The personal care industry is growing faster than other market sectors, posting a 5% sales increase last year, according to a recent report by Investors.com. Companies in the field are consolidating, such as the recent Croda/Uniqema deal, and fast-growing markets such as Latin America are a key focus. As the industry consolidates and seeks new markets, it could be poised for new growth.
The benefits of personal care products have been touted for centuries. William Colgate began making soap in New York City in 1806, says the report, and now, 200 years ago later, Colgate-Palmolive sells over US$10 billion worth of products in 222 countries and territories worldwide. The market is reportedly driven by consumer desire to boost self-esteem with products that make the hair shinier, the skin glow or reduce the appearance of cellulite.
In established markets, consumers always look for something new; they want a variety of fragrances to accommodate changing preferences, skin-care products with more organic materials, and breakthrough anti-aging creams that “erase wrinkles.” According to the report, price is important too but consumers are willing to pay a bit more for something they see that they want. It is important to introduce products that are fresh and innovative and to continue marketing the benefits of existing products.
Today, the industry offers products that are marketed to all segments of the population—men, women and children. The children's market mainly focuses on oral care. Women are the biggest users of cosmetics and personal care items. But for many companies, male consumers have become a key market. NutriSystem, for example, targets men in a new series of ads. The ads are said to emphasize the program's no-cooking approach and the impact it has on a man's appearance.
The industry's biggest source of growth is in the developing world, according to the report. It is in these markets such as China where education may have the greatest impact. Companies should carefully research foreign markets before they start pitching products. Procter & Gamble, for instance, is said to have debated a Chinese marketing push for its Tide laundry detergent several years ago but the effort fell flat since many Chinese consumers did not own washing machines.
The United States also is a crucial market, says the report, but it is a mature market. Global Cosmetic Industry (GCI) magazine reported that North America's personal care sales grew 3.3% in 2005. Consumers are still showing a growing interest in natural products, says the report. The Natural Marketing Initiative reported that 28% of the general population desires natural care products made with organic ingredients. Colgate reportedly sees the natural care market growing 15% a year. The company's recent acquisition of all-natural toothpaste maker Tom's of Maine reflects its willingness to embrace the field.
Overall, the industry expects to have a healthy future, according to the report. Consolidation should help the biggest players especially as they face pressure from large retailers such as Target and Wal-Mart. With emerging product segments and developing markets, cosmetic and personal care firms are reportedly in a good position to grow. However, companies must make sure that their product offerings stay fresh.