Abstract
Why buy this report
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive
environment
Product coverage
Baby care; Bath and shower products; Colour cosmetics; Deodorants;
Depilatories; Fragrances; Hair care; Men' s grooming products; Oral hygiene;
Premium cosmetics; Skin care; Sun care
Executive summary
Lower growth in 2007
Sales of cosmetics and toiletries grew at a slower rate in 2007 than in 2006.
That said, current value growth in 2007 was similar to the average growth rate
for the 2002-2007 time period. Cosmetics and toiletries sales growth was
slowed by the housing downturn, and rising energy and food prices. Worries
about the US economy led to reduced consumer confidence and lower spending.
The US economy saw GDP growth of 2.7% in 2007, lower than the 3.2% growth
achieved in 2006.
Natural and organics grow in popularity
Americans are expressing growing concerns over the impact of various goods on
the environment and on their own health and well-being. They are increasingly
turning to all things natural in search for healthier alternatives to standard
industrial goods, and products that have claims of being "natural", "organic"
and/or eco-friendly are growing in popularity across various areas of the US
consumer market. Consequently, speciality and niche beauty manufacturers, such
as Lush and Pangea Organics, have been expanding, while mainstream
manufacturers continue to introduce a large variety of products formulated
with organic ingredients, botanicals and food ingredients, such as Estée
Lauder Cos Inc' s Origins subsidiary introducing the Origins Organics line, and
L' Oréal USA Inc launching Garnier Nutritioniste, with lycopene and omega-3 and
omega-6 fatty acids. Household care company Clorox' s November 2007 decision to
purchase Burt' s Bees, a natural personal care company, for US$925 million,
demonstrates confidence in the future growth of the "natural" and "organic"
personal care market.
Companies look to acquisitions to build sales
The US cosmetics and toiletries market continues to see a trend towards
greater consolidation, as market entry via acquisitions and mergers is one of
the strategies to gain competitive advantage in a highly developed US market.
L' Oréal Groupe further strengthened its salon hair care business by acquiring
professional hair care company Pureology, in May 2007, and expanded its
presence in prestige colour cosmetics, fragrances and skin care through its
January 2008 acquisition of YSL Beauté Holding. Procter & Gamble entered the
dermatological skin care field through its January 2007 purchase of skin care
company HDS Cosmetics Lab, and its DDF (Doctor' s Dermatologic Formula) brand.
In March 2008, the company acquired salon hair care company Frederic Fekkai.
Coty Inc chose to expand beyond its core fragrance business through its
acquisition of Del Laboratories (Sally Hansen colour cosmetics and
depilatories, NYC New York Color colour cosmetics) which was completed on 31
December 2007, though not announced until January 2008.
Drugstores and perfumeries rise in importance
Industry analysts point to the increasing "democratisation" of retail, in
response to the "democratisation" of the American consumer. Time magazine
named "You" its Person of the Year in December 2006, and bloggers are wielding
increased power, as consumers move away from traditional media to social
media, such as YouTube and myspace.com. With the Internet allowing consumers
to become more knowledgeable about product attributes, as well as prices,
Americans want more power in making purchasing decisions when they walk into a
store. The success of drugstores, which is the second leading distribution
channel for cosmetics and toiletries behind supermarkets/hypermarkets in the
US, and perfumeries lies in the fact that they fit well with these
"democratisation" tendencies. Sephora and Ulta, which offer self-service
options with beauty advisors available on demand, have shown strong growth.
Value declines ahead
The cosmetics and toiletries sector is expected to decline between 2007 and
2012 in constant value terms. This will be due to the maturity of the US
cosmetics and toiletries market, where many products enjoy a high rate of
household penetration, as well as to price pressure from mass merchandisers,
such as Wal-Mart. Sun care, baby care and men' s grooming products are expected
to show the fastest value growth over this time period. A desire to look
younger will prompt skin care to be the fastest growing subsector within men' s
grooming.
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