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A Closer Look at Personal Care Fragrance

By: Jeb Gleason-Allured
Posted: April 28, 2014, from the May 2014 issue of GCI Magazine.

Editor’s note: This article originally ran in the February 2014 issue of Perfumer & Flavorist magazine. Reprinted with permission, and all rights reserved.

“It’s an exciting time to create fragrances,” says Mane perfumer Ashley Wilberding Balavoine, reflecting the dynamism and growth potential of the personal care category. The personal care products category boasts more than $250 billion in annual sales, according to the Personal Care Products Council (PCPC), driven by consumers’ desire “to live better, healthier lives.”

Meanwhile, Euromonitor International values the 2013 global bath and body care market at $55 billion, an increase of approximately 7% over 2012. According to a Euromonitor report, beauty and personal care in the United States are expected to grow through 2017 in response to premium and value-added products, and hair care and skin care innovations for aging populations.

Indeed, the personal care category, which for the purposes of this article includes products such as soaps, shower gels, shampoos and deodorants, is experiencing growth due to key emerging markets, product innovations and evolving consumer needs.

Rethinking Emerging Markets

In late 2013, Unilever told Agence France Presse that demand in emerging markets, which account for more than half of the company’s sales, had weakened. In addition, a company spokesman noted that ongoing growth in these markets would drop from the expected 5% to somewhere between 3.0% and 3.5%. Despite this, Rob Walker of Euromonitor International, writing for P&F sister publication GCI magazine, explained, “In 2013, for the first time ever, consumers in emerging markets will collectively spend more on bath and body care products than consumers in developed markets… A decade ago, developed markets accounted for nearly 70% of worldwide bath and body care sales.”

However, he said, the geographic focus is shifting. While Latin American market results come under negative pressure in Brazil, Argentina, Venezuela and Mexico, the fastest growth will be seen in Africa and the Middle East. While some of these markets may be high-risk, Walker noted that consumer product companies must diversify the emerging markets served to secure ongoing growth.

The Global Natural Boom

Interestingly, Brazil and China are key drivers of the $29.5 billion natural personal care market, reports a 2013 Kline & Co. market brief. The global natural personal care market has experienced a compound annual growth rate of 11.3% over the last five years, according to Kline, and could reach $46 billion by 2018. In Brazil, 85% of the market is dominated by domestic giants Natura and O Boticario, with ingredients falling across a broad spectrum of synthetics, naturals and organics.

“Within the flourishing Chinese market, while both domestic and foreign brands are enjoying growth, domestic ones still claim an estimated 80%-plus share of the market,” said Zachary Ferrara, Kline’s project lead in China. “Notably, of these local players, those offering mostly TCM (traditional Chinese medicine) products account for approximately less than two-thirds of the Chinese natural personal care market. However, international natural brands are becoming more accepted by Chinese consumers as they are considered to be of a higher quality.”

In a separate analysis, Kline’s Nancy Mills said, “In 2013, the Chinese natural personal care is posting growth of almost 25%, fueled by a cultural reliance on Traditional Chinese Medicine (TCM), increased—confidence-inspiring—transparency in product safety and health related matters, and growing affluence.”

On the other hand, the 7% U.S. growth and 6% European growth in natural personal care in 2013 has been driven by brand diversity, product efficacy, price and a desire for greater labeling transparency. Kline notes that Japan’s natural personal care market grew 5% in 2013, driven by shampoos, conditioners and personal cleansing products.

Natural positioning is desirable for manufacturers around the globe, and many products are being reformulated to remove or minimize synthetic components. Of course there are price, performance and olfactory sophistication issues to consider when selecting ingredients.

A 2013 Euromonitor U.S. beauty and personal care report notes, “The multitude of complex chemical compositions in today’s beauty and personal care products rivals only modern consumers’ collective ignorance surrounding their use. According to a 2009 poll of 2,016 participants by natural deodorant company Bionsen, the average woman uses 515 different synthetic chemicals on herself each day, with only 9% aware of what most of the key ingredients actually were.”

Presumably, consumer awareness of the ingredients contained within their products has only increased, even as growing amounts of naturals, notably argan oil in hair care, are incorporated into product designs as their efficacy improves. Yet, even as product developers and formulators create products with marquee ingredients, many are also highlighting what’s not in the bottle. Notably, Unilever’s Simple skin care line, which underscores its fragrance-free status in marketing communications.

“People [consumer product companies] are interested in essential oils,” says perfumer Balavoine. “But they don’t know quite how to use them in their formulations. They’ll say ‘we want 100% essential oils,’ or they’ll say they want to claim essential oils on their label. Or they don’t want to have ‘fragrance’ on their label. They want to be able to explain the whole formula on the label using only essential oils. It’s a challenge for [perfumers]. It presents a lot of limitations to a wonderfully wrapped fragrance when [you’re] limited to essential oils or 100% natural because the formula has to be short, and those ingredients need to fit on a small label. I think it’s extremely challenging, especially when you’re talking about sourcing, price and quality fluctuations year-to-year.”