ANALYSIS
A new body-conscious male culture drives US$2 billion market The current generation of skin care is not all about women, of course. Focusing on male-specific skin care has become a major priority for some manufacturers, driven by an increasingly body-conscious male consumption culture. Globally, male- specific skin care generated a retail value of over US$2 billion last year, according to data from Euromonitor International. Concurrent with trends in women’s skin care, anti-agers have been a key growth engine in developed markets, especially in the mass and masstige segments. L’Oréal Men Expert Wrinkle De-Crease and Nivea for Men DNAge, for example, are two brands growing in profile. Worldwide sales of Nivea’s male-specific skin care doubled over five years to reach US$323 million in 2010, according to Euromonitor International. Tanning skin care products have also taken off in the developed markets, notably the gradual tanning moisturisers such as L’Oréal Men Expert. The functionalities of skin care products for men are very similar to those for women, although we are yet to see any significant age segmentation strategies. The main marketing difference between products for men and women is evident in the packaging, with colours such as blue, white and silver identified as critical to enticing mainstream male consumers. In the emerging markets, the functionality of brands also aligns with trends in female-specific skin care. Skin whiteners are, notably, a growth category in male grooming products in Asia Pacific. For example, Unilever’s Fair & Lovely has registered double-digit year-on-year growth since its launch in India in 2005. That owes much to endorsement from Bollywood actor Shahrukh Khan, who has helped male consumers overcome taboos about using a product with strong feminine associations. Over the next five years the global men’s skin care category is forecast to generate compound annual growth of 9%, according to Euromonitor International. That would indicate an incremental retail value of more than US$1 billion, fuelled by burgeoning demand in markets as diverse as South Korea, the UK, China, the US, Thailand and India. As with trends in women’s skin care, there will be increased penetration of category crossovers in 2012; for example we will see growth in sun care products that promise anti-ageing benefits.
Profitability drains from middle ground One of the most striking features of fast moving consumer goods culture in the current operating environment is the growth
generation that is fuelling upbeat sales of Mulberry, for example. In short, there is untapped potential for skin care brands that present a premium heritage but at an affordable price point.
Focusing on male-specific skin care has become a major priority for some manufacturers, driven by an increasingly body-conscious male consumption culture.
of luxury products at one end of the spectrum and value products at the other. In the UK, the luxury department store Harrods and the value chain Poundland were two of the top performing retailers of 2011. But, the middle ground suffered due to mounting pressure to cut prices at a time when commodity and distribution costs were rising. The net result has been a squeeze on margins. We are seeing such trends in skin care too, with luxury brands on the one hand, and budget lines and private label offerings on the other, all performing well while the middle ground gets squeezed. This is particularly apparent in Western Europe, where mass brands currently account for around 67% of skin care sales compared to 33% for premium brands. Within the mass segment private label is gaining traction, driving upwards of 7% of all skin care sales in Western Europe last year, compared with 5% in 2007. The polarisation of skin care poses multiple strategic challenges for the beauty houses. In 2012, we will probably see stronger development of value protection brands to combat the private label threat in developed markets, but we are also likely to see stronger penetration of luxury brands, especially in the fast-growing emerging markets of China, Brazil, Russia and India where there is a new and increasingly status-driven middle-class. In the developed markets, there is opportunity for development of premium skin care products at affordable price points, fundamentally as a means to offset negative pressure on the middle ground. Brands such as Clinique and Shiseido, for example, could pick up new consumers in the so-called Generation Y (aged 18-35), which has a propensity to spend a great deal on affordable luxury goods despite the poor economic climate. This is the
China and Brazil spearhead global skin care opportunity Globally, the biggest opportunity for skin care is in the emerging markets, and China and Brazil in particular. Over the next five years China is forecast to generate some US$5 billion of incremental skin care retail value, and Brazil around US$1.5 billion, according to Euromonitor International. None of the developed markets come even close to that growth prospect. The US, for example, is forecast to achieve incremental growth of around US$500 million over five years.
That the UK’s St Tropez self-tanning brand is set for a rollout in Brazil, a country renowned for its beaches and sun worshippers, is illustrative of the ambition of the West’s beauty houses as they look to offset glacial growth rates on their home turf. Although Brazil’s economic growth has slowed over the past six months, partly as a result of contagion from the Euro zone debt crisis, there is a new and burgeoning middle-class with a strong appetite for beauty care. Crucially, the consumption base for beauty care has expanded from the traditional hubs of the south and south-east into the upwardly mobile states of the north east and centre west. There is an even more significant expansion of the consumer base in China, where the middle class is spreading from the coastal cities to the interior. This is potentially a huge opportunity for the likes of L’Oréal and Procter & Gamble, which have already developed a strong skin care footprint in China. Last year, L’Oréal and Procter & Gamble together accounted for more than a quarter of all skin care sales in China, according to Euromonitor International.
Conclusion
What is clear is that international beauty care companies will become increasingly dependent on China, Brazil and other first- tier emerging markets for their profitability over the next five years. In developed markets, anti-ageing solutions will continue to be at the crux of new product development, both for men and women, but companies will need to meet the complex beauty care demands of a consumer base with weaker spending power. Indeed, while there will continue to be a multiple product segmentation approach across the skin care category, the biggest portfolio challenge will be in indentifying the right mix of price points.
PC April 2012 PERSONAL CARE 19
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