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Looking for a Bigger Bite—Selling Beauty from Within

Carrie Lennard, Euromonitor International
  • Success in selling nutraceuticals requires both ingredient manufacturers and brand owners to focus on innovation.
  • Many consumers remain highly skeptical about the efficacy of nutraceuticals.
  • Though lagging behind other markets in total sales, the U.S. nutraceuticals market was the most dynamic in 2008, with a 42% rise in value sales.
  • The image of nutraceuticals is difficult to reconcile with the boom in marketing and sales of natural and organic.
  • Consumers want to understand exactly what they are ingesting and tend to mistrust that which they don’t.

Nutraceuticals are becoming a focal point for product innovation among both food/drink manufacturers and supplement players alike. The segment is currently the hot topic for the beauty industry, and, as a result, has produced a mass of new product innovations—all with the common goal of enhancing beauty from within. The question remains: Are consumers buying it? Euromonitor International takes a look at key trends, the major new developments in the category, who the key players are and how the performance of the beauty industry measures up compared to the areas of fast-moving consumer goods that nutraceuticals essentially compete against.

Companies Focus R&D on Nutraceuticals

In a bid to stay ahead in the nutraceuticals game, both ingredient manufacturers and brand owners alike are focusing their efforts on innovation. One of the most major recent new launches was the lycopene-containing supplement Innéov Fermeté, a joint collaboration from food giant Nestlé and global personal care player L’Oréal. Lycopene is currently one of the most popular ingredients in beauty supplements. The ingredient was initially marketed on the basis of its cancer-fighting properties; however, it was soon promoted as a beauty enhancer. Innéov Fermeté is designed to be taken daily, and reportedly slows down the effects of skin aging. It is currently being sold in parts of Europe and Latin America, and is shortly set to be launched in Britain.

November 2009 saw the launch of Sunpill, a supplement touted by its producers as the “sun defense breakthrough of the decade.” Designed to enable users to stay in the sun for twice as long as normal without getting sunburn, the pill represents a small but growing segment of ingestible sun protection products. It joins existing sun protection from within products such as Bronzage Sublime by Juvamine and Innéov Solaire by Nestlé and L’Oréal.

Consumers Seek Alternatives to Surgery

Cosmetic surgery procedures are growing in the double digits across many European, Asian and Latin American countries. Demand is driven by increasingly youth-obsessed consumers looking to maintain a youthful appearance and age gracefully. With an increasing aging population, especially in the developed markets of Europe and the U.S., demand for age defying procedures is expected to increase substantially.

A sizeable majority of consumers, however, are unable or unwilling to undergo surgery, which fuels a market for a less expensive option and could open a window of demand for nutraceutical products. The concept of maintaining an outward appearance through ingestibles is nothing new to consumers, thanks to strong government and media emphasis on the effects of healthy eating on the skin. The leap from this to the concept of beauty foods and pills should, in theory, not be too great. Yet, in reality, many consumers remain highly skeptical about the efficacy of nutraceuticals.

Popularity of Nutraceuticals Varies Globally

In some countries, nutraceuticals play a big role in the beauty market. In Japan, for example, there are speciality stores dedicated to sales of such products. Beauty-boosting ingestibles are also widely sold through pharmacies in Western Europe, yet the category is still relatively underdeveloped in many countries—especially in key markets such as the U.S. Due to stringent regulations, the U.S. market is lagging behind, representing only 4% of the total beauty supplements market, but a growing interest is gradually blossoming as Americans become better acquainted with appearance-enhancing functional foods and drinks. In 2008, sales of beauty supplements in the U.S. totalled just $80 million—less than a tenth of the size of the Japanese market. However, it was by far the most dynamic growth market, with a 42% rise in beauty supplement value sales in 2008 compared to just a 4% growth seen in Japan for the same time period.

The Japanese Ministry of Health and Welfare assess the quality of nutraceutical products and only issue the FOSHU (foods for specific health use) seal of approval if they meet up to its stringent standards. Unlike in many Western markets where functional food products are largely unregulated and, therefore, are often met with skepticism, the Japanese classification system lends a degree of credibility to products that measure up to its standards, and is driving sales of nutraceuticals in the country.

Clear Message; Ingredient Offering Key to Success

Part of the problem of selling nutraceuticals in many markets is that many consumers regard beauty foods, drinks and supplements as being chemically altered rather than natural. This means that the image of nutraceuticals does not sit entirely comfortably with the boom in sales of natural and organic foodstuffs and beauty products and the associated marketing messages that these products carry, which tend to emphasize their lack of added ingredients.

For example, consider British drink brand Innocent’s Superfruit Smoothies tagline: “Superfruit recipes are a blend of whole crushed fruit, pure juices and absolutely nothing else.” This contrasts with the unique selling position of Danone’s now defunct beauty yogurt Essensis, which contained a rather mystical sounding “Pronutris” ingredient. While such obscure ingredient terminology may still wash in the cosmetics industries (especially the antiaging segment), the zeitgeist of the consumer foods industry is leaning far more toward the former line of marketing: Consumers want to understand exactly what they are ingesting and tend to mistrust that which they don’t. This could well have been part of the problem in Danone’s failure to develop consumer confidence in Essensis and led to its ultimate withdrawal from sales in most markets.

Bite the Bullet; Conduct Clinical Trials

Recent studies on green tea supplements were conducted at the University of California on behalf of NuSkin. Despite being previously thought to have beneficial properties in healing sun-damaged skin, the researchers in the double-blind trial reluctantly concluded that “there were no statistically significant differences in the clinical or histological parameters of photoaging.” This was reported in the beauty industry press, which could be damaging for the beauty supplements industry—although what really counts are the studies that end up in the mainstream consumer media.

Perhaps out of fear of investing money in costly trials only to end up with similarly disappointing results, many nutraceutical brand owners shy away from carrying out similar tests. While, on the one hand, this prevents products being discredited, the downside is that it hardly helps to convince shoppers to try a product. It is clear that when it comes to persuading people to part with their cash for products that will enhance beauty, there is no better convincer than a clinical trial, especially in an area such as nutraceuticals where skepticism is so prevalent. The hype surrounding Alliance Boots’ Protect and Perfect Beauty Serum is one that is rather old hat in the U.K. market, but the point it proves is clear globally. By subjecting, in this case, the antiager to independent scientific trials and proving its efficacy, the product instantly shifted from one of many in an overcrowded market of antiagers to become the must-have among consumers, selling out in shops and enabling Alliance Boots to increase the serum’s retail price.

Trials; Regulations Should Help the Segment

Ultimately, the nutraceuticals brand owners that are brave enough to let their creations undergo tests are likely to reap the rewards in the long term, and raise the credibility of the industry as a whole. The stringent nutraceutical tests in Japan have actually served to make the country the world’s biggest nutraceutical market, and the same can happen in other key beauty markets if the industry overcomes its reluctance about testing.

Carrie Lennard is a research analyst at Euromonitor International.

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