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 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 system called Olay Smooth Finish 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 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 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 as the proposed new fees associated with FDA registration. The Personal Care Products Council (PCPC), a trade association representing many of the large mass-market cosmetics manufacturers, opposed the bill because of the fees levied on manufacturers, and possible overlap with the industry’s own Cosmetic Ingredient Review Panel in determining ingredient safety.

Future impact

As part of efforts to lobby against the proposed legislation, cosmetics companies have argued that mandatory disclosure of ingredients to the FDA would compromise proprietary formulations and negatively affect sales. Furthermore, manufacturers and retailers have argued that registration and expensive testing would add another layer of complication to the process of marketing cosmetics in the US. On the positive side, standardised, federal legislation about the dangers of particular ingredients may ultimately reduce the liability of cosmetics companies by eliminating multiple lawsuits. Proposed regulatory changes also offer the benefit of greater transparency, which may encourage innovation (particularly in the area of natural or organic beauty products) on a level playing field. Higher regulatory standards already established in the developed European markets may ease any potential transition to a new framework in the US, particularly for large European manufacturers which have a significant presence in the US market. Regardless of whether a federal bill is passed in 2012, manufacturers should anticipate and respond proactively to a confluence of efforts – at both the US state and federal level – to increase transparency and restrict potentially harmful chemicals. Increasingly this has become a question of when, and to what extent, the FDA will exert greater control over the beauty and personal care industry. Manufacturers and retailers would be wise to pre-empt costly changes by developing products which meet higher standards of formulation and ingredient disclosure, eliminating harmful chemical agents and placing a renewed emphasis on consumer demand for natural, harm-free cosmetic products.

Ongoing reinvention of formats in beauty and personal care

Growth in beauty and personal care in the US is dominated by several key multinational beauty and personal care manufacturers. Whilst brand portfolios are diverse and varied, large manufacturers including The Procter & Gamble Co, L’Oréal USA, Estée Lauder, Unilever Home & Personal Care and Johnson & Johnson Consumer Products control many of the leading product lines in the US. Growth has historically been driven by efforts from these manufacturers and marketers to innovate, package and promote their brands to maximum effect. However, in recent years the role of retailers in this marketing process increased, with the staid, fluorescent and old-fashioned shopping experience replaced by new and innovative beauty retailing concepts. New and vibrant retail formats, both in- store and online, premium and mass, are shaping the future of beauty and personal care.

Current impact

In 2008 CVS Pharmacies launched an inventive Beauty 360 concept in west coast locations. The company opened more than 20 stores in 2008 and 2009, primarily in California, which experimented with an “open-sell” retailing format and a premium-priced product mix. This concept was meant to mimic the popular retail format of upscale beauty retailer , a division of the luxury conglomerate LVMH. Although CVS announced the closure of the Beauty 360 concept in 2011, open- sell remains an emerging format in US chained drugstore retailing. Duane Reade, a New York-based and predominately urban chained drugstore owned by the national Walgreens chain has experienced considerable success with a comparable Look Boutique open-sell beauty format. Whilst presently geared towards lucrative urban markets, this represents a shift in the presentation and tone of mass- market beauty sales. Look Boutiques are currently open in Walgreens locations in Chicago, Florida and California, and feature between 1,200 and 2,000 sq ft (110-190 sq m) of sales area for beauty products. Brands range from entry-level cosmetics such as Maybelline to prestige-positioned La Roche-Posay or Vichy (L’Oréal) with extensive in-store shelf, aisle and point-of-sale branding.

At the prestige end of the market, department store retailer Macy’s opened an open-sell Impulse Beauty format at more than 100 Macy’s locations nationwide. This represents a major departure from the traditional one-on-one associate-driven model employed by US department store chains. For many decades, department stores were the go-to beauty retailers for American women, with OTC purchasing de rigueur. However, the channel has been forced to compete with other mass non- specialist alternatives, and a consumer expectation for browsing and trialling products. From a manufacturer’s perspective, open-sell environments allow the consumer to engage with sample products prior to purchase, a factor which may increase the likelihood of an eventual sale.

Men’s grooming is another area of beauty and personal care which has witnessed major changes in retailing presentation. According to some consumer studies, men constitute around a third of mass- market shoppers, whilst beauty and personal care shopper marketing has remained overwhelmingly focused on female consumers. In 2011 Procter & Gamble trialled “Men’s Zone” areas in the regional chain HEB. These male-centric environments feature the Procter & Gamble line of men’s products and toiletries in an inclusive, marketer-branded environment. The prominent display also features overhead flat-panel televisions with sports programming, encouraging male shoppers to linger around the shelves. Other retailers, including Target and leading chained drugstores, have experimented with inclusive “men’s aisle” concepts which promise far greater investment in in-store marketing and inclusive shaving/toiletries aisles.

Not to be outdone, Sephora is remodelling and redesigning some of its locations in New York City in 2012. Already a leader in beauty innovation, Sephora plans to introduce digital checkouts, in-store events, more services and an expanded product mix. New open-sell concepts, including a Fragrance Flight Bar, will also be introduced to the remodelled New York Union Square store. This novel feature will allow the consumer to trial unbranded scents, learning about the composition of the fragrance before the brand name and price is revealed on a display iPad.

Outlook

In the post-recessionary environment, it is more important than ever to coax shoppers back into the beauty aisles and elevate the shopping experience. The reinvigoration of the in-store beauty display or subtle changes to improve consumer comfort can yield significant rewards for both retailers and the leading brands. The popularity of Sephora beauty boutiques at the high-end of the market, and the entry-level Ulta boutique-salons indicates that US consumers may no longer be satisfied by the pared down beauty aisles of , or shelves in traditional chained drugstores.

Experimentation with premium or so-called masstige brands is another area which may benefit from a reinvention of beauty retailing. In autumn 2009 Wal-Mart revived Hard Candy cosmetics (acquired by NuWorld) by bringing the flagging niche speciality brand exclusively into its stores. Duane Reade, acquired by Walgreens, has attempted to bring traditional prestige brands such as Anthony Logistics For Men into its new men’s grooming aisles. Upgrading or upscaling the product mix may be the natural next step in the reinvention of the US beauty and personal care retail environment.

Future impact

Brand equity is a crucially important part of consumer marketing in all beauty and personal care categories, affecting both prestige and mass-market products. Retail format changes and the elevation of the shopping experience could help both retailers and marketers to build market share. Marketers of cosmetics, fragrances, shower gel and a host of other product lines are increasingly dependent on encouraging the sensory or “special” experiences evoked by their brands. Vibrant, immersive and rewarding retail environments stimulate this high level of consumer engagement with product branding. Management consultancy firm Deloitte LLP estimates that both manufacturers and retailers have substantially increased shoppers’ marketing budgets over the past six years, and this will continue to shape future marketing efforts.

Internet retailing accounted for a 6% share of value sales in beauty and personal care in 2011, reaching sales of US$3.6 billion. This is expected to rise to US$5.3 billion by 2016 in constant terms. Continued experimentation and innovation with online beauty and personal care concepts will therefore be another facet of future retailing efforts. Subscription-based websites, such as Birchbox for cosmetics or Dollar Shave Club for men’s shaving, will present a challenge to traditional manufacturers. As small, start-up online retail concepts gain traction, the large marketing budgets of the leading companies are expected to be refocused on the digital platform.

Beauty companies focus on packaging and delivery systems Beauty and personal care companies are focusing more on packaging and delivery systems as ways to differentiate themselves from the competition. Improved packaging lets companies add value, improve shelf appeal and differentiate from competitors and private label. In the case of premium cosmetics, innovative and beautiful packaging allows manufacturers to justify higher prices. Value- added features in packaging are taking place in the form of outer packaging, new brushes and new delivery systems. The need for shelf appeal is especially important in mass-market channels, where there are no beauty advisors to guide shoppers. At the same time, consumers’ short attention span requires bold visual statements in order for products to stand out from the competition.

Stand-out packaging is increasingly necessary in order to appeal to quality-conscious consumers, as well as beauty editors and beauty bloggers. Beauty and personal care distribution is becoming less defined. As a result, prestige products are increasingly finding their way onto the shelves of drugstores and mass merchandisers, as manufacturers seek to increase their shares. The end result of this shift has been an intense struggle for consumers’ attention, with even low-end, value brands making heavy investments in design and development.

In addition, with US consumers relying more on beauty blogs and magazines instead of advertisements and beauty advisors, stand-out packaging remains one of the ways in which a product can receive a mention in a beauty magazine, or on a television show or beauty blog.

Current impact

Beauty companies are introducing more unique packaging in order to stand out from the competition. This is especially true in hair care, as consumers have to navigate long aisles filled with numerous mass-market brands as well as salon hair care brands.

To attract consumers’ interest, cosmetics manufacturers are going beyond just introducing new chemical formulae through applicator brushes. Mascara is the latest battlefield, with companies introducing new mascaras with unique applicator brushes. In 2011 Coty introduced Volume Flash Scandaleyes Mascara with a MaxDensity brush, which is 50% larger than its other mascaras to create lashes which are up to 12 times fuller. More makers are incorporating brushes into the cap In 2011 L’Oréal USA introduced L’Oréal Paris Visible Lift Smooth Absolute Age-Reversing Foundation, which is marketed as offering a smoothing brush which “fills lines and smoothes wrinkles”, whilst its Hydra-Collagen Complex plumps and hydrates.

Consumers are increasingly looking for greater control in their beauty products. In turn, companies are introducing products which allow them to control the colour or coverage. In January 2011 Xen- Tan Products introduced Xen-Tan E! Live From The Red Carpet Perfect Blend Self-Tan, which comes in a dual-chambered bottle containing bronzer and self-tanner, so the consumer can “customise” the tan. introduced Elf Mineral Personal Blend Foundation SPF15. The powder foundation offers four shades in a plastic jar, and an adjustable dial to custom blend the foundation.

The eye area is an area of focus in terms of packaging innovation. Estée Lauder launched Estée Lauder Idealist Cooling Eye Illuminator in June 2011. Instead of the standard cap, this Estée Lauder product features a ceramic applicator that provides a cooling sensation. It is claimed to reduce dark circles and puffiness after two weeks. Procter & Gamble introduced Olay Total Effects Dark Circle Minimizing Eye Brush. The anti-ager with an application brush claims to reduce the seven signs of ageing in the eye area. L’Oréal USA introduced L’Oréal The One Sweep eyeshadow featuring a flat, unusually-shaped brush which is brushed across three shades to produce smoky eyes. Convenience is being touted by new delivery formats. Coty’s Sally Hansen Salon Effects Real Strips offer consumers a fast, easy way to get elaborate nails as the “pre-printed” flexible nail strips eliminate the need to apply multiple polish colours with surgical precision. Liquid nail polish has been bonded to a flexible polymer so that the nail strips move with the nails. Manufacturers of hair colourants have introduced foam formats which are claimed to offer more even colour coverage with minimal dripping. Clairol Nice ‘n Easy Colour Blend Foam and John Frieda Precision Foam Colour are marketed as being easier to use than traditional tube hair colourants. The new self-tanning towelettes from Dr Dennis Gross Skincare allow consumers to apply self-tan without worrying about dripping on or the floor. The Dr Dennis Gross Skincare Alpha Beta Glow Pads tout not only vitamins A, C, D and E, but also contain an exfoliant (willow bark extract) for an even fake tan.

Small and travel-sized products have gained popularity. The 2008/2009 recession prompted consumers to turn to travel-sized products as a way to limit their investment when experimenting with new products. At the same time, such travel products offer a convenience factor to consumers, who can stash small amounts at various places they visit (such as at the office, in a gym locker or a bag), rather than carrying around a full-sized bottle of fragrance or skin care product. Smaller formats, such as fragrance rollerballs, encourage experimentation. Emphasising the trend is the fact that travel-sized products carry lower price points (although unit prices are frequently higher). Online retailer 3floz.com even highlights travel-sized products, promoting trial/travel-sized products to consumers via a convenient website. As consumers remain concerned about the economy, such convenient sizes are likely to remain popular. At the other end of the price spectrum, luxury skin care brand vbeauté launched in 2011 with the It Kit for US$165. The It Kit features an elegant gunmetal clutch that holds five travel sizes.

Outlook

Packaging innovations and new delivery systems will continue to proliferate in the short and medium term. Manufacturers are not expected to reduce their output of new product launches. Secondary packaging (in most cases, outer) is poised to take off, not just in fragrances, but also in colour cosmetics, in which a lot of the smaller brands, such as , are investing more in outer boxes and tins as a method of differentiation. The story in secondary packaging is a move beyond folding cartons (although these continue to become more elaborate) and into tins, paperboard tubes, cans and so on.

Eco-friendly packaging, such as ’s refillable lip colour case, is set to become more widespread over the forecast period, filtering into the mainstream market as environmental issues and global warming continue to grab headlines. In early 2011 Procter & Gamble began using a renewable, bio- derived plastic in packaging for its Pantene and Cover Girl brands. Sugarcane is made into high- density polyethylene plastic (HDPE #2), which is recyclable. The bottle for Cover Girl NatureLuxe Silk Foundation, launched in January 2011, is made from sugarcane-derived plastic. Younger consumers, in particular, are increasingly concerned about sustainability. Pacific World’s new geoGIRL colour cosmetics line for tweens aged 8-12 years old is made from recyclable materials such as corn and recycled paper.

Companies will also place greater emphasis on the already popular convenience pack, especially in light of flight restrictions implemented in 2006, which limit the amount of liquid cosmetics allowed in hand luggage. Fragrances are expected to see particular innovation, as such products typically exceed the 3 fl oz (90ml) limit. Small sizes are also likely to become more common, not just to service the travel market, but to encourage trial purchases at lower prices.

Future impact Packaging is expected to become more important to the success of a product in the coming years. Whether a consumer is looking for added-value, shelf appeal, ease of travel or environmental benefits, packaging will be able to offer the desired benefit.

Companies with large research and development budgets, as well as small but nimble players, should benefit from this trend. Estée Lauder is well-positioned to take advantage of the trend towards more environmentally-friendly packaging. Its Aveda division has sold refillable and make-up compacts for numerous years. Aveda introduced the first 100% recycled polypropylene (PP) cap in the beauty industry in 2008, and created a cap recycling programme in the same year. In 2010 Aveda transitioned from virgin green frosted glass bottles to 100% post-consumer polyester (PET) bottles for its Botanical Kinetics skin care line. The company runs advertisements stressing that Aveda is one of the leaders in terms of environmental awareness. Its division also uses many recycled materials. Origins introduced the “Return to Origins” packaging recycling programme in April 2009, to collect old cosmetics containers at the brand’s retail shops and department store counters nationwide.

Smaller but innovative companies such as Cargo and Physicians Formula Holding Inc should also do well. Whilst Cargo has a considerably smaller research and development budget than Procter & Gamble, it benefits from a strong understanding of its fashionable client base, as well as its long term affiliation with make-up artists. Cargo was the first company to package liquid foundation in a collapsible flexible laminate pouch (with a plastic spout and cap), creating a lightweight, unbreakable container which takes up minimal space in a bag, as well as allowing the user to squeeze out the last drop. In 2009 Cargo developed Cargo Time Strip Gloss – a which contains a time strip inside the lip gloss cap which turns red over time so the consumer knows when to throw it away. In 2010 Physicians Formula introduced the Bamboo Wear compact made of sustainable bamboo and a bamboo brush featuring unbleached, undyed natural bristles. In early 2012 the introduced Physicians Formula pH Matchmaker ph Powered Bronzer, Blush and Lip Gloss. The pH Matchmaker products featured LED-powered packaging to make touch-ups easier.

Reaching older consumers

Americans aged 50 and over comprised 33% of the US population in 2011, up from 27% in 2000. The 50+ population grew by 32% between 2000 and 2011 to reach 102 million in 2011. Baby boomers are ageing, and many are now “empty nesters”, as their children have grown up and left the family home. During the 2008/2009 recession, many in the 50+ age segment saw their retirement savings accounts decimated due to stock market losses and as a result, a large proportion do not intend to retire at the age of 65. At the same time, affluent baby boomers tend to have higher disposable incomes because they are no longer paying for their children’s college expenses.

Current impact

Strong growth in the 50+ population represented a major factor in the significant increase in sales of anti-ageing products. Anti-agers increased by 39% in current value terms over the review period 2006-2011, to reach US$2.9 billion. Women in their 50s and 60s are seeking anti-agers as they look to remain active and attractive. Older women seek to look as young as they feel. At the same time, women in their 20s and 30s are seeking anti-agers in order to prevent the early signs of ageing from developing. As a result, the anti-ageing category has expanded dramatically. Furthermore, advances in technology and perceived benefits motivated consumers to spend more on anti-ageing products.

Demand for anti-ageing features has migrated from anti-agers and skin care in general into other categories, such as colour cosmetics and sun care. Manufacturers of foundation launched several products which offer anti-ageing benefits. Lipsticks and lip glosses now feature skin care ingredients. L’Oréal USA’s L’Oréal Visible Lift Smooth Absolute Age-Reversing Foundation claims that users can “see up to 10 years disappear”. The Bite Beauty Luminous Crème Lipstick claims to contain the resveratrol (the phenol found in grapes) equivalent of five glasses of red wine. Resveratrol is an antioxidant which fights free radicals and may have anti-ageing benefits.

Colour cosmetics companies are increasingly adding sun protection to products, as consumers are increasingly educated regarding the sun’s wrinkle-inducing as well as cancer-causing properties. Many foundations sold today now offer sun protection. Even facial primers are increasingly incorporating sun protection. At the same time, sun care companies are increasingly adding anti- ageing properties to compete against facial moisturisers, and general-purpose body care products which contain sun protection. ’s May 2011 introduction of Avon Anew Solar Advance with RepairShield is an example. The sun protection product claims to “repair skin cell sun damage”, in addition to offering broad-spectrum UVA/UVB protection. Self-tanners now boast anti-ageing properties. The Dr Dennis Gross Skincare Alpha Beta Glow Pads feature vitamins A, C D and E, as well as AHAs, to minimise dark spots.

Outlook

The demographic trend towards an ageing population is expected to continue. The number of Americans aged 50 and over in the US is projected to increase by 17% over the period 2011-2020. In addition, the average age of women at first childbirth has increased steadily, as has the average age of Americans at first marriage. These factors are expected to see a similar pattern over the forecast period. Higher per capita income among the 50+ segment and an improving economy will enable consumers to spend more on premium beauty and personal care products.

Future impact

The increasing number of older consumers is likely to support continuous demand for and strong sales of anti-agers. Baby boomers feel “young at heart”, and they will also want to look young and healthy. Anti-ageing is expected to see a 24% increase in constant value terms from 2011 to 2016, to reach US$3.6 billion.

Given that ageing is a concern for most people, along with the fact that nowadays, most consumers are convinced that anti-agers contribute to preventing wrinkles to a large extent, it becomes clear that anti-ageing is a niche which will continue growing. Similarly, anti-ageing is expected to soon become a key secondary function in various other products, given that it is considered a new area for potential development and innovation in beauty and personal care. It can be said, therefore, that the ageing of the population will continue to drive the market over the forecast period, whilst it is also likely to remain a key proposition in the long term.

The ageing of the population also widens the horizons for further development, even in mature categories such as hair care. In 2008 Procter & Gamble acquired prestige hair company Nioxin Research Laboratories, a salon products company which specialises in products for thinning hair. The company has since introduced more products under the Nioxin brand. Other companies with a strong presence in hair care are also focusing some of their developments on more mature consumers, whose hair becomes thinner with age. L’Oréal’s Matrix salon hair care brand offers Biolage Rejuvathérapie Age Rejuvenating and Conditioner. The company’s Redken salon hair care brand offers the Redken Time Reset Youth Revitalizer. Introducing anti-ageing hair care products may be a good way to reach consumers who are experiencing thinning hair or hair loss, but are not yet ready to use hair regrowth drug Rogaine. Attracting these consumers may be a way to encourage brand-loyalty in a crowded field.

American men are likely to be increasingly targeted by manufacturers of anti-ageing products, as older men seek to remain active in the workplace, as well as find a partner. As men seek to stay employed in a competitive , many are seeking anti-ageing procedures. In 2011 US men had 1.2 million cosmetic procedures, 6% more than in 2010 according to the American Society of Plastic Surgeons. By contrast, US women showed a 5% increase in cosmetic procedures. The high rates of divorce amongst those aged 60+ (US senator Albert Gore and his former wife Tipper being a prime example) are likely to increase demand for anti-ageing products amongst men. Men who pay attention to the way they look generally do not want to look old, and therefore demand products which help to preserve their youth. Beauty and personal care manufacturers are expected to target the older male segment, because today’s men are more concerned with their appearance, and are retiring at a later age than previous generations. Demand for anti-ageing products will be a key reason why men’s skin care will be one of the fastest growth categories in men’s grooming over the forecast period, increasing by 8% in constant value terms to reach US$223 million.

Celebrity endorsements are popular in beauty and personal care

The mature US beauty and personal care market is highly competitive, and features a high number of new product launches every year. Generally, product quality is high in the US, and consumers find it difficult to differentiate between different brands. The high penetration of beauty and personal care products in the US, as well as the wide range of distribution channels, leads to a challenge for companies in the market. As a result, many companies have decided that using celebrities to promote their products is the best way to reach consumers.

Current impact

Many mass and premium beauty and personal care players use celebrity endorsements to help their products stand out. Fragrances are one of the most popular categories for the use of the celebrities. Celebrities such as actors and models have long been hired to represent brands. Now, celebrity fragrances, whereby the name of the celebrity is on the fragrance, are commonplace. The logic behind celebrity fragrances is that loyal fans of a celebrity will purchase the celebrity fragrance. In the case of teen pop singer Justin Bieber, this logic proved to be true. His 2011 launch of Someday Justin Bieber was one of the most successful women’s fragrance launches.

Colour cosmetics are another category which is rife with celebrity endorsements. Procter & Gamble hired Taylor Swift to represent its Cover Girl NatureLuxe line. This allows the company to again appeal to younger consumers, as the company has recently been targeting slightly older women, with actress Drew Barrymore, talk show host Ellen DeGeneres and actress/singer Queen Latifah.

Skin care companies are increasingly turning to older celebrities to market their products. L’Oréal utilises model Andie McDowell and actress Diane Keaton to appeal to the 50+ age group. Johnson & Johnson Consumer Products uses actress Jennifer Garner to represent its anti-ageing line.

Outlook

The use of celebrity endorsements is expected to continue and increase in the forecast period. With the coverage and attention that celebrities get through magazines, news channels, blogs and social media, as well as the explosion of reality shows which show the intimate details of celebrity life, there will only be more emphasis placed upon what products celebrities choose to endorse.

Future impact

To grow or maintain market share, manufacturers of beauty and personal care products must continue to either innovate or to cultivate more celebrity endorsements, especially in the women’s segment. The men’s segment is exemplified primarily by claims of increased sexual attractiveness. However, the incidence of male celebrity endorsements is increasing, as well as increasingly successful.

It is likely that manufacturers will increasingly target the younger generation of men. Young men tend to aspire to be like their male role models. Today’s actors, athletes and musicians feel comfortable endorsing beauty products, and do not feel that it takes away from their abilities. Former NFL football star Isaiah Mustafa found increased fame as the “Old Spice Guy”.

Celebrities are expected to increasingly launch their own lines of beauty products instead of being spokespersons. Former model and Maybelline spokesperson Josie Maran created Josie Maran Cosmetics featuring Moroccan argan oil in 2007. Josie makes regular appearances on the QVC home shopping channel to sell her products, and is able to capitalise on her name recognition. In January 2012 actress Jessica Alba (“Good Luck Chuck”) partnered with environmental health leader Chris Gavigan and Brian Lee to create The Honest Company, featuring non-toxic, eco-friendly baby care products, household cleaning products and nappies/diapers. Actress and producer Salma Hayek, who previously represented Avon, launched her own Nuance by Salma Hayek line of colour cosmetics, hair care and skin care products at the CVS drugstore chain in 2011.

Table 1 Sales of Beauty and Personal Care by Category: Value 2006-2011

US$ million 2006 2007 2008 2009 2010 2011

Baby and Child-specific Products 1,949.1 2,077.8 2,123.6 2,161.8 2,225.0 2,279.8 Bath and Shower 5,139.6 5,235.5 5,281.1 5,463.5 5,602.1 5,660.1 Colour Cosmetics 8,759.4 9,024.1 9,202.3 9,093.1 9,380.3 9,995.0 Deodorants 2,392.4 2,518.5 2,602.2 2,596.6 2,626.1 2,693.7 Depilatories 1,056.8 1,109.5 1,187.0 1,210.3 1,191.5 1,216.7 Fragrances 5,942.1 5,943.6 5,661.1 5,257.4 5,377.8 5,789.8 Hair Care 10,149.0 10,291.4 10,094.3 9,687.1 9,736.6 9,839.2 Men's Grooming 4,758.3 4,926.6 5,037.8 5,053.7 5,243.1 5,410.9 Oral Care 5,953.6 6,184.1 6,130.3 6,053.3 6,101.2 6,275.5 Oral Care Excl Power Toothbrushes 5,034.1 5,154.7 5,087.4 5,047.2 5,074.8 5,210.8 Skin Care 9,355.7 9,812.2 9,958.9 9,792.6 9,977.7 10,341.5 Sun Care 1,195.3 1,311.2 1,408.5 1,420.7 1,538.4 1,622.8 Sets/Kits 4,534.9 4,726.1 4,613.7 4,466.8 4,500.0 4,769.2 Premium Cosmetics 16,672.3 17,162.0 16,649.0 15,770.9 16,255.4 17,564.9 Mass Cosmetics 32,745.2 33,778.3 34,296.8 34,168.6 34,708.7 35,426.2 Beauty and Personal Care 58,793.0 60,601.4 60,641.2 59,577.4 60,744.0 63,086.4

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 2 Sales of Beauty and Personal Care by Category: % Value Growth 2006-2011 % current value growth 2010/11 2006-11 CAGR2006/11 Total

Baby and Child-specific Products 2.5 3.2 17.0 Bath and Shower 1.0 1.9 10.1 Colour Cosmetics 6.6 2.7 14.1 Deodorants 2.6 2.4 12.6 Depilatories 2.1 2.9 15.1 Fragrances 7.7 -0.5 -2.6 Hair Care 1.1 -0.6 -3.1 Men's Grooming 3.2 2.6 13.7 Oral Care 2.9 1.1 5.4 Oral Care Excl Power Toothbrushes 2.7 0.7 3.5 Skin Care 3.6 2.0 10.5 Sun Care 5.5 6.3 35.8 Sets/Kits 6.0 1.0 5.2 Premium Cosmetics 8.1 1.0 5.4 Mass Cosmetics 2.1 1.6 8.2 Beauty and Personal Care 3.9 1.4 7.3

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 3 Sales of Premium Cosmetics by Category: Value 2006-2011

US$ million 2006 2007 2008 2009 2010 2011

Premium Baby and Child-specific products 142.3 168.1 188.0 194.2 205.8 218.1 Premium Bath and Shower 206.8 215.6 202.0 196.1 211.9 216.8 Premium Colour Cosmetics 3,543.3 3,701.8 3,681.7 3,542.8 3,656.9 4,054.6 Premium Deodorants 35.4 36.8 36.4 35.1 34.1 35.8 Premium Fragrances 4,671.3 4,680.6 4,472.1 4,179.4 4,346.8 4,828.6 Premium Hair Care 2,974.4 3,015.7 2,858.6 2,547.2 2,510.0 2,519.1 Premium Skin Care 2,613.6 2,743.9 2,726.5 2,649.7 2,843.5 3,098.4 Premium Sun Care 104.4 108.8 107.6 103.7 110.8 118.1 Premium Sets/Kits 2,380.8 2,490.6 2,376.0 2,322.7 2,335.5 2,475.2 Premium Cosmetics 16,672.3 17,162.0 16,649.0 15,770.9 16,255.4 17,564.9

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 4 Sales of Premium Cosmetics by Category: % Value Growth 2006-2011

% current value growth 2010/11 2006-11 CAGR2006/11 Total

Premium Baby and Child-specific products 6.0 8.9 53.3 Premium Bath and Shower 2.3 1.0 4.8 Premium Colour Cosmetics 10.9 2.7 14.4 Premium Deodorants 4.9 0.2 1.2 Premium Fragrances 11.1 0.7 3.4 Premium Hair Care 0.4 -3.3 -15.3 Premium Skin Care 9.0 3.5 18.6 % current value growth 2010/11 2006-11 CAGR2006/11 Total Premium Sun Care 6.6 2.5 13.1 Premium Sets/Kits 6.0 0.8 4.0 Premium Cosmetics 8.1 1.0 5.4

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 5 Beauty and Personal Care Company Shares by NBO 2007-2011

% retail value rsp 2007 2008 2009 2010 2011

Procter & Gamble Co, The 17.0 17.2 17.2 17.3 16.9 L'Oréal USA Inc 11.4 11.2 10.8 11.0 11.2 Estée Lauder Cos Inc 7.5 7.4 7.3 7.5 7.6 Unilever Home & Personal Care USA 5.1 5.0 5.1 5.1 5.1 Johnson & Johnson Consumer Products Inc 5.1 5.2 5.3 5.2 4.9 Colgate-Palmolive Co 3.0 3.0 3.1 3.0 2.9 Inc 2.7 2.6 2.5 2.5 2.7 Coty Inc 2.2 2.7 2.6 2.7 2.7 Limited Brands Inc 2.6 2.4 2.4 2.5 2.4 Avon Products Inc 2.6 2.6 2.6 2.3 2.1 Inc 1.8 1.9 1.8 1.8 1.8 Co 1.1 1.4 1.4 1.3 1.4 Alberto-Culver Co 1.2 1.3 1.3 1.3 1.3 Schick-Wilkinson Sword 0.7 0.7 1.0 1.1 1.2 Chanel USA Inc 1.0 1.0 0.9 1.1 1.1 Guthy-Renker Corp 1.1 1.1 1.1 1.1 1.0 Dial Corp, The 1.1 1.1 1.2 1.1 1.0 Wal-Mart Stores Inc 0.7 0.8 0.9 0.9 0.9 John Paul Mitchell Systems Inc 0.9 0.9 0.9 0.9 0.8 Bare Escentuals Inc 0.7 0.8 0.8 0.8 0.8 LVMH Perfums & Cosmetics USA Inc 0.7 0.8 0.8 0.8 0.8 Beiersdorf Inc 0.6 0.6 0.7 0.8 0.8 Cosmetics (America) Ltd 0.8 0.8 0.8 0.8 0.8 GlaxoSmithKline Consumer Health 0.7 0.7 0.7 0.7 0.8 Kao Brands Co 0.8 0.7 0.7 0.7 0.7 Energizer Holdings Inc 0.7 0.7 0.6 0.7 0.7 Merck & Co Inc - - 0.6 0.6 0.6 Church & Dwight Co Inc 0.7 0.7 0.7 0.6 0.6 Kimberly-Clark Corp 0.6 0.6 0.6 0.6 0.6 Philips Oral HealthCare Inc 0.4 0.4 0.4 0.5 0.5 SA 0.5 0.5 0.5 0.5 0.5 Walgreen Co 0.3 0.3 0.4 0.4 0.4 L'Occitane en Provence 0.4 0.4 0.4 0.4 0.4 Amway Corp 0.4 0.4 0.4 0.4 0.4 Combe Inc 0.3 0.4 0.4 0.4 0.4 Corp 0.4 0.4 0.4 0.4 0.3 Arbonne International Inc 0.7 0.5 0.4 0.4 0.3 CVS Caremark Corp 0.2 0.3 0.3 0.3 0.3 Bic Corp 0.3 0.3 0.3 0.3 0.3 Philosophy Inc 0.3 0.3 0.3 0.3 0.3 % retail value rsp 2007 2008 2009 2010 2011 Del Pharmaceuticals Inc 0.4 - - - - Liz Claiborne Inc 0.4 - - - - Other Private Label 1.2 1.4 1.6 1.7 1.8 Others 18.9 18.8 18.0 17.6 17.8 Total 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 6 Beauty and Personal Care Company Shares by GBO 2007-2011

% retail value rsp 2007 2008 2009 2010 2011

Procter & Gamble Co, The 17.4 17.6 17.5 17.6 17.1 L'Oréal Groupe 11.7 11.7 11.3 11.4 11.6 Estée Lauder Cos Inc 7.5 7.4 7.3 7.5 7.6 Unilever Group 5.1 5.0 5.1 5.1 6.2 Johnson & Johnson Inc 5.2 5.4 5.4 5.4 5.0 Coty Inc 2.7 2.8 2.7 3.1 3.2 Colgate-Palmolive Co 3.0 3.0 3.1 3.0 2.9 Mary Kay Inc 2.7 2.6 2.5 2.5 2.7 Limited Brands Inc 2.6 2.4 2.4 2.5 2.4 Avon Products Inc 2.6 2.6 2.6 2.3 2.1 Revlon Inc 1.8 1.9 1.8 1.8 1.9 Energizer Holdings Inc 1.4 1.4 1.7 1.8 1.9 Shiseido Co Ltd 0.8 0.8 0.8 1.6 1.7 Henkel AG & Co KGaA 1.3 1.3 1.3 1.3 1.2 Elizabeth Arden Inc 1.0 1.2 1.1 1.1 1.2 Chanel SA 1.0 1.0 0.9 1.1 1.1 Guthy-Renker Corp 1.1 1.1 1.1 1.1 1.0 Kao Corp 1.0 0.9 0.9 0.9 0.8 John Paul Mitchell Systems Inc 0.9 0.9 0.9 0.9 0.8 LVMH Moët Hennessy Louis Vuitton SA 0.7 0.8 0.8 0.8 0.8 Beiersdorf AG 0.6 0.6 0.7 0.8 0.8 GlaxoSmithKline Plc 0.8 0.7 0.8 0.8 0.8 Merck & Co Inc - - 0.7 0.7 0.7 Church & Dwight Co Inc 0.6 0.6 0.6 0.6 0.6 Kimberly-Clark Corp 0.6 0.6 0.6 0.6 0.6 Koninklijke Philips Electronics NV 0.4 0.4 0.4 0.5 0.5 Clarins SA 0.5 0.5 0.5 0.5 0.5 L'Occitane International SA 0.4 0.4 0.4 0.4 0.4 Amway Corp 0.4 0.4 0.4 0.4 0.4 Combe Inc 0.3 0.4 0.4 0.4 0.4 Arbonne International Inc 0.7 0.5 0.4 0.4 0.3 Sté Bic SA 0.3 0.3 0.3 0.3 0.3 High Ridge Brands Co - - - - 0.3 Helen of Troy Ltd 0.1 0.1 0.2 0.3 0.3 Colomer Group, The 0.3 0.3 0.3 0.3 0.3 Clorox Co, The 0.2 0.2 0.2 0.2 0.3 Vogue International 0.1 0.2 0.2 0.2 0.2 Sanofi - - 0.1 0.2 0.2 % retail value rsp 2007 2008 2009 2010 2011 Vorwerk & Co KG 0.2 0.2 0.2 0.2 0.2 Markwins International Corp 0.2 0.2 0.2 0.2 0.2 Private Label 2.7 3.1 3.5 3.8 3.8 Others 19.2 18.8 17.9 15.9 14.6 Total 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 7 Beauty and Personal Care Brand Shares by GBN 2008-2011

% retail value rsp Company 2008 2009 2010 2011

Clinique Estée Lauder Cos Inc 2.2 2.3 2.4 2.5 Crest Procter & Gamble Co, The 1.9 1.9 2.0 2.0 Neutrogena Johnson & Johnson Consumer Products Inc 2.1 2.2 2.2 2.0 Dove Unilever Home & Personal Care USA 1.9 2.0 1.9 1.9 Bath & Body Works Limited Brands Inc 1.7 1.8 1.8 1.8 Lancôme L'Oréal USA Inc 1.5 1.5 1.6 1.6 Mary Kay Mary Kay Inc 1.7 1.7 1.6 1.6 Maybelline L'Oréal USA Inc 1.3 1.4 1.5 1.5 Cover Girl Procter & Gamble Co, The 1.4 1.5 1.6 1.5 Estée Lauder Estée Lauder Cos Inc 1.4 1.4 1.4 1.4 Pantene Procter & Gamble Co, The 1.5 1.5 1.4 1.3 Gillette Fusion Procter & Gamble Co, The 0.9 1.0 1.1 1.3 L'Oréal Paris L'Oréal USA Inc 1.2 1.2 1.2 1.2 Suave Unilever Home & Personal Care USA 1.0 1.0 1.0 1.0 Mac Estée Lauder Cos Inc 0.9 0.9 1.0 1.0 Revlon Revlon Inc 1.0 1.0 1.0 1.0 Avon Avon Products Inc 1.2 1.2 1.1 1.0 Wal-Mart Wal-Mart Stores Inc 0.8 0.9 0.9 0.9 bareMinerals Bare Escentuals Inc 0.8 0.8 0.8 0.8 Proactiv Guthy-Renker Corp 0.8 0.8 0.8 0.8 Axe Unilever Home & Personal Care USA 0.7 0.8 0.8 0.8 Secret Procter & Gamble Co, The 0.7 0.8 0.8 0.8 Olay Procter & Gamble Co, The 0.8 0.7 0.8 0.7 Listerine Johnson & Johnson Consumer Products Inc 0.9 0.8 0.8 0.7 Old Spice Procter & Gamble Co, The 0.7 0.7 0.7 0.7 Paul Mitchell John Paul Mitchell Systems Inc 0.7 0.7 0.7 0.7 Dial Dial Corp, The 0.7 0.8 0.7 0.7 Fructis L'Oréal USA Inc 0.7 0.7 0.6 0.7 Sally Hansen Coty Inc 0.4 0.5 0.6 0.6 Head & Shoulders Procter & Gamble Co, The 0.6 0.6 0.6 0.6 Aveeno Johnson & Johnson Consumer Products Inc 0.6 0.6 0.6 0.6 Gillette Venus Procter & Gamble Co, The 0.6 0.6 0.6 0.6 Matrix L'Oréal USA Inc 0.7 0.6 0.6 0.6 Huggies Kimberly-Clark Corp 0.6 0.6 0.6 0.6 TRESemmé Alberto-Culver Co 0.5 0.5 0.6 0.6 Oral-B Procter & Gamble Co, The 0.6 0.5 0.5 0.6 Coppertone Merck & Co Inc - 0.5 0.5 0.5 Banana Boat Energizer Holdings Inc 0.5 0.5 0.5 0.5 % retail value rsp Company 2008 2009 2010 2011 Johnson's Baby Johnson & Johnson Consumer Products Inc 0.5 0.5 0.5 0.5 Softsoap Colgate-Palmolive Co 0.5 0.5 0.5 0.5 Coppertone Schering-Plough Healthcare Products Inc 0.5 - - - Other Private Label Other Private Label 1.4 1.6 1.7 1.8 Others Others 59.2 58.1 57.4 57.6 Total Total 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 8 Penetration of Private Label by Category 2006-2011

% retail value rsp 2006 2007 2008 2009 2010 2011

Beauty and Personal Care 2.5 2.7 3.1 3.5 3.8 3.8 Baby and Child-specific Products 15.1 15.7 16.5 17.6 18.8 19.2 Bath and Shower 4.5 5.1 7.0 7.8 8.0 8.2 Colour Cosmetics 0.8 0.7 0.7 0.7 0.7 0.7 Deodorants 0.4 0.4 0.4 0.4 0.4 0.3 Depilatories 2.3 2.1 2.2 2.8 3.1 3.4 Fragrances 0.2 0.3 0.2 0.2 0.2 0.2 Hair Care 1.1 1.2 1.4 1.5 1.6 1.6 Men's Grooming 1.7 1.8 1.9 1.9 2.0 2.0 Oral Care 5.4 5.6 6.0 6.6 6.9 6.7 Skin Care 1.8 2.1 2.4 2.9 3.3 3.4 Sun Care 9.8 12.0 13.8 16.4 17.9 18.8 Sets/Kits 0.7 1.1 0.9 0.9 1.0 0.9 Mass Cosmetics 3.1 3.6 4.1 4.6 5.0 5.1

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 9 Sales of Beauty and Personal Care by Distribution Format: % Analysis 2006-2011

% retail value rsp 2006 2007 2008 2009 2010 2011

Store-Based Retailing 83.9 83.2 82.9 82.9 83.5 83.4 - Grocery Retailers 25.3 25.6 26.0 26.7 26.9 27.0 - - Discounters 0.0 0.0 0.0 0.0 0.0 0.0 - - Small Grocery Retailers 0.8 0.8 0.7 0.7 0.7 0.6 - - - Convenience Stores 0.2 0.2 0.2 0.2 0.2 0.2 - - - Forecourt Retailers 0.0 0.0 0.0 0.0 0.0 0.0 - - - Independent Small Grocers 0.6 0.5 0.5 0.5 0.5 0.5 - - 9.6 10.3 10.8 11.6 11.7 11.6 - - Supermarkets 14.4 14.1 14.0 13.9 14.0 14.2 - - Other Grocery Retailers 0.4 0.4 0.4 0.4 0.5 0.5 - Non-Grocery Retailers 58.6 57.6 56.9 56.2 56.6 56.5 - - Health and Beauty Retailers 24.5 24.7 24.5 24.5 24.9 25.1 - - - Beauty Specialist Retailers 6.4 6.4 6.3 6.3 6.4 6.5 - - - Chemists/Pharmacies 0.3 0.3 0.3 0.2 0.2 0.2 % retail value rsp 2006 2007 2008 2009 2010 2011 - - - Parapharmacies/Drugstores 13.6 14.0 14.1 14.4 14.6 14.9 - - - Other Health and Beauty Retailers 4.2 4.0 3.8 3.6 3.7 3.5 - - Mixed Retailers 32.3 31.1 30.3 29.5 29.4 29.1 - - - Department Stores 15.8 15.5 14.8 14.1 14.2 14.7 - - - Mass Merchandisers 12.0 11.2 10.9 10.8 10.6 10.2 - - - Variety Stores 0.9 0.9 1.0 1.0 1.0 1.0 - - - Warehouse Clubs 3.5 3.6 3.6 3.6 3.6 3.2 - - Outdoor Markets 0.1 0.1 0.1 0.1 0.1 0.1 - - Other Non-Grocery Retailers 1.7 1.7 2.0 2.1 2.1 2.2 Non-Store Retailing 16.1 16.8 17.1 17.1 16.5 16.6 - Direct Selling 8.9 8.9 8.9 8.7 7.9 7.7 - Homeshopping 3.5 3.5 3.4 3.3 3.2 3.2 - Internet Retailing 3.7 4.4 4.8 5.1 5.4 5.7 - Vending 0.0 0.0 0.0 0.0 0.0 0.0 Total 100.0 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 10 Sales of Beauty and Personal Care by Category and by Distribution Format: % Analysis 2011

% retail value rsp BC BS CC D DP F HC MG OC SC SU SK

Store-Based Retailing 94.4 88.1 83.7 94.3 84.6 83.8 97.7 93.8 97.3 68.2 91.7 41.0 Grocery Retailers 45.0 44.9 13.3 51.6 31.5 3.3 34.7 44.1 52.9 14.8 32.7 5.4 Discounters 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Small Grocery Retailers 1.5 0.8 0.1 0.7 0.1 0.0 0.3 1.0 3.1 0.2 1.2 0.0 Convenience Stores 0.0 0.1 0.0 0.2 0.0 0.0 0.1 0.3 1.0 0.1 0.7 0.0 Forecourt Retailers 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Independent Small Grocers 1.5 0.5 0.1 0.5 0.1 0.0 0.2 0.8 2.1 0.1 0.4 0.0 Hypermarkets 20.0 19.9 6.4 22.7 13.9 1.6 14.8 19.1 21.7 6.3 11.5 2.5 Supermarkets 23.6 23.9 6.8 28.3 17.6 1.6 19.1 23.7 26.0 8.2 14.1 2.9 Other Grocery Retailers 0.0 0.4 0.0 0.0 0.0 0.0 0.5 0.2 2.0 0.0 5.9 0.0 Non-Grocery Retailers 49.3 43.2 70.4 42.7 53.1 80.6 62.9 49.7 44.4 53.5 59.0 35.6 Health and Beauty Retailers 23.7 18.8 22.1 19.4 28.3 21.2 44.1 22.9 18.7 24.9 22.7 17.5 Beauty Specialist Retailers 1.1 10.3 4.7 0.0 0.0 11.2 4.6 3.7 0.0 11.5 0.4 13.7 Chemists/Pharmacies 0.3 0.1 0.2 0.3 0.2 0.1 0.1 0.2 0.6 0.2 0.5 0.2 Parapharmacies/Drugstores 22.3 8.4 17.2 19.1 28.1 9.9 17.0 18.8 18.2 13.2 21.6 3.7 Other Health and Beauty 0.0 0.0 0.0 0.0 0.0 0.0 22.4 0.2 0.0 0.0 0.2 0.0 Retailers Mixed Retailers 25.7 24.3 42.4 23.3 24.8 55.9 18.6 26.8 23.7 27.8 22.1 14.6 Department Stores 4.9 3.6 34.3 1.0 0.6 49.3 0.3 3.9 0.3 16.8 8.5 12.0 Mass Merchandisers 16.9 13.8 7.9 18.0 14.5 6.3 11.7 14.3 15.4 7.5 10.0 0.9 Variety Stores 1.0 0.6 0.1 0.6 0.3 0.2 2.8 1.4 1.9 0.4 2.5 0.8 Warehouse Clubs 2.8 6.3 0.1 3.7 9.4 0.2 3.7 7.2 6.1 3.1 1.1 0.9 Outdoor Markets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.4 0.0 Other Non-Grocery Retailers 0.0 0.0 6.0 0.0 0.0 3.5 0.3 0.1 1.9 0.8 9.9 3.5 Non-Store Retailing 5.6 11.9 16.3 5.7 15.4 16.2 2.3 6.2 2.7 31.8 8.3 59.1 Direct Selling 2.6 5.8 10.3 5.2 10.8 9.3 1.0 3.8 1.0 16.4 4.3 13.2 Homeshopping 0.4 0.9 1.0 0.1 1.1 0.6 0.5 0.5 0.2 3.3 1.0 28.9 % retail value rsp BC BS CC D DP F HC MG OC SC SU SK Internet Retailing 2.6 5.1 5.0 0.3 3.4 6.3 0.9 1.9 1.6 12.1 3.0 17.0 Vending 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 11 Forecast Sales of Beauty and Personal Care by Category: Value 2011-2016

US$ million 2011 2012 2013 2014 2015 2016

Baby and Child-specific Products 2,279.8 2,313.0 2,342.0 2,372.8 2,416.9 2,472.7 Bath and Shower 5,660.1 5,738.2 5,796.5 5,864.1 5,950.2 6,028.2 Colour Cosmetics 9,995.0 10,365.5 10,662.8 10,933.7 11,206.7 11,450.5 Deodorants 2,693.7 2,714.8 2,747.8 2,772.8 2,793.9 2,839.1 Depilatories 1,216.7 1,217.7 1,223.9 1,221.5 1,232.8 1,243.9 Fragrances 5,789.8 5,945.0 6,056.1 6,140.1 6,154.0 6,127.0 Hair Care 9,839.2 9,979.9 10,075.9 10,203.5 10,343.0 10,515.7 Men's Grooming 5,410.9 5,525.5 5,616.2 5,669.0 5,700.2 5,763.1 Oral Care 6,275.5 6,325.9 6,373.7 6,401.6 6,462.8 6,557.8 Oral Care Excl Power Toothbrushes 5,210.8 5,226.4 5,229.9 5,208.0 5,222.7 5,270.6 Skin Care 10,341.5 10,570.2 10,796.2 10,978.3 11,181.7 11,420.8 Sun Care 1,622.8 1,677.1 1,754.7 1,792.3 1,829.1 1,846.7 Sets/Kits 4,769.2 4,860.4 4,931.0 4,974.6 5,013.3 5,049.0 Premium Cosmetics 17,564.9 18,313.6 18,846.2 19,284.6 19,702.6 20,062.0 Mass Cosmetics 35,426.2 35,850.4 36,316.7 36,747.7 37,186.2 37,687.7 Beauty and Personal Care 63,086.4 64,328.5 65,417.0 66,307.5 67,227.9 68,223.2

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 12 Forecast Sales of Beauty and Personal Care by Category: % Value Growth 2011-2016

% constant value growth 2011-16 CAGR 2011/16 TOTAL

Baby and Child-specific Products 1.6 8.5 Bath and Shower 1.3 6.5 Colour Cosmetics 2.8 14.6 Deodorants 1.1 5.4 Depilatories 0.4 2.2 Fragrances 1.1 5.8 Hair Care 1.3 6.9 Men's Grooming 1.3 6.5 Oral Care 0.9 4.5 Oral Care Excl Power Toothbrushes 0.2 1.1 Skin Care 2.0 10.4 Sun Care 2.6 13.8 Sets/Kits 1.1 5.9 Premium Cosmetics 2.7 14.2 Mass Cosmetics 1.2 6.4 % constant value growth 2011-16 CAGR 2011/16 TOTAL Beauty and Personal Care 1.6 8.1

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 13 Forecast Sales of Premium Cosmetics by Category: Value 2011-2016

US$ million 2011 2012 2013 2014 2015 2016

Premium Baby and Child-specific products 218.1 224.0 228.9 234.4 241.0 249.3 Premium Bath and Shower 216.8 222.7 221.2 222.3 225.8 234.7 Premium Colour Cosmetics 4,054.6 4,255.1 4,410.6 4,558.3 4,691.3 4,803.8 Premium Deodorants 35.8 37.7 39.0 40.3 41.3 42.3 Premium Fragrances 4,828.6 5,035.8 5,200.9 5,329.3 5,393.8 5,402.4 Premium Hair Care 2,519.1 2,660.8 2,728.3 2,781.1 2,852.3 2,909.6 Premium Skin Care 3,098.4 3,235.7 3,346.4 3,441.7 3,557.2 3,694.8 Premium Sun Care 118.1 124.1 131.3 135.2 138.2 142.6 Premium Sets/Kits 2,475.2 2,517.7 2,539.5 2,542.0 2,561.8 2,582.6 Premium Cosmetics 17,564.9 18,313.6 18,846.2 19,284.6 19,702.6 20,062.0

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 14 Forecast Sales of Premium Cosmetics by Category: % Value Growth 2011-2016

% constant value growth 2011-16 CAGR 2011/16 TOTAL

Premium Baby and Child-specific products 2.7 14.3 Premium Bath and Shower 1.6 8.3 Premium Colour Cosmetics 3.4 18.5 Premium Deodorants 3.4 18.1 Premium Fragrances 2.3 11.9 Premium Hair Care 2.9 15.5 Premium Skin Care 3.6 19.2 Premium Sun Care 3.8 20.7 Premium Sets/Kits 0.9 4.3 Premium Cosmetics 2.7 14.2

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources