In line with the performance of the beauty industry in general, hair care has experienced a slight slowdown globally, with the value growth rate falling from 5.5% in 2012 to 4.9% in 2013. However, hair care has resisted this slowdown more so than other beauty categories, largely due to a surge in innovations. Hair care is evolving from a staple category serving basic cleaning functions, to one of more sophisticated products offering targeted solutions.
All Categories Are Up
At nearly 40% growth, conditioners recorded the highest value growth in hair care between 2008 and 2013 thanks to the introduction of hair treatments, primarily hair oils formatted as leave-in conditioners. The popularity of hair oils also appears to have impacted the sales of styling agents, which recorded one of the lowest value growth rates in hair care at just 5% during the same period. Consumers seem to prefer the natural look and feel of hair oil rather than the stiff hold of traditional styling agents. Oil also is used in colorants; Garnier’s Olia hair color uses 60% oil to help pigments penetrate the hair. In fact, thanks to such innovations, hair colorants were the second-fastest growing category in hair care between 2008 and 2013, increasing more than 30% in value terms.
In absolute terms, however, shampoos contributed the most to the value growth of hair care, benefiting from innovations and, more importantly, increasing penetration in emerging markets. A key impetus to the growth in shampoos has been aspiring consumers in emerging markets upgrading to more premium Western brands. The impact of emerging markets has been so significant as to contribute nearly 90% to the overall hair care value growth in 2013.
Brazil: Key Focus for Growth
Within the context of prospective emerging markets driving growth, Brazil is a special case. With a 20% contribution to global hair care retail value growth in 2013, Brazil not only accounted for the most growth, but also, going forward, is projected to surpass the United States as the largest hair care market, in nominal terms, by 2017. Growth in Brazil is projected to come from all hair care categories, although conditioners are expected to take the lead. Brazilian women have a strong preference for straight hair and spend considerable amounts on conditioners to moisturize and hydrate hair. In fact, Brazil is the world’s largest market for conditioners, both in terms of value size and per capita spending.
Unsurprisingly, due to its strong growth prospects, Brazil is a key focal point for leading global hair care players. However, multinationals are facing competition from the local players, who experienced a strong boost in the sales of perms and relaxants, and also are improving product sophistication across all hair care categories. Multinationals could address this competition by introducing more advanced and sophisticated products from their mature market portfolios. Of particular interest are keratin shampoos and conditioners, which claim to straighten hair—and Brazilians are ready for them. This is illustrated by the fact that Brazil ranks among the top 10 markets in terms of per capita spending on hair care.
Three Es Dominate in Developed Markets
Innovations in hair care in mature markets have revolved around three key Es—efficiency, experience and expense, concepts that have been inspired by other beauty categories. Hair care has increasingly become more performance-driven, borrowing the focus on efficacy from skin care. Also, some hair launches have aimed to emulate the experience of color cosmetics by making products exciting; hair chalk, for example, a form of hair colorant, has been introduced in retail channels. Also adding to the experience element, some fragrance brands have launched hair fragrances to evoke sensorial effects, although these are still at an incipient stage.
More Segmentation for Future Innovations
An important question moving forward is: What other levels of sophistication is hair care likely to witness? While hair care developers have successfully targeted consumer needs more closely, there are still untapped areas. For example, gray hair remains largely unexplored. And although products have been launched to address hair loss, it is still not a fully proliferated market.
Future innovations are expected to be driven by increasing consumer segmentation and the targeting of less explored hair care concerns. In relation, for innovations focused on hair health, consumers will continue to watch product costs but if there are breakthrough innovations that can impede the processes of graying hair or hair loss, it is likely consumers would take a different view on pricing.