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A New Style for Hair Care

By: Fabrizio D’Alete, Euromonitor International
Posted: November 29, 2011, from the December 2011 issue of GCI Magazine.

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The category of hair care products with anti-aging properties is also an area underlined by a growing number of launches, many of which are focused on hair loss and coloring [for more on this category, read Ageless Tresses—Building the Complete Anti-aging Hair Care Line]. Statistics for the global hair loss category show growth reached almost 39%—5.3% compound annual growth rate (CAGR)—2005–2010 to reach a value of $681 million in 2010. Asia leads the way by far, posting a 7.2% CAGR over the same period to reach value sales of $433.3 million in 2010.

Within Western Europe, dry shampoo could be one of the most important drivers for value growth, as these products have a higher price per liter and can offer higher margins. Companies in the region are struggling to find premium products that appeal to consumers, and in this case, dry shampoo is perceived as a very convenient product because it is quicker to use and does not require water.

Dry shampoo is performing well in the U.K., but companies are already seeking to move beyond this market into other key hair care markets. Dry shampoo is by no means a new innovation, but sales have surged recently due to frequency of use. For example, the brand Batiste has been on sale in the U.K. for many years but only recently regained popularity with the festival culture in the U.K., where festival-goers are unable to wash their hair for several days on end. The fact that users do not need water also attracts eco-aware consumers who are concerned with the scarcity of water, and the damage linked to the use of chemical products and the residual that ends up in public water. As a result of growth in the category, late 2010 marked the entrance of one of the major players in hair care into dry shampoo, moving the product beyond its niche status and into the mainstream. Unilever entered the dry shampoo segment with a product called Fresh Start under the TRESemmé brand, acquired by Unilever via the acquisition of Alberto Culver in 2010.

Acquisition Boost Companies Growth

Other than innovation, acquisition could be an extremely functional tool for a company looking to enter other markets. In the case of Unilever Group—which agreed to pay $3.7 billion for Alberto Culver, the world’s sixth largest hair care brand owner—the deal has increased the company’s global share of the beauty industry from 6.8% to 7.2%, cementing its third place ranking behind industry leaders Procter & Gamble and L’Oréal. Although Alberto Culver is very strong in the U.S., the acquisition is extremely interesting for Unilever for accessing emerging markets, including Mexico, China and Argentina.

Acquisitions are expected to be the quickest and most effective way for companies to enter emerging markets, while innovation will be the main tool for companies seeking to increase sales in mature markets. Both are expected to be core strategies for companies and could be successful if supported by effective marketing campaigns.