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Nutricosmetics: The Future of Beauty or a Waning Fad?

By: Carrie Lennard, Euromonitor International
Posted: October 5, 2009, from the October 2009 issue of GCI Magazine.

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Beauty foods manufacturers are having to walk a tightrope when selling their goods. The first option is to retail through mainstream outlets such as supermarkets, which are thriving during the recession but which are risks because consumers are able to compare nutricosmetics prices unfavorably with standard product counterparts, as in the case of Essensis. The second outlet is high-end doors such as department stores, where brand image is far easier to maintain but which are currently facing greatly reduced foot traffic. Value sales through department stores declined in the key Japanese and U.S. markets by 3% and 2%, respectively, 2007–2008.

Nestlé evidently learned from Danone’s mistakes, and opted for high-end distribution when it launched its beauty drink Glowelle in the U.S. Retailing at approximately $7 per bottle, it is available only in department stores, which wisely avoids the possibility of comparison with standard drinks. The fact that the product remains on sale in the U.S. suggests that selective retailing is the way forward.

Emerging Regions Hold Key to Long-term Growth

In the Japanese market, the use of nutriceuticals is widespread, and the country accounts for the vast majority of global beauty supplement sales— $923 million in 2008, or 16% of all dietary supplements sold. The problem is that in order for the segment to continue to grow, sales really need to take off in countries where the economies are more resilient to the global recession—in particular, the BRIC nations. In the comparatively still booming Brazilian market, the market for beauty supplements is currently negligible. China is a more positive story, with beauty ingestibles accounting for 13% of the supplements market. However, its overall spend on supplements is woefully lacking compared to neighboring Japan, with an average spend of just $4 per person in 2008 compared to $45 per person in Japan. India’s spend on dietary supplements is even lower, at under $0.5 per person, and there are no supplements currently positioned as beauty enhancing. If the nutricosmetics segment is really going to move forward from a global perspective, it will have to focus its attention on building use among consumers in these key markets.

Carrie Lennard is a research analyst at Euromonitor International.