The Global Market for Natural Personal Care Products

Introduction & Product Definitions

Natural & organic is the fastest growing sector of the global personal care industry. Growing consumer demand for ‘chemically-clean’ cosmetics & toiletries has increased revenues by over US $1.6 billion between 2007 and 20XX. Rising consumer awareness of the possible dangers of parabens, phthalates, aluminium salts and related chemicals is the major driver of market growth.

This report analyses the global market for natural personal care products. Also known as natural cosmetics & toiletries, these products can be segmented by product category:

Natural Skin Care Products – facial care products like moisturisers, cleansers, etc.

- body care products like lotions, foam bath, etc.

- sun care products like sun screen, lotions, etc.

Natural Hair Care Products – shampoo, conditioner, hair colours, etc.

Natural Oral Care Products – toothpaste, mouthwashes, etc.

Natural Colour Cosmetics – mascara, foundation, lipstick, etc.

Others – deodorants and feminine hygiene products

Natural personal care products are defined as products made from natural ingredients of plant extraction and contain minimal levels of synthetic substances like petrochemicals and parabens. The definition is arbitrary since there is no formal definition of natural personal care products. The definition excludes bath salts, candles, aromatherapy products and essential oils, however massage oils and body oils are included.

Many brands of personal care products that have natural ingredients but contain high levels of synthetic substances are excluded. These brands include The Body Shop, Neutrogena,

Chart 8 gives the sales breakdown of natural personal care products by marketing channels.

Chart 8 The North American Market for Natural Personal Care Products: Sales Breakdown by Channels, 2010

Others Concept stores 11% 21% Natural food shops 42%

Specialty PCP Mass market stores 16% 10%

Note: All figures are rounded Source: Organic Monitor

Natural food shops comprise most sales, with 42 percent market share. The channel includes natural food supermarkets, organic food shops, health food retailers and similar stores. North America has about 22,000 such retailers. Most sales are from large store formats, with many having dedicated areas for natural personal care products. The leading chains are Trader Joe’s and Whole Foods Market in the US, and Planet Organic in Canada. The American chains are marketing natural personal care products under their private labels.

Roughly 21 percent of natural personal care product sales are from concept stores & salons. Included are manufacturer operated retailers, salons and spas, as well as independent salons and spas. The two leading companies - Aveda and Bare Escentuals - operate concept stores. A number of European companies, such as Korres Natural Products and Melvitacosm, are opening concept stores when entering the North American market. Hair salons, spas and beauty centres are also important channels for some brands of natural personal care products.

A high degree of fragmentation characterises the European natural personal care products market. Most brands operate on a national basis, with few developing a European presence. The major competitive trends occurring are:

Popularity of retailer private labels. Leading retailers, especially in northern Europe, have introduced natural personal care products under their private labels. Private labels are most prominent in Germany where they have over 15 percent combined market share. Supermarkets, pharmacies, organic food shops and discount stores have introduced private labels for these products in Germany.

Growth in concept stores. Many natural personal care product companies are investing in concept stores. Some companies, such as L’Erbolario and Neal’s Yard Remedies, have concept stores as an integral part of their business model. However, concept stores are also being opened by companies that have traditionally not focused on this area. For instance, Melvitcosm is opening concept stores across Europe since its acquisition by L’Occitane in 2009. New entrants into the European market like New Zealand-based Comvita are also opening concept stores.

Entry of conventional brands. Many large cosmetic & toiletry brands are entering the natural & organic personal care products market. A new entrant in spring 2010 was Garnier, which launched a line of Ecocert-certified organic skin care products under the Bio Active brand. Beiersdorf launched the Nivea Pure & Natural range of natural skin care products in January 2011. Henkel has a line of Ecocert-certified organic skin care products under the Diadermine Bio Expertise brand. Other notable new entrants include ADA Cosmetics, Schwarkopf and Boots Alliance.

Crossover from pseudo-natural sector. A growing number of natural-based brands are entering the ‘pure natural’ and / or organic personal care products market by launching certified products. Yves Rocher and L’Occitane have developed Ecocert- certified products. A new entrant in November 2009 was The Body Shop which introduced an Ecocert-certfied range of organic skin care products under the Nutriganics brand.

Increased market segmentation. Many new brands are targeting specific sales channels and / or consumer groups. For instance, the UK company Bulldog markets a dedicated range of natural male grooming products.