Peter J. Bachmann (Signum Forte) and Irene Domberger (Mit Haut und Haar GmbH and Autrepart nature)

A growth segment

Since years natural cosmetics represent a growth segment par excellence and without doubt this trend continues and will exert influence on the whole cosmetics market in general. Considered worldwide, sales are growing by US$ 1 billion per annum and are currently estimated at around US$ 7 billion in total. As in the case of organic food, the great demand for natural cosmetics is concentrated on Europe and North America.

Customers in Germany spent about EUR 672 million on natural cosmetics in 2008, a significant increase of 9.7 % compared to the previous year. The organic natural and „near-natural“ segments would already represent 10 % of the German market. And the market isn’t saturated yet! The rising environmental consciousness and health awareness among consumers, as well as the desire for sustainability are fuelling the growth.

Increased market differentiation

Speakers at the second Natural Cosmetics Conference - which took place from September 22 to 23, on the occasion of the Nuremberg fair - particularly turned their attention to increased market differentiation, and to the specificities of marketing natural cosmetic brands.

Elfriede Dambacher, who has been managing Naturkosmetik Konzepte, a consulting firm, since 2003 to advise manufacturers and trading companies in the natural cosmetics markets, primarily specialising in strategic marketing and sales consulting and the development, and publisher of the Natural Cosmetics Report 2008 and Natural Yearbook 2009, said that variety keeps the market on the move, and asked if natural cosmetics could be viewed as the pacemaker for the international beauty sector.

Indeed, the natural cosmetics business is one of the few economic sectors that show favourable development rates. Reasons for growth rank from consumer trends (cultural and social changes) to the search for alternative energies and raw materials and the shift from material prosperity to social wealth, or from prestige luxury to ethic luxuriousness! Increased media presence, and the rising number of distribution channels are also important factors of growth. According to Elfriede Dambacher the segment is currently evolving from a demand-driven to a supply market, which means new challenges for everyone involved.

From left to right: Hana Hrstkova (Kline Market Research) and Ted Ning (LOHAS Conference, LOHAS Journal)

Need for new retail concepts

Irene Domberger and Dr. Stefan Kraus gave some practical examples and addressed key issues such as: Is premium natural cosmetics the growth market of the future? Do natural cosmetics need their own POS concepts? How much green glamour is credible?

Since 2006, Irene Domberger has been working with a French producer on the development and introduction of a new shop concept under the name of Autrepart Nature. The aim is to integrate products and manufacturers who offer exclusively natural cosmetics and also specialise in the organic segment. The basic philosophy is “no risk for customer’s health, fair trade and no animal tests”.

Dr. Stefan Kraus is the founder of the Dr. Kraus pharmacies. The concept combines well-known international cult brands with natural cosmetics classics. Dr Kraus also sells online.

Irene Domberger and Dr. Stefan Kraus got to the point that much more innovative shop concepts have to be developed in the future. They also consider that “shop in shop” concepts are of major interest. These concerted actions would provide authenticity and confidence and establish an appropriate basis for and a better perception of the entire natural cosmetics market.

Gerd Weiler (Sanoflore Germany)

Different opportunities in the US and Europe

Hana Hrstková, manager of the Kline Market Research’s office in Prague, confirmed that consumer’s awareness in is growing and will help pave way for new product receptivity.

As far as the US market is concerned, she explained that mainstream marketers of personal care products have a low penetration rate in the natural cosmetics segment and that they would have interest to help natural brands with high growth potential to develop. She said there are many excellent candidates for acquisition.

Regarding opportunities in Europe she explained that more retail shelf space is opening up to naturals, that distribution channels will continue to broaden with natural products becoming more readily available, that smaller less developed product categories offer growth opportunities to marketers, that new standards will help to decrease confusion among consumers and that Russia and other Eastern European markets are less mature markets where consumer interest and demand for natural personal care products is on the rise.

From left to right: Elfriede Dambacher (naturkosmetik konzepte), Dr. Christina Kraus (DrKRAUS Apotheke) and Dr. Stefan Kraus (DrKRAUS Apotheke)

Eventually, all speakers agreed that the potential of natural cosmetics has hardly been exhausted! However, the development of the segment needs better consistency.

The next Natural Cosmetics Conference will be hold on 14-15 September 2010 at the Congress Centre in Nuremberg.