2008: lowest growth since 1991

U.S. sales in the cosmetics and toiletries market grew only by 0.3% in 2008, the lowest since 1991, according to the latest study completed by research and consulting firm Kline & Company. The new data available in Kline’s latest report - Cosmetics & Toiletries USA 2008 - indicates that sales have reached a total of US$35.6 billion at the manufacturers’ level.

Kline projects that consumer concerns about the recession may ensure that these levels do not rise higher during 2009-2010.

Nancy Mills, Industry Manager, Consumer Products practice, at...

Nancy Mills, Industry Manager, Consumer Products practice, at Kline

Upgrading the mass segment?

In the recession context, consumers are showing a preference for competitively-priced products from the mass and direct trade channels. Premium products sales are being affected heavily by these negative market conditions. In fact, salon, specialty, and luxury trade classes all demonstrated negative growth in 2008, whereas mass and direct trade classes turned out to be the fastest growing segments.

Many people have traded down on certain products, and as they get accustomed to buying some lower-priced or private-label products, and shop more in the lower-priced channels, they might well continue with those habits after the tough times have subsided. To be successful, companies will likely continue to infuse the mass segment with more sophisticated products to compete with luxury products,” notes Nancy Mills, Industry Manager, Consumer Products practice, at Kline.

Innovation drives skin care growth

Skin care, the largest product class, was also the second-fastest growing category during 2008, spurred by the sun care category. Although consumers have curtailed spending, they are not ignoring innovative and sophisticated new products. Marketers propel growth with product development, albeit the rate of new launches slows down in 2008.

Some brands that did very well in the previous years such as Bare Escentuals, had slower growth in 2008, whereas, some mass brands like Garnier skin care and Neutrogena sun care showed very strong growth. Some luxury brands did buck the trend with great results — such as La Prairie.