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Hair Care Growth Thinning for the Near Term

By: Carrie Lennard, Euromonitor International
Posted: April 30, 2009, from the May 2009 issue of GCI Magazine.

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This means that, as the recession digs deeper, these regions will be hit harder than developing regions as consumers trade down. The biggest single market for hair care is still the U.S., with value sales of more than $10 billion in 2008, or a 16% share of the global hair care market. Americans are also the biggest consumers of salon hair care products, with an annual spend of $2 billion in 2008—though the recession has impacted sales of salon brands, which previously sold well because of their availability in key mass channels such as Wal-Mart. In 2008, the category’s sales nose-dived by 6% as consumers cut back on their spending. This contributed to an overall decline of 2% in U.S. hair care value sales.

The most promising growth regions are currently Latin America—in particular Argentina, where the hair care sector increased by around a third in value in 2007–2008—along with India and China, which are two of the biggest markets for hair care and are expected to continue to perform well in the next five years.

In China, people are now washing their hair far more often—the average is around once every two days compared to once every four days a few years ago. This has translated directly into stronger sales growth for shampoo and conditioners. In India, a rise in disposable income has resulted in consumers shifting away from buying a single bottle of two-in-one shampoo/conditioner for the whole family and embracing the segmentation trend by buying individual products tailored to gender, age or hair type.

In India, as in many other emerging markets, price is still a barrier to buying hair care products for many people, and manufacturers have tried to overcome this by selling sachets and smaller bottles of products that are more affordable. Sales of conditioners are being boosted by consumers shifting away from buying hair oil, traditionally used to moisturize hair in India, to Western-style conditioning products.

Price Key to Staying Afloat

With some exceptions, such as the natural hair care niche, consumers will continue to trade down globally to less-expensive products as the credit crunch continues. Innovation, though often touted as the key to survival in a recession, is simply not enough to prevent this from happening, and manufacturers operating solely in the premium hair care segment should consider a move into the mass market. In a similar vein, those whose primary focus is currently the ailing Western regions should shift their attention to emerging markets that are not as dependent on the fortunes of Western economies.