July 2012

MarketBEAT

Global Aerosol Outlook The aerosol can industry has regained momentum after a
slow year in 2009 and further progress is forecast, according to Euromonitor International’s report Metal Aerosols in Beauty & Home Care: Where Opportunities & Challenges Abound. However, exciting growth in developing regions is overshadowed by slower growth in Western markets. Aerosols offer good value, marrying efficiency and efficacy, stimulating trial and trading up in emerging economies. Aluminum benefits most from rising global deodorant sales. In mature market economies, aerosol cans are competing with spray alternatives for sales, as witnessed in air care.

Teens & Tweens More Engaged in Beauty Products In 2009, there was evidence
that the youth beauty consumer was becoming less engaged in the beauty category overall.
Results showed declines from 2007 to 2009 in the percentage of young consumers regularly using beauty products. However, according to the third installment of Insight into the Youth Beauty Market report by market research company The NPD Group, Inc., NPD is seeing some signs of improvement among both female tweens (8-12) and teens (13-17). Tweens estimated spending an average of $9.80 on beauty products per month, up $.60 from 2009. Likewise, teens report spending an average of $13.60 on beauty products per month, up from an average of $12.10 in 2009.

“Far from the fickle and fiscally carefree image most adults associate with tweens and teens, youth consumers continue to be price conscious and savvy shoppers like their
older counterparts. They continue to look for discount offers, and display less willingness to pay full price for beauty products,” said Karen Grant, VP & Senior Global Industry Analyst, The NPD Group.

“The overwhelming majority of girls 8-12 years old tell us that they look to their parents and siblings to see what beauty products they are using and that helps them decide what
to buy and use. In some sense love for beauty products and brands can be thought of as
family heirlooms, passed on from generation to generation,” concluded Grant.

Consumer Believe Products are Over-Packaged
When asked about packaging, three-quarters of U.S. consumers believed many consumer products are over packaged and about one quarter will look elsewhere, according to NMI’s annual U.S. LOHAS Consumer Trends Study. Minimal packaging is most preferred among
consumers, followed by recyclable packaging and use of packaging materials that are
environmentally-friendly.

According to NMI Managing Partner Steve French, “The ‘less is more’ trend continues
to resonate with consumers. Marketers can maintain current and attract new consumers
by using less packaging and ‘greener’ packaging materials. Specifically, ‘renewable’ and
‘plant-based’ materials are rated most environmentally-friendly among consumers.”

NMI recommends that businesses promote the use of post-consumer recycled packaging as well as incorporate new environmental materials where applicable. However, companies should be careful not to use environmentally-friendly packaging at the expense of the product or its experience. In the end, environmentally-friendly packaging can help consumers feel better about their choice—without sacrifice, said NMI.

Beauty Sales through Alternate Channels up 21%
Sales of cosmetics and toiletries through alternate channels have exploded, growing by nearly $1 billion since 2005, according to the latest Beauty Retailing USA 2010 report by research firm Kline & Co. More double-digit growth is expected as consumers are increasingly drawn to the convenience of at-home shopping to meet their beauty needs.

Posting 25.4% growth from 2005 to 2010, e-commerce sales are leading the way, followed by home shopping networks posting 20% growth. Similarly, infomercials and the multimedia celebrity-endorsement approach to marketing have seen sales grow over 17%.

“Consumers are spending more time at home, either by virtue of unemployment, telecommuting or merely a desire to save money by not going out so much,” observed
Karen Doskow, Consumer Products Industry Manager at Kline. “Instead of running out
to the store to buy their beauty products, they’re watching home shopping channels and
infomercials to get the latest.”

Consequently, brand marketers are exploring new tactics to build online buzz. Daily deal sites are fueling e-commerce sales by creating awareness and enticing interest about new products or services by offering one-time discounts.

Doskow also noted that bricks-and-mortar sales are far from lagging.

“Beauty has become the new revenue sweetheart in the traditionally slow-growing drug store channel, as pharmacies reinvigorate their beauty offerings to lure customers with
a more upscale, specialty-store look.”

Furthermore, Kline’s study reveals that as brands increasingly look to leverage mobile and e-commerce to create seamless and ubiquitous purchase options for their customers, single-channel marketing is being rendered less and less viable.

“We expect a great deal of cross-channel promotion that will drive solid growth over the next five years,” predicted Doskow. “The Internet and mobile technologies are empowering consumers to be even more aggressive in their product and price comparisons
and driving marketers to deliver value-based products to meet these demands.”

Sustainable Packaging Development Gathers Pace
Continued and increasing awareness of and concern for sustainability and packaging’s
impact on the environment have encouraged a number of fast-moving consumer goods (FMCG) multinationals to further their development of sustainable packaging solutions, according to Euromonitor International. The issue of sustainability has increasingly entered the beauty and personal care arena. For example, Procter & Gamble launched a Pantene brand extension in a sustainable plant-based HDPE bottle, thus making this
line of products even more environmentally-friendly. Initially launched in Western Europe in 2011, the brand plans to expand reach of this plantbased HDPE bottle globally.