The Hair Care Market

November 7, 2005

With an estimated 50% of women coloring their hair, sales of hair color are rising steadily. At the same time, specially formulated shampoos and conditioners are emerging to combat hair and scalp problems.

The Hair Care Market

With an estimated 50% of women coloring their hair, sales of hair color are rising steadily. At the same time, specially formulated shampoos and conditioners are emerging to combat hair and scalp problems.

A combination of innovative technologies from research and development departments and the consumer’s desire for healthy hair has led to a boom in the hair care market. Not only are store shelves sporting a large variety of hair care products formulated to fit an individual’s personal hair needs, shampoos and conditioners now promise to add benefits such as clarity and enhanced color and volume

In fact, all of the major hair care companies, including Procter & Gamble, Clairol and L’Oréal have been beefing up their hair care ranges with innovative products designed to restore hair’s health while cleaning and conditioning it.

“New, innovative products are very important in staying competitive and driving growth in the hair care segment,” remarked Carol J. Hamilton, senior vice president of marketing, L’Oréal. “Today’s consumers are very demanding. They are looking for technologically advanced formulas that provide great benefits. As the market continues to expand and consumers are faced with more hair care options, products that really deliver added benefits are the ones that will stand out.”

L’Oréal recently added Nutrivive shampoo and conditioner to its lineup of specially formulated hair care products. The products contain nutri-ceraminde to repair and revitalize dry, damged hair cuased by blowdrying, brushing and washes. “Today’s popular straight styles are taking their toll on the hair,” Ms. Hamilton said. “Hot blowdryers, irons and the tugging with brushes to create a super-straight look can lead to a lot of hair damage and breakage. This product helps prevent damage.” Hydravive is the company’s latest addition to its Vive line of shampoos and conditioners that are tailored to individual hair types. Also in the line is Colorvive, for color treated hair, Vitavive, a multi-vitamin complex for normal hair, Bodyvive for fine hair and Hydravive for dry hair. While this trend of specially formulated products is particularly noticeable in mature markets such as Europe and the U.S., a move toward this trend is beginning to be seen in the emerging markets such as Taiwan, India, China, Hong Kong and Singapore, according to Diagonal Reports.


P&G Hangs On
Procter & Gamble’s power brand, Pantene Pro V, led the shampoo and conditioner categories with annual sales of $237.3 million and $139.7 million, respectively for the year ended July 18, 1999, according to Information Resources Inc., Chicago, IL. But, the brand has faced some fierce competition in recent years particularly from Clairol Herbal Essences. Herbal Essences shampoo and conditioner has enjoyed double-digit sales growth every year since it was repositioned a few years ago. Last year the shampoo’s sales rose 17.6% to reach $139.4 million and the conditioner sales reached $84.3 million, a 15.5% increase.

Traditionally known for its colorants, Clairol has become a force to be reckoned with in recent years. Not only has Herbal Essences catapulted the company’s shampoo and conditioner sales, the Clairol Daily Defense line, launched in 1997, recorded sales of $62.8 million in the shampoo and conditioner segments. Also, Clairol’s acquisition of the Aussie shampoo and conditioner brand has boosted its market share in the category. “Hair care is a category we have traditionally competed in and we looked at the shampoo and conditioner segment and saw a huge growth opportunity,” said Drew Shepard, director of marketing, hair care. “We have been competing by filling consumer need gaps with new products and tying in great marketing to boost the new products’ recognition.”

Unilever’s Thermasilk brand has also become a major competitor since it entered the fray at the end of 1998, becoming the No. 3 conditioner brand with $59.6 million in dollar sales and the No. 6 shampoo ($64.4 million).

In January, P&G will attempt to prove its prowess in the hair care category when its launches the Physique brand, the company’s first new hair care brand in more than 20 years. Physique is a line of shampoos, conditioners and styling products that work together to give consumers the hair style they want. “Surprisingly, our research shows three out of four consumers are still unable to achieve the hair style they want everyday,” said a P&G spokesperson. “That’s because the hair you were born with doesn’t have the ability to give you the style you want. Physique brings breakthrough science to hair care to liberate style, enabling consumers to get and keep the style they couldn’t achieve before.”

Physique includes five series, each designed for a particular style—volumizing, smooth and contouring, easy styling, intense moisturizing and color bright.

P&G spokeswoman Tracey Long said the line’s introduction was born out of the company’s initiative to add innovative products that consumers crave to the marketplace. This initiative also led the company to extend its Pantene Pro-V line with Pantene Pro-V Color, a five-product line that keeps color-treated hair healthy and vibrant. Among the products offered in the extension is a protective pre-wash spray which is applied on dry hair before showering to help waterproof hair color. Company research showed that water alone may be responsible for 80% of color loss. The extension also includes a gentle cleansing shampoo, vitalizing care conditioner, intensive care masque and leave-in finishing spray with UV filters.

With 50% of women coloring their hair, more companies are introducing shampoos and conditioners that protecting the color and moisturizing the dry hair often caused by coloring. L’Oréal now offers ColorVive shampoo and conditioner; Revlon has reformulated its Colorstay and Matrix has introduced Logics ColoReserve Remoisturizing shampoo.


A Color Craze
Gone are the days when it was taboo to mention a woman’s hair color. The baby boomers depend on hair colorants to hide unwanted gray hair and many younger consumers consider the color of their hair a fashion accessory, switching shades to suit their whims. Furthermore more men are using hair color than ever before. This trend has not only created the color enhancing shampoos and conditioners such as Pantene Pro-V Color, it has sent the home hair color market skyrocketing. Industry sources estimate that of the 50% of consumers who color their hair, 35% use home coloring products.

According to IRI, mass market hair color sales rose 13.3% to reach $1.2 billion during the year ended July 18. Unlike the fragmented shampoo and conditioner segments, the hair color market is largely dominated by two brands, L’Oréal and Bristol-Myers Squibb’s Clairol. Together, these two companies manufacture eight of the 10 leading brands. L’Oréal’s Preference Hair Coloring saw the most sales with $153 million; Clairol Nice N Easy was second with $121 million and L’Oréal Excellence and Feria were third and fourth, respectively.

The hair color marketers Happi spoke to all agree that companies must do two things to be successful—provide a superior product in a wide variety of shades and attract the male consumer. Ten years ago, the hair color market had few brands which all had similar shade palettes. “We have really used technology to tailor our shades to the consumer’s needs,” explained Paul Scoggins, marketing director, Clairol. “The sophistication of the color form has been important because it has produced different palettes. These modern hair colors use more ingredients that will produce vibrant, natural colors.”

In keeping with its theory that consumers want as many color options as possible, Clairol has reinvented its Ultress color brand. The new formulation offers women the option to customize their own shade with an expert color customizer that can be added to the line’s 28 shades to create brighter, richer more vibrant colors. The application process is similar to salon hair color, according to Clairol. The application begins with the colourconcentrate gel, then the developer and finally the customizer. “Before women had to go to the salon for this kind of customization,” said Norm Loveless, director R&D, Clairol. “The customizer gives the home color user the confidence to get this effect.” Before the restage, the Ultress brand was in a slump with sales dropping 19.6% to $37.3 million, according to IRI.


The Same for Less
Like other personal care segments, the line between the mass market and prestige hair care markets has been blurred. Manufacturers are offering upscale products with higher price points to the mass market, insisting that consumers are willing to spend more money to care for their hair. “Consumers are willing to spend money when a product meets an unmet need on the market,” said a P&G spokesperson. “Especially when the product is changing hair care from a toiletry to a beauty segment.” The products in the Physique line cost $10 each, that’s more than moss mass market brands sell for.

Not every consumer is willing to pay a high price for hair care. Some hair care manufacturers insist at least a portion of consumers won’t spend a lot of money to get the desired results. Value hair care brands such as Suave, White Rain and Rave cater to this part of the population with the ranges of shampoos, conditioners and styling aids which are usually cost less than $2. “For 30-40% of consumers, price is still a big discriminating factor in their hair care choices,” explained Ralph Blessing, marketing director for Suave. “They believe they can get the same performance at a considerably lower price.”

Found in an estimated 40% of U.S. households, Helene Curtis exectutives consider Suave a microcosm of the hair care category, offering more than 60 SKUs that represent the hair care needs of virtually every consumer. “Being a part of Unilever, we have access to a global network that allows us to look at trends all over the world,” Mr. Blessing said. “We are ready to jump on the trends even before the competition launches their products. For instance, if L’Oréal launches something in France, we know about it and we’re ready to have in the U.S. before they do.”

Suave recently restaged its entire brand, adding new formulas, extracting tired products and repackaging everything. New additions include a daily protection shampoo and conditioner and vanilla, almond and silk protein shampoo and conditioner. Suave even introduced a value brand to compete with one of its sister brands. New Thermal Formula shampoo and conditioner plays off much of the same concepts as Unilever’s Thermasilk brand, a hair care line that improves normal and damaged hair during heat styling. Since it was introduced last year, Thermasilk has been a tremendous success for the company. As a result, styling products have been added to the Thermasilk brand. Mr. Blessing said it is not unusual for Suave to offer products similar to those offered by Unilever’s other brands and this is in keeping with Suave’s main philosophy of offering a similar product performance at a value price. “We consider two things when we introduced a new product,” he remarked. “Whether there is a significant need and if we can deliver the same perceived performance as the competition.”


Salon Style
As Revlon continues to face economic woes, its salon division, which is reportedly on the selling block, continues to churn out niche products to fuel its success. American Crew has recently introduced two lines to target niche categories it feels could fuel growth. The Modern Organic Products (m.o.p.) and d:fi brands cater to the needs to a natural conscience consumer and generation Y, respectively, similar to how the American Crew brand targets males.

Chris Hansen, director of marketing, said the d:fi line is being marketed to consumers age 10-24, a segment of the population that spent more than $140 billion last year. “Nobody else is going after them exclusively,” he said. “These people want products designed exclusively for them. Still, I wouldn’t consider going after them a niche market because it is so large. They’re the trendsetters.” The nine product line ranges in price from $6.95-$8.95 and includes extreme cleansing shampoo, moisturizing shampoo, 60-second daily conditioners, pomade, molding crème, two hair gels and two hair waxes.

American Crew will creatively market the brand to appeal to the young consumer who, the company says, is not impressed by gimmicks. “We want to show them that these products are about defying the norm and not taking ‘no’ for an answer,” Mr. Hansen said. “It’s about going against society because these kids know they can do things better when they do them their way.”

The m.o.p. line targets the urban woman, age 25-45, who is well educated, financially secure and interested in using quality products on her hair. The line includes basil, carrot, cucumber, mint, oats, olive oil, parsley, sage, watercress and ylang-ylang which all work together to enhance beauty and healthy living. “With all the emphasis on health food and natural living, we felt there was a demand for natural hair care products,” remarked Laurence Hegarty, senior vice president marketing. “The plant-based formula strengthens hair and condition the scalp.”


What’s Next
The hair care market will continue to evolve as manufacturers struggle to produce products to suit the many needs of a diverse and knowledgeable consumer base. Companies will put much of the same philosophy they now place behind their skin care ranges into hair care and consumers will begin using products that meet their specific hair care needs.

“There will be a lot of activity in revitalized for permed or color treated hair as well as products for other concerns,” said Suave’s Mr. Blessing. “Hair is almost like fingerprints. Each person has unique needs based on texture and lifestyle. That’s why there are so many products out there.”

As the drug store shelves become more crowded with products offering added benefits to cleaning and conditioning, however, some worry that traditional products suited for a more generic customer base could become obsolete.

“Specially formulated shampoos are in danger of cannibalizing other products,” said Ms. Clarke, Diagonal Reports. “For example, from the point of view of consumers if a specially formulated shampoo offers the benefits that were once the preserve of conditioners or even treatments, why buy and use conditioners?”

Meanwhile, consumer giants such as L’Oréal, Clairol and P&G will continue to focus their R&D efforts on innovative products in an effort to dominate in this ever-growing segment.

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