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As the global economic downturn is tempering off and showing signs of recovery, some companies are finding a moderate return to growth. In 2010, the 10 leading beauty brand owners saw their combined value sales (in U.S. dollar year-on-year exchange rates) increase by 7%; an improvement from the slight 1% decline in 2009. For these players, a few key strategies are at play: increased presence in the emerging markets, development in areas of innovation, and acquisitions that help to increase sales and margins.
Of the largest beauty categories globally, hair care accounted for 18% of value sales in 2010 and was also one of the hardest hit segments during the downturn. According to research firm Euromonitor International, hair care recorded a drop of 2% in 2009, largely due to consumers trading down to less expensive options and relentless discounting, including “buy one get one free” offers. In 2010, the category did see an increase of 7% in value sales, which is broadly in line with growth in the overall industry and a decent performance given the relative size and maturity of hair care.
As is the story with most consumer good products, the markets that were largely impacted by the downturn included mature, saturated markets such as North America and Western Europe.
Nevertheless, in this negative scenario two main trends sprouted; the first one is the inclination to choose bigger formats, which offer a better value for money ratio. The second trend involves consumers opting for premium-end brands or those with salonlike features to replace visits to the salon. While many salons were forced to offer discounts to consumers in order to maintain foot traffic, the exceptional growth of categories such as colorants and at-home perm kits indicates female consumers are still choosing to color their hair at home. As a consequence, the colorants category, previously one of the less dynamic areas of hair care, has become a hive of new product development activity and renewed consumer interest, according to Euromonitor International.