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| Issue 24 |  |
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| Print version | ||||
| Category | Title | Author | ||
| Market Report | Mass Skincare Goes International | Colin Hession |
Colin Hession, reviews some of the latest trends in mass market skincare on both sides of the Atlantic, and concludes that the major brands are becoming more international, more sophisticated and maybe, more of a threat to their prestige counterparts.
Division #1 - an exclusive club?
Time was when only a few prestige skincare brands were truly international, with designer pedigrees and prices to match.
| Figure 1 | ||
| Regional Shares of Mass Skin Care Market | ||
| Market Size: $ 17 bn at Consumer Prices | ||
 |
||
|
1
|
Western Europe | 29 % |
|
2
|
North America | 20 % |
|
3
|
Japan | 12 % |
|
4
|
Other Asia | 24 % |
|
5
|
Rest of World | 15 % |
| Source: | Colin Hession Consulting | |
Cheaper mass market brands, on the other hand, tended to be different in each country and struggled to achieve more than commodity pricing.
That situation is now long gone, with a select group of mass brands forming a very definite First Division, and all very much international, namely: Nivea, Olay, Plenitude, Ponds & Vaseline.
Nowadays, there is a growing separation between this Division #1 group - all of whose brands belong to multinational manufacturers - and Division #2, which is comprised of one or two-country brands from international companies, and then Division #3, the local players.
The global market for mass skincare is probably worth around $17 bn at consumer prices, just under half the value of total skincare - albeit accounting for a lot more in terms of tons (see Figure 1). Western Europe & North America represent approximately 50% of consumption, although Japan's 12% understates that country's importance in total skincare, i.e. mass + prestige, where its share is around double that of mass alone, since most of Japanese consumption tends to be classified as prestige.
When it comes to market share, the Division #1 group of brands stand out clearly. Together these 'Big 5' brands account for around one third of global consumption of mass skincare, over 40% in Western Europe and North America (see Figure 2).
| Figure 2 | ||
| Brand Shares of Mass Skin Care Market | ||
| % | ||
  |
||
| Source: Colin Hession Consulting |
Clearly, Beiersdorf's Nivea is much larger in Europe than in the US, whilst Unilever's Ponds & Vaseline franchises are stronger in their heartland of North America. This is also the case for P&G's Olay, although this brand is certainly growing in Europe. Interestingly, L'Oreal's Plenitude has more of an even share on both sides of the Atlantic.
The question arises, are there any challengers to Division #1? The short answer from our consultancy's viewpoint, is not many!
Diadermine - a challenger for Division #1?
One of the few brands with the potential - in terms of size & quality - to be able to challenge for membership of the international group we have termed, Division #1, is Schwarzkopf & Henkel's Diadermine.
Schwarzkopf & Henkel have had significant success with Diadermine, driving the brand to the No.3 position in mass facial skincare in France and No. 1 in Spain, in the face of very tough competition - from Division #1 (see Table 1). Diadermine also does well in Holland, Belgium & Portugal.
| Table 1 | ||||||
| Diadémine's Ranking and Share | ||||||
| Mass Facial Skin Care | ||||||
|
France
|
Belgium
|
Holland
*
|
Spain
|
Portugal
|
||
| Brand Ranking |
3rd
|
4th
|
5th
|
1st
|
4th
|
|
|
Brand Share |
15 %
|
7 %
|
5 %
|
15 %
|
12 %
|
|
| * Launched in October 1999 | ||||||
| Source: Colin Hession Consulting | ||||||
Part of Diadermine's success in 1999 was undoubtedly due to innovative line extensions like cleansing towels, anti-wrinkle eye pads, etc, which in turn have created new skin care segments. Indeed, Diadermine anti-wrinkle eye pads received the international Cosmetic Award from Marie-Claire magazine for one of the best cosmetic products launched in Europe last year.
In January 2000, Diadermine was launched in Henkel's domestic market of Germany, where the company already has 7% of mass facial skincare with their AOK brand. Early results look positive, which perhaps is not so surprising, given Henkel's evident marketing skills on their home turf. But clearly, this is part of a larger, global plan.
Uwe Specht, CEO of Schwarzkopf & Henkel told an interviewer from the French beauty press in April this year, "The results of Diadermine's international roll out are looking positive and based on those results, we are planning to have some 20% of our turnover in skincare within the next 5 years." The italics are ours, but given that only 9% of Schwarzkopf & Henkel's total sales of $1.8 bn in 1998 were in skincare, the significance of Mr Specht's remarks is clear.
Certainly it is consistent with what he told financial analysts 18 months earlier, namely that Schwarzkopf & Henkel were going for total sales of $4 bn, including increasing Dep's sales in the US from $120m to $300-400m over the next two years. Although the jury is still out as far as US expansion is concerned, the company is also pursuing an aggressive growth strategy elsewhere and has recently acquired Yamahatsu in Japan.
Threat to Prestige?
The fact is that mass market skincare is progressively getting a whole lot more sophisticated - and effective, too. Mass styles and variants are altogether more competitive with their prestige counterparts than they were a few years ago, as evidenced by P&G's recent international launch of Total Effect, with "VitaNiacin, a complex of B3 vitamins, to provide advanced exfoliation & moisturisation". Who would have thought such a line would be selling for around $30 in mass?
Or take Diadermine's new Force Retinol+ introductions, with Retinol and vitamins A & C, to reduce wrinkles and increase "luminosity" (see photo). Clearly, Schwarzkopf & Henkel have been reading their consumer research right - something that company is renowned for - as the following figures suggest (see Table 2):
| Table 2 | ||||
| “I use a face cream to slow down signs of ageing” (women < 35) | ||||
|
France
|
Germany
|
Italy
|
Span
|
UK
|
|
39,1
%
|
26,6
%
|
21,4
%
|
8,5
%
|
14,1
%
|
| Source: Taylor Nelson Sofre's European Toiletries & Cosmetics Database | ||||
The increasing sophistication of brands at the top of the mass market is beginning to pose an increasing threat to the prestige sector.
Although there is little market research evidence in the public domain of trading down from prestige to, say, upper-mass, it probably exists within manufacturers' files. Certainly, there is quite a lot of anecdotal evidence, which is only logical when you consider how competitive mass brands have become - formulations with clinically proven results, in upscale packaging, at prices high enough to underline the product's value but low enough not to represent a complete indulgence.
After all, for users of cheaper, more basic skincare products - trading up not down - it is easier to aspire to upper-mass brands, rather than having to make the jump to very expensive prestige lines. And perhaps it is less awe inspiring, too - the following figures from the UK seem to support this latter point (see Table 3):
| Table 3 | ||||
| Attitudes to Buying Toiletries & Cosmetics | ||||
|
All
women (in %)
|
Women
< 45 (in %)
|
|||
|
Free
gift might make me buy
|
57
|
61
|
||
| Assistants behind the counter put me off |
50
|
59
|
||
| Prestige cosmetics justify higher prices |
23
|
26
|
||
| Source: IPC Research | ||||
Interestingly, the threat to prestige from the mass sector coincides with an increasing blurring of channel distinctions in Europe, as mass retailers get more and more into prestige's turf, selling an ever widening selection.
Indeed, we believe the current protection of prestige - or 'selective' - manufacturers' positions by the European courts, whereby mass retailers are legally denied supplies of prestige lines, is bound to end sooner or later. When all is said and done, keeping consumer prices high is a political issue; consumers are voters, and European politicians know it ….but that is another story.
Implications for formulators
When considering this trend to a Division #1 group of international brands, the implications for formulators of skincare are clear - make sure you know what Division #1 are doing!
There is an evident need to monitor all developments from this group very closely indeed - and that probably now means including Diadermine, too, as the emerging new player on the international scene.
What claims are they majoring on?
Which scientific routes are they choosing?
What is their variant choice?
In practice, this may not always be as easy as it sounds. It inevitably calls for particularly good liaison between international offices, in terms of competitive intelligence, as well as a systematic analysis of all new launches, local tests, etc. But it will pay off.
As primarily a marketing and commercial consultancy, on the occasions that we do work with technical folk, we always start by asking about their intelligence systems. Do they have a formal procedure for monitoring competitors or customers? Or do they leave it up to Pierre in the French office, or Pietro in Italy, to remember to pass on that piece of information he heard last week? It is at this point that the people to whom we are talking often tend to change the subject ….
In addition to monitoring developments from the major international brands, another thing we are always saying to our formulator friends is
Go for ingredients which work
… and don't just rely on In Vitro evidence
Go for In Vivo every time!
To keep up with the Nivea Visage's, Plenitude's and Diadermine's of this world, formulators will need to use all the tools at their disposal - two of the most important being effective competitive intelligence, and real life evidence that 'it works'!
Author
Colin Hession is Managing Director of Colin Hession Consulting, a specialist consultancy which focuses exclusively on Personal Care in Europe, in terms of commercial & marketing development. Tel: +44-1625-522241 Fax: +44-1625-527284 E-mail ch@hessioncosmetics.com web site www.hessioncosmetics.com
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