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Sustaining Natural Growth

By: Karen A. Newman
Posted: October 3, 2008, from the April 2006 issue of GCI Magazine.

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U.S. brands Zia Natural Skin Care and Jason Natural Products, both part of The Hain-Celestial Group, are free of animal-derived ingredients and it is company policy to not test on animals or use ingredients that were tested on animals. “This commitment is very important to our consumers and (is) indicated on our packaging through the leaping bunny symbol,” according to company spokesperson Laura Setzfand, director of marketing for both companies. “The recycle symbol and natural ingredients logo are also extremely important to our consumers.”

The challenges for this segment don’t end with definitions and standards, however. Zia and Jason are two examples of what Duber-Smith characterized as “the wave of consolidation” that has been going on in the natural and organic personal care segment in recent years. “This is significant,” said Duber-Smith, “because consolidation usually forewarns of a maturing market.” Burt’s Bees, Dr. Hauschka, Avalon and others also have undergone some kind of acquisition or equity funding in recent years, according to Duber-Smith.

Changing Attitudes, Changing Channels

Growth in the segment shows no signs of slowing, due mainly, said Duber-Smith, to the expanding base of U.S. consumers who report using natural and organic personal care products. “Growth is driven by increasing attitudes in favor of health and wellness and environmental sensitivity as well as more product availability,” said Duber-Smith. “Products are available in an increasing number of channels as evidenced by major players like Tom’s of Maine and Burt’s Bees enjoying success in mass retailers like Wal-Mart and Target, the expanding role of e-commerce and other direct channels, and the continued growth of natural, spa, salon and prestige channels,” he said.

For Korres, a natural products company established in Greece and with roots in the first homeopathic pharmacy in Athens, the channel strategy varies upon the special characteristics of every market. “In Greece, our products are distributed to more than 5,000 pharmacies,” said Maggie Vasilyadis, spokesperson for Korres Natural Products. “Selling our products in Greek pharmacies is therefore very natural as we ourselves also started from a pharmacy.” In other countries, the concept of a pharmacy is very different and doesn’t always fit the Korres image. Korres works instead with well-known department and beauty stores, which often have a special area for the niche beauty and lifestyle brands from around the world, according to the spokesperson.

“In the United States, as awareness has grown about our brand’s quality and effectiveness, our distribution has expanded from small independent beauty boutique shops to prestige beauty chains. Thirty percent of our business is currently represented through our independent accounts, and 70% through the prestige beauty chains. In the short term, we see a continuous growth and awareness of our brand within the prestige market,” said Vasilyadis.