Natural products breath life into stagnant sector

By Staff Reporter

- Last updated on GMT

Related tags: Natural ingredients, Marketing, Euromonitor

By highlighting the natural aspects of their products manufacturers
can tap into the healthy lifestyle trend and revitalize sluggish
sales, says market researcher Euromonitor International.

While the cosmetics and toiletries sectors is expected to grow by only around 1 percent a year through 2009, Euromonitor draws on figures from TNS Media Intelligence/CRM, which predicts that the annual growth rate for natural organic skin care, hair care and color cosmetics markets in the US to be around 9 percent between 2003 and 2008, increasing in value from $3.9 billion to $5.8 billion.

Euromonitor valued the US cosmetics and toiletries market at $71.3 billion in 2003, growth of just 0.5 percent on the previous year. The European market is smaller, around $45.6 billion, but growth on the previous year was steeper, at 17.7 percent.

"Rightly or wrongly, good health is often associated in consumers' minds with all things natural, while chemicals are considered by some to be the root of all evil,"​ said the market researcher, which has recently published a strategy briefing entitled The Growth of Natural Ingredients: Implications for Global Marketing Strategies.

"Consequently, these perceptions have given rise to demand for natural additives and ingredients used in cosmetics."

What is more, negative media coverage of certain chemical ingredients such as phthalates and triclosan, which have been linked to carcinogenic effects, has encouraged consumers to scour the shelves for hair care, oral hygiene and color cosmetics products that do not contain them.

In particular, manufacturers have heeded the signs in baby care products and are highlighting natural ingredients in their marketing - such as Johnson & Johnson with its oatmeal-based Aveeno line that was extended into baby care in 2000.

Bath and shower products and hair care are also key receptors for natural ingredients, and it is expected that the major players in the market will dedicate large portions of their marketing budgets to promoting the natural aspects.

And the reward potential is clear. Not only could they benefit in sales volumes, but natural products can also get away with costing rather more than their mainstream counterparts, since they are perceived to be of higher quality. This premium injecting new value into the market, and it being perpetuated by upscale packaging emulating successful high-end products like Origins and Aveda.

Despite the boom, Euromonitor does not expect that natural cosmetics and toiletries will outpace mainstream products in overall sales, nor that chemicals will disappear entirely from the formulations, since they seen to play a vital role in increasing shelf-life or efficacy. Rather, it expects that manufacturers will up the amount of natural ingredients used in addition to synthetic ones.

However the report also contains a caveat. Regulations on both sides of the Atlantic could hamper development of natural products, since manufacturers will have to label potential allergens - and synthetic ingredients are known to cause fewer allergies than natural ones.

"This could potentially damage the market for some natural cosmetics and toiletries products,"​ said Euromonitor.

Another important factor in the market is definition of natural and organic. At present, there is no clear-cut definition, but there is a feeling that it will be clarified in the coming years.

Related topics: Packaging & Design

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