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Natural Beauty Enters the Big Leagues

Natural beauty products set up shop in the mass market.

Natural beauty is big — and it’s only going to get bigger.

As a result, the mass market has more options for consumers, but is more fragmented than ever. Shopper demand for mass natural beauty is rising so fast that brands once sold only through natural product retailers are rushing into the drugstore and discount channels faster than an avocado ripens. Brands born in the natural channel are crossing over into mass. Meanwhile, leading beauty brands are scrambling to ramp up their own naturally positioned products in order to better compete with smaller niche players pouring in from the health store sector.

The latest example is at the Walgreens Boots Alliance in the U.S. Next month the chain will introduce its The Plant One campaign for the recently modernized Botanics line, in tandem with repackaged and reformulated products that are entering Walgreens stores — they have already hit shelves at Target and Ulta Beauty. Boots Retail USA managing director Lyle Tick said in order to be competitive, Botanics, which has been on shelves in the U.S. for some time, was in need of a serious makeover.

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“We’ve all seen the same numbers,” said Tick. “[The revamp] was driven by the category. Naturals is growing superfast…and is predicted to grow.”

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Tick is right.

A 2016 Kline study reported that the natural personal-care market in the U.S. — $5.4 billion wholesale — grew more than 9 percent last year, and is projected to balloon by 40 percent in the next five years. Shoppers are increasingly curious about natural beauty — in a recent Mintel survey, 37 percent of consumers shopping in natural grocery and health-food stores agreed that they buy more natural personal-care items than they did one year ago.

The better-for-you-beauty trend began in the niche luxury sector, where a $250 face oil infused with African jasmine is the norm. But as U.S. consumers continue to view their beauty routines as an intrinsic part of a holistic lifestyle, linked with healthy eating and exercise, natural beauty and personal care is manifesting in the mass landscape, fragmenting the market even more than it already is.

Mass hair products with natural positioning.
Mass hair products with natural positioning. George Chinsee

“This is such a fundamental shift in interest for beauty shoppers,” said Wendy Liebmann, chief executive officer of WSL Strategic Retail. Over the course of the next five years, “the marketplace will transform itself so there will be a spectrum of choice. If you want to buy natural from a big national brand, you’ll be able to because they’ll have [introduced] natural ingredient stories.”

It is no longer an option for mass retailers to not carry natural brands or product offerings — it is a mandate, according to experts. CVS has been cultivating a natural section for some time and Target Corp. just doubled down on natural offerings. On the brand side, the same is true for product assortments — having a natural option is essential.

“I don’t see any other way around it,” said Naira Aslanian, project manager at Kline & Co. “A lot of brands are trying to keep that market share by infusing their product lines with natural ingredients.”

It appears to be working. At a time when sales are sluggish in mass personal care, brands that have adopted natural positioning are the ones seeing the significant growth.

Take the hair category, which mass consumers are using as a gateway point to natural beauty. According to Kline & Co. research, hair care recorded the highest growth of any natural category last year, growing 11 percent in 2016 as consumers increasingly opt for products that are “free of” chemicals considered to be harmful, such as sulfates. According to IRI data tracking the 52 weeks ending Feb. 19, all categories in hair were down except shampoo and conditioner. In the shampoo and conditioner categories, OGX nabbed the number-one spot by a landslide. Shea Moisture was up 74 percent in shampoos and 54 percent in conditioners. Garnier Whole Blends, which launched last year, recorded double-digit growth in both categories and Carol’s Daughter grew double digits in conditioner. Hask, which focuses on trend-driven natural ingredients such as clay, charcoal and superfruits and launched a Greek yogurt-based line earlier this year, also tracked significant growth.

It’s a similar story in skin care, where cleansers and moisturizers are driving the category. In cleansers, Kao-owned Bioré grew 59 percent after releasing splashy charcoal-based launches last year. Burt’s Bees was up 10 percent and Freeman’s line of facial cleansers featuring hot ingredients such as apple cider vinegar was up 27 percent. Garnier’s SkinActive line — the Clean Plus range offers charcoal and clay-based cleansers for acne — tracked double-digit growth.

In Boots’ case, the product was already in place — like a natural answer to No 7’s skin-care range, with a less overt focus on antiaging — formulated with plant extracts as the active ingredients. But the packaging and brand messaging needed an overhaul, said Tick. “We weren’t showing up in a way that reflected where the consumer and category had moved.”

Pacifica products.
Pacifica products. George Chinsee

Consumers want clarity in the mass naturals space, according to Tick, who said the old Botanics line had grown too cluttered for consumers to navigate.

“It’s not the clearest [category]. It’s a relatively new, growing category, and consumers [aren’t] sure if natural is efficacious, what the benefit [of plant extracts] is and what they can do for you,” said Tick.

The products, which tout star ingredients such as clary sage, ginkgo biloba and rosehip, were formulated in partnership with Kew Gardens scientists in London. The stockkeeping unit count has been streamlined from over 140 items to 42, and are packaged in sleek, simplistic color-blocked designs. The outer packaging of each product references a single active natural ingredient, and the inner packaging explains exactly what the ingredient can do do for skin — for instance, hibiscus extract brightens.

Tick could not go too deep into details on The Plant One campaign, which will drop in April, but noted that it will be “graphical, simple and fun,” evoking the message that the products deliver straightforward, natural ingredients.

The name of the campaign — The Plant One — is a reminder that of the proprietary Boots lines available in the U.S. — Botanics, Soap & Glory and No 7 — Botanics is literally “the plant one,” or the most natural offering that brand has.

As companies like L’Oréal and Johnson & Johnson introduce naturally positioned products into the market, questions arise as to just how natural those products are.

The answer doesn’t necessarily matter, experts agree.

“There’s a little bit of a war about what’s really natural,” said a source in the financial sector. “As long as you are clear about your message to people at what you are meant to be, it’s fine. I don’t think the non-natural channel consumer cares that much.”

For the most part, consumers will be able to determine for themselves just how “natural” a product really is, agreed Lucie Greene, worldwide director of the J. Walter Thompson Innovation Group. “The term ‘natural’ is broader and more nebulous than ever, but you have a consumer who is more engaged than ever.”

“People are increasingly conscious of whether something is natural or more health fully produced,” said Liebmann, who also noted that transparency is key. “They want to make their own choices, whether it’s organic or natural or ‘free from.’”

Even as traditional mass brands race to churn out natural product innovations, smaller ones are swooping in from the health product channel, stealing customer attention in drugstores.

Schmidt’s Naturals, a Portland, Or.-based deodorant brand, entered Target last month. It was previously sold only in natural grocers, but consumer fears around aluminum in deodorants have made the brand’s aluminum-free product a hot proposition. Industry sources estimate Schmidt’s does about $20 million in annual net sales, and the brand tracked 269 percent growth last year. Chief global strategist Michael Cammarata said Schmidt’s is on track to grow 300 percent this year, and will introduce new categories as well. An industry source with knowledge of the brand noted it will bow in Kroger supermarkets later this year.

Schmidt's Naturals products.
Schmidt’s Naturals products. George Chinsee

While Schmidt’s is riding the natural deodorant craze, most natural channel brands need more cache to enter the mass market.

“Back in the Nineties, consumers buying these products in the farmer’s co-op weren’t looking for the trendiest item,” said Julie Marchant-Houle, senior vice president and general manager of personal-care products at Hain Celestial Personal Care. Hain Celestial owns a portfolio of beauty brands, including Alba Botanica and Avalon Organics, both of which have made strides into mass-market distribution. Avalon Organics skin care is now at Target, and Alba Botanica is sold at Ulta Beauty.

“As we’ve moved into mass, consumers today aren’t willing to make those trade-offs. They want an affordable product that doesn’t look crunchy and granola, and they want their trendy item when [it’s in vogue in the marketplace].” Marchant-Houle noted Alba Botanica has significantly ramped up its innovation pipeline, introducing trend-driven launches that remain true to the brand’s heritage, such as its Hawaiian volcanic clay line.

According to another financial source, brands that don’t get the aesthetics memo will face challenges in crossing over from natural retail distribution to the mass channel. “When you look at natural coming out of prestige, they’re cute and cool and sexy,” said the source, who noted brands such as Mineral Fusion and Derma E, which lack modern packaging, are less attractive to buyers. “They’re not aspirational. They’ve rested on their laurel of ingredients, which the natural consumer cares about, but the mass consumer wants something fun as well.”

“I’m a beauty junkie,” said Stacey Kelly Egide, ceo of Andalou Naturals, which started in the natural channel and is crossing over to mass. “I love seeing what the hot trends are, and how we can make that within our natural and organic standards and put our natural twist on it.”

Another hot brand is Pacifica, which relies on brightly colored splashy packaging and trendy formulations, like micellar water and foaming masks. Industry sources say the brand, which is available in Target, Ulta Beauty, Whole Foods and natural grocers, is growing 80 percent year-over-year.

According to Spins data, Andalou is the skin-care brand with the most market share in its database of natural grocers. And Egide knows something about marketing natural brands to mass consumers — she started Alba Botanica and Avalon Organics before selling to North Capital Partners, which turned it over to Hain Celestial.

As more natural brands crowd the mass market and the word “natural” remains without a standard definition, the industry is beginning to conclude that having a point of view and maintaining transparency will be key in keeping the customer’s attention on naturals.

Some say that responsibility falls on the retailer. “There will still be a significant role for brick-and-mortar stores to curate a natural destination for shoppers to discover and learn about the segment,” said Jim Geikie, general manager for Burt’s Bees. “[These retailers] play a critical role in helping people choose the best options in what is generally a confusing and unregulated landscape.”

Target has done this with its designated natural beauty section but, according to Liebmann, the “introductory period” of natural beauty will soon come to an end and it will be up to brands to help consumers differentiate between the influx of different lines. Liebmann envisions natural products ultimately being taken out of designated areas and placed into aisles alongside traditional brands.

Brands who are counting on designated natural sections to sell their products shouldn’t hold their breath, according to Liebmann.

“In the beginning [of a trend], there’s value in separating out brands because people want to be educated and spend time learning about their choices,” said Liebmann. “Ultimately I see [natural beauty] weaving into the broader market because if you want to grow the business, you have to put it where the traffic is.”

Greene noted that the market will continue to fragment as natural brands enter the mass channel, especially given the continuing momentum of natural beauty ingredient trends mirroring those in food. The more food trends there are, the more consumers will want to see them manifested in beauty. She listed everything from different types of protein to ayurvedic diets and even marijuana as growing natural product trends.

The variety of microtrends within the natural category is one way for brands to define their own take on natural beauty.

“Brands will define what their position is within the category,” said Harvey-Taylor, the Pacifica cofounder. “For us what’s really important to our consumer is us being vegan and cruelty-free, using the best ingredients, safety, more sustainable packaging, which is a big deal.”

“I liken it to food,” said Marla Beck, ceo and cofounder of Bluemercury, which just boosted its natural skin-care offering. “Whether its vegan or raw ingredients, organic or probiotics, everyone has their different beauty diet they want to be on.”