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The natural beauty segment is growing up.
This story first appeared in the March 23, 2012 issue of WWD. Subscribe Today.
Rightly or wrongly, natural beauty brand founders had a reputation for being crunchy purveyors of so-so products in ugly packaging. But it was clear at Natural Products Expo West, which drew 60,000 people to the Anaheim Convention Center in Anaheim, Calif., from March 8 to 11, that they’ve made strides to change that reputation. Pounded by the recession, criticism over the meaning of natural and organic labeling, and consumer reluctance to stick with ineffective products, natural beauty brands have focused on improving affordability, message coherence and efficacy.
Natural beauty’s maturity is showing up in sales. The U.S. natural personal care market grew 7.7 percent in 2011, markedly more sluggish than the double-digit growth it had experienced for years, according to research firm Kline & Co., which attributed the slowdown to the segment’s age. Kline forecasts total sales of U.S. natural personal care products will grow at a rate of 9.6 percent from 2011 through 2016 to $6.2 billion.
Still, investors, retailers and brands at Expo West touted both the natural segment’s short-term growth and long-term potential as educated consumers evaluate their personal care choices. Janica Lane, a partner at boutique investment bank Partnership Capital Growth, said natural brands have really upped their game to woo shoppers accustomed to the pizzazz of the mass beauty industry. “They are starting to get the consumer to come around with packaging that looks more prestige, really great ingredient profiles and science,” she said.
Brand sales are signaling customers crave natural alternatives to mainstream beauty. In fiscal year 2011, Hain Celestial Group’s personal care business — which includes the brands Jason, Avalon Organics, Queen Helene and Alba Botanica — increased nearly 11 percent to $101.7 million. Bruce McMullin, president of Sibu Beauty, marketer of products driven by sea buckthorn, said the three-year-old brand has jumped from generating $700,000 in sales its first year to $4 million. “It is really growing by leaps and bounds,” he said. Patrycja Towns, media and advertising director at Aubrey, said the brand was up slightly last year and is projecting a 10 to 15 percent sales bump this year. “We are proving to have a very strong quarter, so I’m optimistic about this year,” she said.
Even cosmetics, which have historically been difficult in the natural channel, are exhibiting signs of life. Tim Schaeffer, senior vice president of marketing at Mineral Fusion, said the brand is up 38 percent and, as a whole, the natural cosmetics category is up 18 percent, compared with one percent for cosmetics at mass. He said Mineral Fusion is in 1,000 U.S. doors currently but he expects it to be in 8,000 doors within three years. A major launch for the brand this year is a line of 30 nail polish shades, which Mineral Fusion believes is the largest of its kind in the natural market, at $7.99 each.
Jeremiah McElwee, executive global coordinator of Whole Foods’ Whole Body section, said making natural personal care products more affordable has had a lot to do with attracting shoppers. “Post-2008, we definitely have seen a lot of natural personal care companies sharpening their pencils to bring pricing down. There used to be a wide disparity between the mass market and our channel, but that gap has really closed,” he said. “It is way easier for people to get our products than it ever has been.”
Value, whether it was represented in sizing or product versatility, continued to be a major theme at Expo West. Alaffia’s Authentic Black Soap, a body wash, shampoo, facial cleanser and more, came in large 32-oz. bottles for $9.99, while EO’s Everyone Soap was priced the same for a three-in-one shampoo, body wash and bubble bath product. “There’s a lot of consumers that want to try clean products, and the price point has not been there,” said Sherry Roushandel, EO’s eastern regional sales manager. For the sake of convenience, towelettes were popular product releases, notably Alba Botanica’s Natural AcneDote Daily Cleansing Towelettes and Giovanni’s D:Tox System facial cleansing towelettes for purifying and exfoliating.
As natural personal care extends its reach, African-Americans and Latinas, customer bases often ignored by natural beauty product brands in the past, have become important growth engines. Queen Helene’s Royal Curl, a four-product hair care line that launched last spring, is being extended with Princess Curl, a three-product range for curly-haired girls, at $5.95 each. “There is something very resonate with women of color, especially taking care of their hair in a natural way, that is very, very modern,” said Emma Froelich-Shea, Hain’s senior vice president of personal care marketing, and R&D. She pointed out that Royal Curl’s Curl Shaping Crème is one of Hain’s “fastest-turning” products at Whole Foods. Giovanni aims to break into the Latina market in the third quarter with Manzanilla, a brand designed for hair lightening with clarifying shampoo and conditioner, among other products, likely priced at $7.99 each. Before Manzanilla launches, Giovanni is bringing the hot ingredient argan oil into natural hair care with the 2Chic Collection of eight products priced from $7.95 to $8.95.
All beauty customers, regardless of race or creed, want products to work — and natural beauty products were seen as not working that well. But natural skin care brands are now trying to prove their results. As of the end of this month, MyChelle Dermaceuticals will have placed Visia machines at 20 Whole Foods locations to compare customers’ skin before they use MyChelle products and after usage for 60 to 90 days. Another 50 should go into stores this year. With Visia analyses, “Our units per transaction have gone from one to two products on the shelves to four to six products,” said Kristine Carey, MyChelle’s vice president of marketing, who added, “We have seen upwards of triple-digit year-over-year” sales increases in stores with Visia machines. Mirroring mass brands, natural brands are also conducting clinical trials. Suki, for example, promotes itself as being “clinically tested,” and states third-party trials found its Nourishing Regimen and Balancing Regimen to result in 84 percent and 73 percent improvement.
Perhaps more significantly for the natural segment than the up-front communication of skin care results, brands have started to communicate their organic positioning transparently. Whole Foods adopted a standard for personal care that stipulates products can’t advertise as organic unless they contain at least 70 percent organic ingredients. Despite early resistance from a few brands, McElwee said there’s now widespread acceptance of the standard. Avalon Organics opted to follow NSF/ANSI 305, an American standard for personal care that meets Whole Foods requirements, and upgraded 90 formulas to meet the standard.
“We are hitting this tipping point that almost everything in the store is meeting the standard,” said McElwee. “In the coming months, we are really going to start talking about it more. We will be doing a lot more in-store education around what organic means. Now, you know what organic means everywhere in the store.”