Beauty and Personal Care in the US
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Euromonitor International Beauty and Personal Care in the US 22 Jun 2012 Beauty and personal care grows in 2011 In 2011 the US beauty and personal care market saw the highest growth in current value terms of the 2006-2011 period. Although economic recovery was slower than anticipated and the unemployment rate remained high, overall growth was strong. Growth was driven by high-income consumers, who were less affected by the 2008/2009 recession than their lower-income counterparts. Although the performance of the US stock market was flat in 2011, many affluent consumers felt comfortable spending money again. Pent-up demand, as well as product innovation in discretionary categories such as colour cosmetics and fragrances, contributed to growth. Premium beauty products outpaces growth in mass products Growth in beauty and personal care in 2011 was driven by premium products, which increased in 2010 and into 2011 after declining in 2009. In particular, premium skin care products outperformed mass skin care products. Consumers of premium skin care products economised in late 2008 and through 2009 by using the last drop of moisturiser before repurchasing, and also traded down to mass brands. In 2011, an improving economy, combined with product innovation, attracted high- income consumers back to department store beauty counters to buy premium skin care products. At the same time many consumers in the lower-income groups continued to struggle, as high unemployment rates and increasing petrol prices reduced their purchasing power. The poor economic prospects for low-income consumers contributed to moderate sales of mass skin care products in 2011. Procter & Gamble and L’Oréal lead beauty and personal care The Procter & Gamble Co and L’Oréal USA were the leading two players in beauty and personal care in the US in 2011. Procter & Gamble’s Olay brand was the leader in skin care, whilst Lancôme from L’Oréal was the third ranking premium skin care line. Olay was able to achieve top billing through product innovation and massive advertising spend. In 2011 the Olay brand launched a new hair removal system called Olay Smooth Finish Facial Hair Removal Duo, and entered acne treatments for the first time with its Olay Pro-X Clear Acne Protocol. L’Oréal also found success with its Maybelline colour cosmetics line, which was able to upgrade its image through new product development, as well as its sponsorship of Mercedes-Benz Fashion Week. Parapharmacies/drugstores lead beauty and personal care Parapharmacies/drugstores lead US beauty and personal care sales. This channel saw its value share increase in slightly in 2011 as drugstore chains CVS and Walgreens added more foods to their stores which increased shopper frequency. Americans like to purchase beauty products in drugstores because of their convenient locations and wide selection of mass market beauty brands. Department stores - the second leading channel for beauty products - saw their value share increase in 2011 due to the strong performance of premium beauty and personal care products. High-income consumers returned to department stores in 2011. Growth through to 2016 The US beauty and personal care market is expected to demonstrate good growth over the forecast period in constant value terms. Consumers are expected to increase their purchases of beauty products, as the US economy recovers and manufacturers launch new value-added features. A rise in employment will lead to more disposable income to spend on beauty. Anti-agers in skin care is expected to experience good growth, as baby boomers will drive growth in anti-ageing products as they seek to look as young as they feel. Sales of male-specific bath and shower and skin care products are expected to continue growing due to the immaturity of these categories, and increasing comfort with grooming regimes amongst younger American men. KEY TRENDS AND DEVELOPMENTS Lawmakers seek federal oversight of US beauty products Despite challenging economic conditions over the past decade, US beauty and personal care remains an extremely popular and vibrant market, supported by a loyal and lucrative consumer base. Yet despite the ever-expanding range of products available to consumers, and the increasingly pharmaceutical or cosmeceutical nature of new product lines, regulation and oversight of the US beauty products industry has remained sparse and largely untouched for decades. Whilst the US Congress and regional state legislative bodies have, in isolated cases, sought to provide specific guidelines for certain products or ingredients, there are few hard, consistent guidelines pertaining to industry-wide consumer safety standards. In 2011, at the behest of consumer advocacy and protection groups, lawmakers at the federal level took the first steps to design a regulatory framework to meet the challenge of standardising modern cosmetic formulation, testing and labelling. This legislation has the potential to change the landscape of cosmetic and personal care legislation in the US, as consumers increasingly seek greater knowledge of the ingredients in their cosmetics and the potential impact on their health. Current impact Unlike robust federal oversight of the US pharmaceutical industry, the present regulatory environment for cosmetic companies and many personal care product companies in the US is weak, with self-policing and little to no federal involvement in the testing, labelling or recall of cosmetic products. Legislation designed in the early 20th century (the Federal Food, Drug and Cosmetic Act of 1938) only empowers the Food and Drug Administration (FDA) to provide guidance and classification of cosmetics, with no mandate to require government approval of certain products, and little effort to rigorously test or prohibit potentially harmful substances in cosmetics or other personal care products. One area of particular concern is health-related product claims, whereby consumers may purchase a product under the assumption that it positively impacts their health. More recently, the FDA has taken a larger role in the regulation of this area, particularly with regard to sun care, whereby a 2011 regulation instituted by the FDA revised the labelling of sun protection factors on sun care products to reduce spurious claims about UV protection and skin cancer prevention. The increasing complexity of the ingredients present in many cosmetics (and the health claims attached to these products) prompted consumer advocacy groups to push for a change to the system. Advocacy groups, including the Campaign for Safe Cosmetics, have expressed concern about the presence of phthalates, parabens, acids, formaldehyde, mercury and other harmful substances in products ranging from make-up and skin cream to shower gel, deodorant and hair care products. A February 2012 study commissioned by the US Food and Drug Administration revealed that 400 lipsticks on the US market tested positive for lead. The publicity around these studies and their mass dissemination via social media increased consumer awareness regarding the ingredients of beauty and personal care products. Online communities of concerned consumers of beauty products have pressured lawmakers for greater access to the content and potential dangers of ingredients within popular cosmetic products, as well as a more rigorous assessment of the efficacy of cosmeceutical claims made by clinically formulated products. In June 2011 the Safe Cosmetics Act of 2011 was introduced to the US House of Representatives. This legislation, as well as the Cosmetic Safety Enhancement Act of 2012 (a similar but less comprehensive successor bill introduced during the new legislative session) was the subject of committee debate in 2012. Outlook In general terms, both articles of proposed federal legislation aim to expand the role of the US Food and Drug Administration in the oversight of consumer cosmetic products. Whilst the two bills under discussion differ, and the final proposal is still under discussion, a few key ideas common to both proposals seem increasingly likely to be adopted in some form. First, manufacturers will be required to register large companies, production facilities, products, new product proposals and ingredients with the FDA for review and approval. Second, the FDA is likely to require the disclosure of new ingredients to federal health bodies and to consumers through new transparent labelling requirements. Third, the FDA will receive the power to recall harmful or defective beauty products for the first time. Finally, the expansion of a standardised FDA/Health & Human Services list for prohibited, controlled and/or potentially harmful ingredients is expected. Whilst the European Union currently restricts the use of more than 1,000 harmful chemicals in beauty and personal care products, US federal authorities presently restrict only 11. If the legislation under review is indicative of the eventual regulatory changes to come, then both consumers and manufacturers can expect major changes to the industry. So-called cosmeceutical health claims attached to anti-ageing, hair loss or other popular products could be subject to far more scrutiny. Popular products containing scrutinised chemical agents may be subject to tighter labelling requirements, and potentially removal from the market. Unsurprisingly, these changes have been met without enthusiasm by cosmetics manufacturers, many of which remain wary about the cost of implementing these changes to product formulations, marketing and packaging, as well