Natural and organic hair care products are growing in popularity as consumers become mindful of the health and environmental risks of chemical ingredients. This is a trend seen across cosmetics and toiletries sectors. Response from manufacturers of hair care products, however, has been slower than in other areas because some ingredients, such as peroxides and ammonia, are difficult to substitute.
Despite this, natural brands are becoming increasingly available. The Estée Lauder Companies, for example, has been particularly successful with the natural position of its Aveda brand, which is currently available in more than 20 countries. In colorants, ammonia- and peroxide-free variants are appearing.
Natural ingredients are in particular demand in developed markets, where consumers are more conscious of the health and wellness trend and have more disposable income to spend on higher-priced natural products. However, the trend is also strong in Latin America and Asia-Pacific, where there is a tradition of using herb-based products. Reibi Hair Care Series, launched by Utena, features four products that make a connection with seven traditional Japanese herbs, such as peony, carrot and iris, believed to bring out the best in Asian hair.
In addition, the market presence of natural and organic hair care is likely to expand rapidly during the next five years, in keeping with the growing consumer trend toward health and wellness, and ingredients trends across cosmetics and toiletries sectors.
The increased presence of natural ingredients in hair care products will help niche brands forge a place for themselves in a crowded environment. The natural label can provide a point of differentiation. Also, as questions still hang over what constitutes a natural brand, niche natural and organic labels, such as Burt’s Bees and Kiss My Face, will have more credibility than mainstream lines.
Mainstream brands will, however, be working hard to tap into the trend. Although none of the big name brands currently have organic ranges, this is expected to be the next step for the naturals trend in hair care, and L’Oréal is expected to be a leader in this respect, given that it began pushing into the ethical/natural arena with the purchase of The Body Shop and French organic cosmetics maker Sanoflore, in 2006.
Just as ingredients that are perceived as healthier will prove popular, more environmentally friendly formulations will also sell well. This could be achieved through packaging—by the use of refillable, recyclable or biodegradable containers and PVC-free plastics—and via formulations, such as sustainably-sourced ingredients, for example.
In 2006, manufacturers continued to drive growth through a process of consumer segmentation, with an emphasis on products tailored to meet increasingly specific needs. This trend, which represented a key focus in the slow moving mature markets, is driven by the three leading hair care manufacturers—Procter & Gamble, L’Oréal and Unilever. These players are extending their brands to address a widening range of hair care issues. For example, Unilever’s Dove was able to increase its global value share by adding a higher priced Advanced shampoo, conditioner and styling line that offered treatment for two types of hair damage and level of color.
In the competitive U.S. hair care sector, communicating the brand’s function is no longer enough, and marketers have turned to promoting the lifestyle values of certain hair care brands to differentiate their product. The recent Sunsilk launch is supported by a series of two-minute television commercials that run during Sex in the City, a now-syndicated program popular with the brand’s target consumer. The commercials focus on the day-to-day experiences of a young single woman, with hopes of creating an association between the female audience, the main character and Sunsilk.
The trend toward segmentation is likely to continue in the short-term, driving both volume and value sales. In highly mature markets such as the U.S., France, Germany and the U.K., hair care sales are suffering stagnation, and manufacturers will need to offer value-added attributes in order to gain share.
Euromonitor International believes that, in the longer term, there is a danger that hair care will encounter the problem of over-segmentation. With hundreds of brands to choose from and in different added-benefit combinations, consumers will become increasingly confused as to which product is right for their hair. Hence, a simplification of supply may well be the way forward.
As a reaction to over-segmentation, the market could see the re-emergence of brands that make simple claims for good all-around results, segmented only by general hair types: normal, oily, dry and color-treated, for example. The market could also see the rise of the all-purpose brand—one that combines benefits so consumers do not have to pick and choose from a variety of products; for example, sun protection conditioner for colored hair, or hydrating and volume boosting shampoo. The relaunches seen throughout 2006—exemplified by Procter & Gamble’s Herbal Essences in the U.S. and Unilever’s Sunsilk—could be seen as an attempt to give brands a more unified look, so that they are clearly identifiable without being overwhelming, despite their highly segmented nature.
There is one obvious segmentation opportunity that has of yet been ill-explored, though is expected to become better established in the longer term: men’s hair care. Male-specific hair care sales were worth less than 5% of the global hair care sector. It is also the slowest growing area, by far, of the vibrant men’s grooming products environment. The majority of men’s hair care products consist of male-focused colorants to hide gray hair. However, the men’s colorants segment is nearing maturity. It is expected to see continued growth in coming years as more men buy such products, particularly as a result of the aging population, but it is not likely to be as strong as when these products were first introduced. Therefore, the majority of potential for growth lies with male-focused shampoos, conditioners and styling products.
Male-specific shampoos and conditioners have, for the most part, yet to meet with great success in markets outside of Japan. There is a needs-based question here. Unlike deodorants, where manufacturers have convinced men and women that they need separate products, a division has not been established in relation to shampoos and conditioners. Were manufacturers to push the notion that unisex shampoos are not appropriate for male hair, there might be greater segmentation and an opportunity to develop a new niche.
The continuation of the megabrand trend that began in 2005 was a prominent theme in hair care in 2006, with manufacturers such as Unilever, L’Oréal and Procter & Gamble leading the way. Megabrands have a broad presence across the hair care environment, as well as geographically, and attempt to cater to every hair care need. In a highly penetrated, competitive area, the megabrand enjoys strong recognition, and it provides a more accessible option in an environment where high segmentation is often confusing for consumers. The theory is that manufacturers can milk broader industry trends and target new lucrative groups—ethnic consumers, teens, seniors and consumers with special needs—while reinforcing brand equity. Procter & Gamble’s Pantene Pro-V, for example, benefited from the addition of Pantene Extra Liso for Hispanic women. Procter & Gamble also extended its Head & Shoulders range with the launch of Head & Shoulders Sensitive Care, an antidandruff shampoo designed for consumers with sensitive skin. Unilever is also concentrating on its leading brands, and, following a policy of divesting its poorer performers; its key Dove and Sunsilk brands were extended throughout 2006 while poorer performers Finesse and Aqua Net were put up for sale.
While global brands continue to dominate the hair care environment, local companies can have an advantage, particularly in emerging markets. In Asia-Pacific, for example, a growing sense of nationalism and cultural identity is tipping consumer preferences in favor of locally produced goods. This move is exemplified by the “Japanese women are beautiful” campaign to advertise Shiseido’s new Tsubaki hair care line. In South Africa, where the emerging black middle class is increasingly demanding sophisticated products designed specifically for African hair, locally owned Amka Products— with brands such as Sof ’n’ Free, Easiwave and Black Like Me—ranked third in 2006. Western companies are working to tap into this trend by launching products better suited to ethnic hair types. In South Africa, L’Oréal sells under brands such as Dark & Lovely, and Unilever’s Sunsilk is segmented by ethnicity with lines for both South Africa’s Caucasian and black African consumers.
While global megabrands may address universal tastes and promise consistent quality, it seems likely that the major multinationals will retain a portfolio of international and local brands to satisfy both global and international tastes. This strategy will prove particularly important for manufacturers looking to succeed in both developed and developing markets. By professing expertise in Hispanic hair, straight hair, long hair and so on, megabrands also run the risk of losing credibility due to overextension. Niche brands that may span the entire hair care spectrum but target only one consumer segment may also increase in popularity as a more effective, specialized option to overstretched megabrands.
Salons are providing strong competition to at-home hair care products, particularly in the mature markets where consumers are more affluent and are willing to spend more money to achieve the perfect hair style. Perms and relaxants suffer most from this source of competition, with many consumers preferring to leave such tasks to the professionals where they pay for the convenience and perceived superiority of the results. Colorants are also beginning to feel the bite in developed markets, declining every year between 2001–2005 and achieving only a marginal recovery in 2006. Consumers are also proving increasingly willing to trade up to commodity products such as shampoos, conditioners and styling products sold through the spa channel.
To beat back the competition, manufacturers of at-home hair care products are developing products that are as easy to use and as effective as salon brands. Alberto-Culver’s success in this area with TRESemmé in the U.K. and Nexxus in the U.S., illustrates that this strategy enjoys high credibility among consumers by offering what is perceived as premium hair care at affordable prices. Hair care manufacturers could also go beyond the focus on efficacy and tap into the popularity of pampering spa treatments by launching at-home alternatives. Examples could include massaging shampoos and conditioners that both relax and de-stress the consumer while also offering improved efficacy such as deeper penetration of moisturizers and other nourishing ingredients.