16 July 2007 00:00 [Source: ICB]
DORIS DE GUZMAN/NEW YORK
THE INCREASED purchasing power of ethnic groups, and a forecasted growth surge in emerging markets is grabbing the attention of global cosmetics and personal care manufacturers. No wonder when you take a closer look at some hard facts and figures.
The US ethnic-specific health and beauty care (HBC) market - which includes hair care, makeup, and skin care - posted a 5-7% increase in retail sales growth during 2004-2006 after a 1.7% retreat seen in 2002, says market research firm Packaged Facts.
The consultancy firm estimated sales last year at $1.9bn (€1.4bn) and forecasts retail sales of ethnic-specific HBC products to surpass $2.5bn by 2012, with a compound annual growth rate of 5.4% from 2006-2012.
"The ethnic cosmetic and toiletries [C&T] market in the US is flourishing. However, according to Packaged Facts, ethnic groups such as Hispanics, African-Americans and Asians spend much more - about three times more - on general market beauty products," says Penny Antonopoulos, personal care marketing manager at specialty chemical manufacturer International Specialty Products (ISP).
"These individuals seek out products that meet their beauty care needs. As a result, C&T manufacturers are looking to match their products to the specific requirements of their consumers," she adds.
US - THE ETHNIC HUB
The US market has been described as the hub of ethnic products, says Patrick Obukowho, president and principal consulting chemist for Advantage Research Lab, which specializes in the ethnic cosmetics market.
"It is from this market that the whole world is defining ethnic products and African-American consumers. It is also the market that has more disposable income from the ethnic consumers and as a result, it is of great value to the market in general," he adds.
For 2006-2010, the US population is forecast by the Census Bureau to jump 3.3% from 290.2m to 299.9m. Hispanic, African-American and Asian minorities, however, are expected to leap by 8.6% from 88m to 95.6m.
"There has been significant growth in North America of individuals who are of ethnic descent," says Dwayne Gavin, account manager for polymer sales at Cognis.
"In addition, worldwide individuals exhibiting multiculture hair and skin texture have increased. These individuals tend to, but not exclusively, purchase products that are designed/formulated 'with a difference.' They also tend to spend a greater amount of discretionary income on personal enhancement."
Skin and hair care, fragrances, color cosmetics and other specialty products constitute the majority of purchases from the ethnic sector. Purchasing behavior, however, varies widely across ethnic groups, according to market research firm the NPD Group.
African-American women are said to be less likely to use either makeup or skin care products, as well as shaving products, but are more likely than any other ethnic group to use fragrances or bath products.
"This stands out as a significant opportunity for retailers and manufacturers," says NPD's senior beauty analyst Karen Grant. "It is apparent that once involved with makeup and skin care products, African-American women have the tendency to be heavy product users and more brand loyal compared with other ethnic groups."
Hispanic women, on the other hand, are reportedly more likely to use makeup and skin care products than their Caucasian and African-American counterparts.
NPD says Asian women are likely to use skin care products more than any other ethnic group, but are the least likely to use fragrance or scented body care products.
"Just as all boomers cannot be lumped together and marketed as one homogenous group, women of color are diverse, rapidly changing and defy generalization," says Grant. "To tap into the power of this ever-expanding group, beauty manufacturers and retailers must understand the nuances of differences and adapt strategies to be identified as 'for someone like me.' That is a key statement for leading brands that resonates well with this increasingly important group of beauty consumers."
The ethnic hair care category consists mostly of products that are formulated and positioned for African-Americans, but the sector of products designed for use by Hispanics and Asians is growing.
"In the hair care sector, more ethnic-specific products are focused on hair texture as opposed to just normal, dry or oily hair types," says Antonopoulos. "Ethnic hair care has a lot of damage control needs to meet and this has generated focus on new and functional products," says Obukowho.
Silicones are said to have played a major role in tailoring solutions for various ethnic hair care, says Erik Gyzen, Dow Corning's global market leader for hair care. Gyzen describes African-American hair as more fragile, especially compounded by the use of combing, relaxing and coloring treatments.
"African-American hair is curlier, kinky and drier, so moisturizing and straightening conditioning benefits are often sought. Amino functional and high-molecular-weight silicones can really help here as they help hold in the moisture, especially when heat styling," he adds.
While predominantly found in the African-American group, tightly curly hair can also be found in other ethnic groups, says Catherine Ehrenberger, global head of Ciba's home and personal care business line.
"As a segment, this market sector has many specific hair needs. It requires products which add moisture, help to strengthen, protect, repair and condition the hair, as well as to add lubrication and shine," she adds.
Commercialization partner National Starch says its CurlScience concept, initiated a few years ago, helps support manufacturers of hair care products that want to offer high-performing formulas for curly-haired consumers.
"Curly-haired consumers require a broad range of effects from their hair care products - effects that help to manage curls and lend a natural look to hairstyles," says Kathy Maurer, marketing manager for National Starch Personal Care.
"The curly-haired group continues to grow in major markets such as the US Hispanic population, which is estimated to grow from 34m in 2001 to over 49m in 2015, and understand the potential of the marketplace," adds Maurer.
The US ethnic hair care market grew by 2.4% to reach a value of nearly $1.1bn last year, according to Packaged Facts.
"The perfectly gentle relaxer, perm or frizz-fighter remains the Holy Grail of ethnic-specific hair care. Ethnic consumers are still willing to experiment with each new natural preparation, and to pay premium or prestige prices for it," the firm reports.
Ethnic skin care is said to be the smallest ethnic HBC category, with US retail sales of $154m last year, a 12% increase from 2005. However, it has been the fastest-growing ethnic HBC sector, increasing by 40% from 2001 to 2006.
"Ethnic consumers, like mainstreamers, have become ever more aware of proper maintenance of the skin, equating its health with beauty," says Packaged Facts.
African-Americans are said to be a prime target for marketers because of distinctive skin care needs, such as problems with ashiness of the skin, keloid and melanin imbalances, and oiliness, among others.
Key ingredients mostly used in ethnic skin care products include: alpha-hydroxy acids to reduce ashiness of the skin, natural oils and butter for moisturization and skin lighteners for even pigmentation.
Daily wear sun protection and skin-whiteners, meanwhile, are mostly popular in Asian skin care products. "Skin-whitening is a widespread phenomenon in Asia," says Briony Davies, cosmetics and toiletries account manager for market research company Euromonitor.
"Japan is the largest market, with an estimated 15-17% of skin care sales attributed to whitening. India has the highest penetration, with over 60% of skin care sales because of whitening products."
Several specialty chemical companies recently launched skin-lightening actives, as whitening also becomes synonymous with skin brightening in western markets. ISP says its skin-lightening botanical extract Achromaxyl significantly reduces skin imperfections (brown spots) and lightens skin pigmentation for a more uniform skin tone.
Symrise's Symwhite active agent is said to have no side-effects and disadvantages - such as skin irritation and poor performance - as compared to other skin-bleaching agents.
"Demand for skin lightening formulas with ingredients that control dark spots - a common problem in the Asian population - is expected to rise in tandem with disposable income," says Maurer.
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