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Natural Products Outperform the Overall Personal Care Market

By: Nancy Mills, Kline & Company
Posted: November 19, 2010

According to Kline & Company research, the surge in consumer interest in, and adoption of, natural personal care products around the globe has driven outstanding growth in this segment of the market even as the overall industry has posted lukewarm results. While this story may already be well-documented, new research reveals that this little-red-sports-car of the consumer products industry will continue to pull ahead of the pack with stellar growth expected in key emerging markets.

Although not immune to the downturn in the global economy, the natural personal care market seems to have recovered more quickly than other segments, outpacing overall industry growth in all four major market regions. As the naturals movement regains momentum, unprecedented growth in some unexpected locations may not only continue to outpace overall industry growth, but also provide significant opportunities for both regional and global players to capitalize on the double-digit surge expected over the next five years.

Burgeoning in Brazil

Despite its ranking behind Asia and Europe as the third largest market for natural personal care products, the Brazilian market for naturals has ballooned at a 20% compound average growth rate (CAGR) since 2005. Despite an economic crisis that saw the nation’s GDP slide backwards by 0.2%, growth in naturals continued at a double-digit pace, making it one of the fastest growing markets in the world. Part of this growth can be attributed to the heavy influence of local giants Natura and O Boticário, which together command an overwhelming majority of the market share.

However, as the industry moves toward more natural formulations, there remains room for other players, especially those who can offer consumers a wider selection of truly natural products. The richness of Brazil’s biodiversity, particularly the flora of the Amazon region, is one of the key drivers in the growth of this segment, with many well-known ingredients already being explored for their cosmetic properties. The increasing supply of locally sourced raw materials also makes natural products more affordable and accessible for consumers.

Belief in natural remedies is already a well-ingrained aspect of Brazilian culture, where herbs and plants have long been widely used for medicinal and therapeutic purposes. This cultural acceptance makes it easier for brand owners to make the natural “pitch” to consumers, who largely already appreciate the benefits. Meanwhile, the rising middle class has boosted overall cosmetics and toiletries growth, priming the market for naturals to blossom.