson & Johnson’s Piz Buin 1 Day Long, with label claims to be water- and sweat-resistant and to provide UVA and UVB protection for up to 10 hours. Similarly, educating consumers to use self-tans as a safer alternative to sun bathing or sun beds will only work if self-tanning products are quick and easy to use and achieve even, natural-looking results.

The rise of medicated products is one possible challenge to the development of sun care. Sunscreens containing mexoryl are sold OTC throughout the European Union countries and in many other sun care markets, and pose an increasing risk to sales of standard sun care. Manufacturers could up the competitiveness of sun protectors against this emerging threat by seeking endorsements with health charities—New Zealand’s biggest-selling sun care brand, for example, is produced by its Cancer Society. Teaming up with high-profile dermatologists to create brands, a method commonly used in skin care, could also boost credentials. Restricting distribution to pharmacies, drugstores and specialist retailers—the types of channels that stock a select range of top quality products—is another method sun care brands could use to project a more efficacious image.

Future Outlook

In spite of the dynamism of the smaller sectors, the future of personal care overall is less than promising, with forecasted growth for 2006–2011 of just 12%. As price pressure continues to squeeze the toiletries sectors, the trend toward incorporating cosmetic properties or injecting extra functionality into basic hygiene products is expected to gain momentum, driving premiumization. The danger is that the inclusion of certain added benefits, such as tooth whitening in oral hygiene or antiaging in bath and shower products, will become standard practice, with brands losing unique selling points and becoming less able to claim higher prices. It will, however, create more space at the bottom end of the market, a potential spur to private label competition and participation by local companies in the emerging markets. This focus on functionality is also expected to create more fluidity between sectors. Skin care has already found its way into all toiletries sectors, save oral hygiene, but there is further scope for crossover products. Sun protection or self-tanning in color cosmetics, for example, or hair care in bath and shower products.

Natural and organic ingredients are becoming increasingly central to many toiletries sectors, and the focus for brands should be on eliminating the use of all chemicals and synthetic ingredients. Price pressure is not only driving innovation, it is also working to slow it down, pinching manufacturers’ margins and making it difficult for them to justify large expenditures on research and development. This, in turn, will further stimulate the need to compete on price and erode sales growth in the more mature markets. It could also see companies that predominate in the toiletries sectors, Johnson & Johnson and Colgate-Palmolive being two prominent examples, expanding their presence in cosmetics where growth is more dynamic and value prices are less susceptible to discounting.