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Hair care is currently the largest category of the global beauty industry, according to market research firm Euromonitor International, accounting for 19% of total global industry value sales in 2008. However, it has also been one of the hardest hit during the global economic downturn. As a result of relentless discounting, “buy one get one free” offers and consumer trade down, value growth in the category rose only 4% in 2008, falling from 5% in 2007. This gave hair care the second lowest growth rate in beauty, after the dismally performing premium cosmetics category. Hair care sales cooled further in 2009, as discounting and price wars among both retailers and manufacturers intensified.
The markets that have endured the hardest year in hair care have been those where consumers already use conditioner as part of their grooming regimen, and where many consumers had already made a trade up from standard hair care products to more expensive salon brands. North America, Western Europe and Japan accounted for a combined 54% of total global hair care sales in 2008, and, perhaps more importantly, have the highest per capita consumption, according to Euromonitor. This means that there was far more scope in these regions to make cutbacks, and any change of market dynamics had a direct impact on global sales.
As the recession continued to bite in key markets such as the U.S. and the U.K., many consumers have opted for less-expensive brands—with private label hair care sales rising at the expense of higher-priced aspirational brands. Some consumers have even adopted a more drastic approach by cutting out products altogether—conditioners and styling agents have proved particularly susceptible to this. This resulted in a 2% decline in value sales in North America from 2007–2008 and just 1% growth in Western Europe, enough to dampen total global hair care sales.
Emerging regions did their part to prop up the sluggish performance of the developed markets. Particularly strong performances were put in by Eastern Europe (9% value growth 2007–2008) and Latin America (8%), according to Euromonitor. Improvements in distribution and retail networks is one of the main driving factors behind the strong growth of hair care in both regions. The sharp increase in chain retailers means that consumers in emerging markets are now being exposed to a wider variety of products than ever before, and this has moved sales in the category beyond basic products (like shampoo) toward conditioners and styling agents. In India, for example, consumers historically bought shampoo and conditioners as general or family-use products, but by 2008, with growth in disposable income levels and consumer choice, products are increasingly being bought for specific individuals—with more consumers demanding variants for their own hair type. The relative immaturity of these markets offers fantastic potential. In stark contrast to the developed markets, there is far more scope for long-term growth—as consumers, in many cases, are only beginning to trade up beyond basic products such as shampoo.