- Although the global economy is showing signs of recovery, consumers will continue to be attracted by budget products.
- There was a marked decrease in footfall in speciality stores and department stores in 2009, which had a negative impact on sales of premium-priced bath and body care products.
- Globally, growth of liquid soap rose from 7% in 2008 to 13% in 2009, driven by consumer demand for products with anti-germ and antibacterial properties.
- The male body wash segment presents substantial growth opportunities and has proved to be relatively resilient to trading down.
- A major factor behind the decline in sales of anti-cellulite products was a lack of notable success stories in key Western markets.
According to Euromonitor International, growth in the global beauty market slowed to 4% in 2009, down from 5% in 2008, as a result of increased price sensitivity and consumer cutbacks that fueled demand for less-expensive brands and private label products. As a rule, commodity categories such as bath/shower and body care performed better than discretionary categories in 2009. While growth rates may not have been the highest, key basic categories such as bath and shower produced the most consistent growth in the face of the recession.
Changes in Consumer Retail Preferences Hurt Premium
There was a marked decrease in footfall in speciality stores and department stores in 2009 in favor of more mass-market outlets, which had a negative impact on sales of premium-priced bath and body care products. Parapharmacies/drugstores were the main beneficiaries of the global recession, as consumers traded down in terms of where they bought most of their bath and body care products. As sales through department stores took a hit, the global premium bath and shower segment slipped into negative growth in 2009, posting a 0.5% decline, according to Euromonitor figures.
Private Label Sales on the Rise
The onset of the recession meant that, in regions where available, private label made significant gains in the more commoditized categories of bath/shower and body care, which were also impacted by discounting. The presence of private label is stronger in categories in which consumers feel they can easily trade down to cheaper products without noticing a difference in quality or function. Sales are particularly strong in Western Europe, a region with a strong concentration of chained retailers and a high level of consumer trust in retailer brands. As a result, private label held a significant 12% share in 2009 in the bath and shower category in Western Europe. During the economic downturn, private label bath and shower products benefited from their low prices, which make them attractive to consumers. As a result, multiple retailers in the region launched more segmented variants of shower gels, often targeting the lowest end of the price spectrum.
Depilatories Remain a Niche Category Globally
According to Euromonitor, with sales of just less than $4 billion in 2009, depilatories accounted for only a 1% share of total global beauty and personal care value sales. Furthermore, sales continue to be highly concentrated in Western Europe and North America, with these regions alone commanding 70% of the sector’s 2009 global value sales.
The cultural acceptance of female body hair is crucial to the success of depilatories in any given region/market, and plays a key role in determining the size of the sector. In the U.K. and the U.S., obvious body hair on women is generally considered unacceptable, particularly underarm hair. This attitude ensures far higher sales in these markets than in other countries where female body hair is more commonly tolerated. As a result, the strong growth in personal wealth in emerging regions such as Brazil, Russia, India and China has not necessarily translated into a big rise in sales of depilatories. Despite China’s disposable income levels roughly doubling 2004–2009, annual per capita female spend on depilatories in the country was still well below $1 in 2009.
Bath/Shower Rescued by Strong Liquid Soap Sales
Plagued by private label launches, consumer trade down and buy-one-get-one-free offers toward the end of 2008, swine flu could not have come at a more convenient time for bath and shower brands, producing a growth spike in liquid soap sales globally. Growth rose from 7% in 2008 to 13% in 2009, driven by consumer demand for liquid soap and hand sanitizer products with anti-germ and antibacterial properties. Brands leapt at the chance to drive sales in the notoriously mature category through new product developments, and there was a strong focus on producing handbag-sized hand sanitizers, often sold at the point of sale in stores. While other categories, such as bath additives, posted a decline of 2% in 2009, the boom in liquid soap sales was enough to maintain overall value growth in bath and shower of 6% in 2009, unchanged from 2008. It remains to be seen whether the strong growth in hand sanitizers will continue now that swine flu is not the looming threat it was feared to be. What is clear, however, is that swine flu provided bath and shower manufacturers with some much-needed respite in a year that would otherwise have been much worse for the industry.
Men Emerge as Key Consumers Globally for Bath and Body
Male-specific bath and body care products continue to be a sustainable trend, with global growth in the men’s skin care and men’s deodorant categories reaching 8% in 2009. Despite this, both segments remain small compared to overall global skin care and deodorant value sales. The male body wash segment has also seen plenty of recent new product development. With the category presenting substantial growth opportunities and proving to be relatively resilient to trading down, a number of companies have made men’s grooming a top priority. Beiersdorf introduced what it calls the first body wash, shampoo and shaving cream combination in July 2009 under the Nivea brand, while Unilever has recently extended its male Dove range with Dove Men and Care in the U.S., Italy and the U.K.
Deodorant Sales Buoyed by Latin America
Deodorants and baby care were the best performers globally in 2009, each growing by 7%, albeit from a low base. Latin Americans’ love of scents underpinned strong growth in deodorant roll-ons and sprays as consumers used less-expensive body sprays as substitutes for fragrances. Unwillingness from parents to sacrifice quality in their children’s products, together with increased purchases of baby lotion for adult consumption, boosted demand for baby care products, including natural/organically-positioned goods.
Sales of Firming/Anti-cellulite Products Take Hit
According to Euromonitor research, while sales growth of global skin care slowed to 3% in 2009, down from 5% in 2008, sales of firming/anti-cellulite products were particularly hard hit during the recession—with global value growth plummeting to 1% in 2009, down from 6% in 2008. Reduced consumer spending was certainly not the only reason for the drop in sales. Despite reduced budgets during the recession, global growth in antiagers remained buoyant at 7% in 2009, only two percentage points lower than the previous year. A major factor behind the decline in sales of anti-cellulite products was a lack of notable success stories in key Western markets, resulting in a lack of credibility among consumers. Antiagers, on the other hand, have benefited as a whole from the publicity surrounding the success of certain products—notably Boots’ Protect & Perfect and Aldi’s Co Enzyme Q10 cream, both of which have been found in scientific tests to work (albeit with a small, temporary effect).
Anti-cellulite products are proving more successful in emerging regions where they are still a relative novelty. Latin America and the Middle East/Africa are still seeing strong performances, with 18% and 12% value growth, respectively, in 2009. Despite this, scepticism in key markets such as the U.S. and the U.K. is harming sales of firming/anti-cellulite products overall.
Outlook: Mass Market Will Continue to Drive Sales
The market will continue to be driven by mass and masstige launches. Premium-priced bath and body care products are set to continue to see subdued global growth rates, caused primarily by continued reductions in consumer spending. Although the global economy is showing signs of recovery, consumers will continue to be attracted by budget products. As a result, the premium bath and shower segment is set to add just $175 million in absolute global growth 2009–2014. Absolute growth in bath and shower 2009–2014 ($3.7 billion) will be less than half that seen 2004–2009 ($6.5 billion), just as absolute growth in body skin care products will be greatly reduced. Because of this, manufacturers will have to work harder than ever to convince consumers not to simply buy the cheapest products available. Strong innovation and USPs will be the key to maintaining value growth.
Carrie Lennard is a research analyst at Euromonitor International.