Naturals Market Report: Product Authenticity and Green Credentials

Increasing consumer awareness has led to a proliferation of natural/organic products in the beauty market as brand owners of all sizes jump on the bandwagon with product offerings claiming to be based on natural ingredients. However, according to Euromonitor International, it is the smaller brand owners that tend to enjoy greater credibility, as consumers appear to be suspicious of mass manufactured natural/organic products and overall corporate commitment to nature. The question is how can larger companies increase their competitiveness in a market inclined toward smaller brands?

Increasing Drive to Include Natural/Organic Products

The number of large companies offering products within the natural/organic space has increased in recent years. Johnson & Johnson rolled out Johnson’s Natural, a new line of products for children claiming at least 98% plant and fruit-derived natural ingredients. Procter & Gamble introduced NatureLuxe, a makeup range with natural ingredients, while more recently Beiersdorf introduced Nivea Pure & Natural, a skin and body care range claiming to derive 95% of its ingredients from natural and organic sources. Some companies, on the other hand, have acquired brands with an established image, examples being L’Oréal’s acquisition of The Body Shop, Clorox’s acquisition of Burt’s Bees and Estée Lauder’s acquisition of Aveda. More recently, Shiseido acquired Bare Escentuals to tap into the growth of the natural/organic segment.

Smaller Players Enjoy Greater Credibility

Although larger companies are actively seeking opportunities in the natural/organic space, it primarily remains the domain of smaller players such as Yes To, Lush and L’Occitane, which are in general experiencing above industry growth rates. L’Occitane’s CAGR of more than 24% between 2004 and 2009 in its primary Asian market compares to an industry average of 7%. Similarly, Lush, which specializes in bath and shower, posted a 6% CAGR between 2004 and 2009, compared to a little over 5.5% for the global bath and shower market. This is because consumers appear to be more skeptical about mass produced natural/organic products, thus favoring smaller brands. For example, The Body Shop saw its share of the global beauty and personal care market fall from 0.5% in 2006 to 0.4% in 2008 and 2009 due, according to Euromonitor International, to its association with L’Oréal.

Develop Smaller Autonomous Entities to Compete with Smaller Players

The concept of natural/organic is not just confined to natural ingredients but extends to a more environmentally-friendly manufacturing process. To increase their credibility and help support green offerings, large players have developed clear environmental objectives. For example, Procter & Gamble’s goal is to replace a quarter of the petroleum-based materials it currently uses with sustainable sources by 2020. This is a move in the right direction, but this alone may not be enough as there is still the issue of product authenticity. Along with environmentally-friendly goals, larger companies may consider setting up small autonomous units to manage green brands under a name not connected with their regular brands. It is perhaps too early to judge, but Beiersdorf may have benefited more if the name Nivea was not attached to its Nivea Pure & Natural range.


Larger companies are at a disadvantage as consumers question their product authenticity and green credentials. Over the years, larger companies have developed sustainability programs to help improve their green credentials as well as support their green offerings, but this alone may not be enough. They need to consider creating smaller entities with full autonomy and maintain a distance from them.

Oru Mohiuddin is a research analyst for personal care at Euromonitor International. She is responsible for contributing to the content and quality of Euromonitor’s personal care research, providing strategic analysis of companies and the global market.

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