Global retail sales of hair care products increased by 5% in 2011 to reach $73.7 billion, according to the latest data from Euromonitor International. Overall, lackluster growth rates in the U.S., Japan and most of Western Europe were offset by more enthusiastic spending in the emerging markets—notably China, India, Brazil, Russia and Mexico.
This trend has been the marked pattern of the past five years, with the emerging markets, in effect, propping up the global hair care industry. North America, Japan and Western Europe (excluding Turkey) showed collectively flat growth (-0.1%) between 2007 and 2011, and an increase of only 0.3% last year (all growth rates are based on U.S. dollars at fixed 2011 exchange rates).
In 2011, for the third year in a row, Brazil was the strongest growth market in the world for hair care, based on incremental retail value. Between 2008 and 2011, Brazilian expenditure on hair care products rose by $2.3 billion, according to Euromonitor International. That was equivalent to more than a quarter of the industry’s global incremental growth.
The affordable luxury trend might present an opportunity going forward, however, as consumers in developed markets are increasingly prepared to treat themselves to luxury items, provided they are positioned at accessible price points. This is very different from the aspiration-fueled consumption of emerging markets. It is more a nostalgia-fueled consumption that harkens back to better times. The question is whether a category such as hair care can successfully tap into it.
The best opportunities would be for colorants, conditioners and styling agents—which, as non-staple hair care products, can more realistically leverage “treat yourself” consumption patterns, and there is already some evidence of this happening. Colorants was the best performing hair care category in Western Europe in 2011, for example, based on incremental growth. And conditioners, colorants and styling agents each outperformed shampoo in the U.S. in 2011.
Eco-friendly products are another potential way to beat the downward curve in Western markets. Despite weaker real spending power, the sustainability agenda is getting bigger, fueled by aFacebook culture of online opinions and consumer reviews. There is little doubt this sharing has brought the sustainability debate—and its relevance to consumer products—to a much wider and more influential mainstream audience.
Ultimately, consumers put plenty of stock in looking good; to that end, they have a propensity to spend money on their hair, even when times are tough. In developed markets, that is the silver lining of opportunity. In emerging markets, it is the springboard for new product development, with the challenge of satisfying the preferences of numerous consumer groups.