Slowing market growth steps up competition in Europe
According to Organic Monitor, the European market for natural and organic should expand by 12% in 2010. Although outpacing the total cosmetics market, growth is far below the 20% plus growth rates observed in previous years. These slowing market growth rates accompanied with an influx of new entrants are raising competitive stakes in Europe, says the market analysis company.
So far, the natural beauty segment’s healthy growth rates have attracted both emerging and mainstream international brands. As a result, competition steps up and retail shelf-space becomes crowded.
Low priced brands attract consumers
In this context, competitively priced brands, in particular private labels, appear increasingly attractive. “In Germany, private labels comprise about a third of all natural cosmetic sales,” says Organic Monitor. The availability of low priced certified natural and organic cosmetics is changing the market. For instance, Alverde, the private label of DM drugstores, is emerging as the leading brand of natural cosmetics in Germany. Over 300 products are marketed under the Alverde brand, with many priced below 2 Euros. “Consumers are attracted to the value prepositions offered by such brands - certified natural and organic products at low prices.”
Similarly, most growth in the European market is coming from mainstream retailers, such as supermarkets, pharmacies and drugstores. Subsequently, some premium natural are organic brands are losing market share because of sluggish demand from organic food shops and beauty retailers
Consumers in conflict
The results of a recent report by Datamonitor [1], another market research firm, were also released this week and may be helpful to understand changing consumer behaviours.
According to Datamonitor, more than half of consumers (52%) across the globe consider personal care products formulated with natural products as being better for them. This simple fact probably explains most of the impressive growth this segment recently experienced.
However, the confidence in the safety remains accompanied by concerns over the efficacy of natural ingredients, also reveals the market research firm. “Despite the growing concern over the ingredients used in personal care products, consumers were also found to be ambivalent over the efficacy of natural ingredients in personal care.”
Actually, Datamonitor’s survey suggest that marketers still have some way to go to convince consumers that natural ingredients are just as effective as synthetic ingredient. Only 37% of global consumers agreed with the statement that health and beauty products formulated with natural ingredients are equally as effective as non-natural products, whilst 44% neither agreed nor disagreed.
Matthew Jones, consumer trends analyst at Datamonitor, comments: “Shoppers will not be prepared to sacrifice performance benefits when it comes to personal care, particularly as many are actively seeking to minimise the time spent on personal hygiene/grooming. Price is also a factor, as consumer will find it difficult to justify any price premiums when there is doubt as to whether they will even see good results.”
