Trends in the Personal Care CategorySource: Euromonitor 2012

Key Takeouts:Key trends driving the beauty and personal care market in 2014 areNeed for multi-functionality as consumers. All-in-one products are the norm.Secondly, consumer preoccupation with image and how they are perceived by others is attributed to the 'selfieHence, products tailored to specific consumer needs

Anatomy of the Global Beauty Market

Interesting trends spotted last decadeThere was a noticeable change in the consumer behavior during the recession in 2009 people started home consumption as opposed to taking treatments outsideAnother trend was that people started treating cosmetic purchases as investments rather than indulgent purchases

Marketing Trends Continued product diversification in terms of product line prices, meant new product lines at lowered price levelsConsumers aware of mass product providing the same quality as their premium counterpartsSignificantly sales growth is generated mostly by mass-produced products, however, innovations are mostly introduced by brands in the premium segment

Product innovations saw two trends: the time-saving and the long-lasting productsTime-saving products are a response to people who want to limit the amount of time spent on their daily beauty routineResearch has been on products like -quick drying nail polish -3-in-1 shower gel- facial wash with shaving foam - or hybrid products for the face that include of make-up, skincare and sun protectionAnother new trend is environmental sustainability with product effectiveness

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Distribution TrendsSource: Euromonitor International 2012This channel includes direct sale and sale over Internet is on the rise.

Distribution channel20002005 2010Non-store retailing10.014.016.1Drugstores13.112.412.8Department Stores13.310.69.5Beauty Specialists13.913.113.4Super/Hypermarkets 25.626.026.9

Product Categories TrendsSkincare as a category is on the rise

Product Category19982010Skin Care16.4%23.0%Haircare20.8%17.3%Colour13.5%12.3%Fragrances12.9%10.4%Toileteries31.2%30.6%Others5.2%6.4%Total Sales Value ( billion USD)166.1382.3

Why is Skincare as a category growing?Throughout 2010, skincare was the most significant segment, with its 23% of the market share and its growth driven primarily by the Asian marketThe global skincare market is divided into- facial care (2/3 of the total sales)- hand and body care -sun careThe success of skincare is a prerequisite for the prosperity of the whole beauty industry

A peculiarity of the Asian skincare markets is - Role of face-whitening products, as pale skin continues to be considered the beauty ideal in Asia. - In India, over 80% of face creams have whitening propertiesThe key consumers for whitening products remain- young women- mostly living in urban areas - typically earn more and are willing to pay a premium. Fairness Creams

Growth in demand in the skincare segment is due to the ageing population in developed countries They are wealthy, demanding customers, who ask for - value in their purchases - expect professional advice - prefer skincare products with a high technological added value

Anti-Ageing Creams

Sun-protection productsRaising awareness of dangers related to exposure to sun is another factor contributing to the demand growth in the skincare sectorSales of skin protection products as well as anti -blemish products, used for skin disorders frequently occurring in Asia and Latin America, are also growing

Emerging Markets TrendsBrazilChina

The Brazilian beauty and personal care market achieved growth of 15% in 2010It is one of the fastest growing marketsIn 2009 the sales reached 28 billion USD, placing the Brazilian market in the third rank worldwide (BRIC Report, 2010)Cosmetics sales through direct sellers accounted for one-third of total sales in 2010. Brazil has more Avon Ladies (900,000) than soldiers in its army and navy put togetherIt is presumed that once retail network develops and reinforces, direct selling will begin to lose its share.Brazil

In Brazil the per capita consumption of beauty and personal care products has almost doubled in a 5-year period due to rising disposable incomes among mid- and low-income consumers Impact of improved incomes led to greater penetration of skin care/ cosmetics among lower income groupsThese consumer groups have only recently started buying items such as conditioners and anti-agers products Brazilian population is large, but relatively low-income. Hence, large number of transactions of relatively small value. The increase in disposable income has generated a new category of consumers - the middle class - that drives sales.

The personal care industry underwent a significant transformation owing to its rapid economic developmentA stable and continuous economic growth has significantly increased disposable income levels per household, with people nearly doubling the amount of disposable income compared to 5 years agoTotal cosmetics and toiletries market in China has tripled in value in last 10 yrsThe fast-growing Chinese middle class had a crucial impact on sales volume and consumption patternsThe internet network expanding in China has also modified distribution of cosmetics and toiletries, boosting consumption

China

As the Chinese are increasingly getting better educated and better paid, they dedicate more and more money to consumption. They now pay more attention grooming their appearanceThe focus on health and beauty is not only limited to young women. However, their role in generating demand for cosmetics is crucialThe canons of beauty and fashion in China evolved significantly within the last 20 years. After 2000 they began to notice the style promoted by the Japanese and the Korean rather than aping the westIn the recent years, as China attains the leading position in the global world, the Chinese women begin to discover their own beauty identity and to promote their own beauty standardsThe Chinese society wants to be a two-in-one product: both Chinese and very international at the same time (Chinas cosmetics, 2011)

ConclusionAnalysis of the trends present in the global cosmetics market in the beginning of the21st century leads to the following conclusions:

The demand for cosmetics will keep growing, fuelled mostly by the emergingmarkets of Asia and Latin America, what will contribute to creation of new products,shape new spending patterns and perhaps even establish new beauty canons.

2. Global cosmetics manufacturers will have to differentiate their products to adjustthem to the expectations of their new customers, originating from different, nonWestern cultures and behaving differently.

3. Skincare is the segment with the biggest growth potential.

4. The deciding factor for market success will be mass cosmetics sales - they willbe setting the tone for the entire market. Growing awareness of mass cosmeticsbeing almost as good as prestige cosmetics will facilitate the growth of theMasstige segment.

5. The distribution structure is changing as well, as supermarkets andhypermarkets as well as online sales channels increase their shares in the overallmarket.

6. New product launches are based in an increasing way upon advanced researchand technologies. On the other hand, there is a growing demand for organicproducts, manufactured in a sustainable way.