The natural personal care industry is still experiencing double-digit growth, according to a recent report by industry observer, Packaged Facts, which pegged the market at $8 billion in 2011, expanding at a healthy 10% clip. Since many different market research firms publish reports on the industry and the definition of what is “natural” is widely and liberally interpreted, many different growth rates and industry sizes have been reported over the years. But they all have one thing in common—double-digit growth rates every year, four to five times higher than the mainstream personal care market.
Quantitatively, as an industry gets larger it becomes more difficult to achieve higher growth rates. This is the nature of all industries as they eventually mature. But the steady performance in the natural personal care sector is maintained by several important trends.
Seems like we’ve been talking about aging forever. But the conversation is far from old—no pun intended. The aging Baby Boomers, the largest and wealthiest generation in history, are still flush with cash compared to every other generation. Most important, they are still concerned about how they look as they age. The result is a very vibrant market for anti-aging products across all personal care subcategories.
Most of these come in crème form, but we are also starting to see a proliferation of serums (more concentrated than crèmes) and powders. This trend will likely continue for at least another decade as the Boomers become elderly and eschew vanity, while a much smaller Generation X becomes more interested in this product category. Barring an invasion of middle-aged immigrants from France over the next decade, the growth rate in the U.S. anti-aging category will likely slow due to mathematical realities.
There are many ingredients at the forefront of this important personal care segment. Retinol and Coenzyme Q10 (CoQ10) are the big wrinkle-regulating ingredients, with the latter being particularly effective at protecting against harmful UV rays as well.
Hydroxy acids are often used as natural exfoliants, copper peptides enhance collagen production and the skin’s natural healing processes, and kinetin is rather effective at treating discoloration. Add a host of teas and “superfruits” to the mix and you have a supply side that is replete with numerous anti-aging options. It should be no surprise that this subcategory is a huge growth driver for the category as a whole.
Much for the Manly Man
The men’s personal care category (long the hairy “elephant in the room” of personal care) has finally come of age. After a brief battle against the rather odious and emasculating “metrosexual” moniker, manly men have embraced this category with vim and vigor.
Many products are targeted toward a man’s shaving needs, which is certainly a lucrative product category for consumer goods marketers. Consequently, there are now dozens of shave creams, gels, toners, after shaves, balms and crèmes available.
There are also products positioned for men with different skin types, from oily to dry. This may sound obvious, but while the industry was enjoying its greatest growth (pre-recession), these products were simply unavailable. Add to this a host of facial washes, body soaps, facial toners, deodorant sprays and moisturizers, and any semi-lucid marketer would be dizzy with the future prospects of this category.
Interestingly, the one area of men’s personal care that has received the least attention is the anti-aging category. For some reason, there aren’t many anti-aging products marketed “just for men.” Still, there are products featuring anti-aging ingredients, such as bay leaf, lime oil, aloe, lavender, shea butter, vitamins and antioxidants. So, a product might have anti-aging qualities, but the male-oriented marketing message is not necessarily focused on that application. For the future, this area could see considerable growth as men’s brands move beyond shaving and into other areas targeting some of the attractive areas of personal care.
It goes without saying that parents are concerned about the health of their children. As a result, they are more likely to scrutinize product ingredients compared to the general population.
Baby care is an important gateway category for natural personal care products in much the same way certified organic milk and produce are important starter products in the food category. Once a mother realizes that these products are effective and “healthier” than synthetically derived products, she will begin to buy natural products in other categories. And so it goes.
The focus has traditionally been on sensitive skin, with Burt’s Bees a first mover in this area on a large scale. And the company will likely become an even more important player as it continues to leverage the distribution strengths of Clorox, its parent.
Natural ingredients found in baby care products include some of the mildest available, such as aloe, beeswax, vitamins, and oils from soy, olives, coconuts, shea and grape seed. Every type of baby need is now represented in this category, including moisturizers, diaper ointments, sunscreen, shampoos, crèmes and others. Remember Johnson and Johnson’s “No More Tears” Baby Shampoo? Clearly, this is not a new idea.
The effort to remove the most harmful synthetic ingredients and replace them with more benign (if less effective) ingredients is known as “green chemistry.” The effort has been in full swing in Europe for several years, but efforts to pass legislation in California have fallen on tough economic times. There is simply no money to fund the effort.
Disappointingly, natural companies and their representative associations have done nothing to further this cause with private dollars, even though the efforts would likely result in a surge of natural ingredients. These same companies have also failed to band together to advance the regulation of “natural” as has been done with “organic.”
Recently, industry analyst Organic Monitor observed more than 50 brands positioned as “natural” and found that many were not meeting their natural claims. Failure to regulate on the part of government and industry has caused this, and the result is an erosion of consumer confidence.
The fact of the matter is that many of these so-called natural brands contain synthetic preservatives, surfactants and emollients. And the most harmful of these, such as phthalates, alkylphenols and parabens (recently banned in France), are already voluntarily being taken out of cosmetics.
A Look Ahead
Despite the current lack of government regulation or industry self-regulation, the evolution of this dynamic marketplace necessitates moves in the general direction of transparency and truthfulness. As natural ingredients become more accessible to manufacturers, and companies continue to offer natural products in broader channels of distribution, the only thing we can be certain of is change itself. The most successful companies will continue to address the expanding sub-categories of natural personal care with effective, well-branded products and will increasingly operate with one eye toward the future.
Competition, changing consumer preferences and demographics, as well as the specter of regulation represent a handful of areas a marketer must address in the strategic planning process. Attention to these will give the savvy marketer an advantage over those who fail to adequately assess the opportunities and obstacles. Those who haven’t addressed the overall global natural trend have failed their shareholders and customers. It’s time to wake up and smell the profits.
About the authors:
Darrin Duber-Smith, MS, MBA, is president of Green Marketing, Inc. He has more than 25 years of specialized expertise in the marketing and management profession, including extensive experience in working with natural, organic and green/sustainable products and services. Mr. Duber-Smith is also visiting professor of marketing at the Metropolitan State College School of Business in Denver, CO, and affiliate marketing professor at the Leeds School of Business at the University of Colorado-Boulder. Mr. Duber-Smith was the recipient of the Wall Street Journal’s In-Education Distinguished Professor Award for 2009, and is author of Cengage Learning’s Know Now Marketing blog at http://community.cengage.com/GECResource/blogs/marketing. He can be reached at firstname.lastname@example.org. Mason Rubin is a graduating senior at the Leeds School of Business at the University of Colorado-Boulder.