Study: As prestige dwindles, drug, mass ‘makeup’ dollars
A recent study by market research firm the NPD Group indicated that the U.S. prestige beauty market took a beating during the first half of 2009. The silver lining, however, were separate reports suggesting that the drug and mass market could be the beneficiary of the prestige market’s plight.
According to the findings, released Sept. 1, sales of U.S. prestige beauty dropped 7% to $3.7 billion during the first half of 2009, with June marking the 11th consecutive month of negative prestige beauty performance.
Prestige fragrance took a major hit during the first half of the year, with sales declining 10% to $1 billion compared with the year-ago period. Both women’s and men’s prestige fragrances posted 10% declines from a year-ago, NPD stated. Even U.S. prestige skin care suffered. According to NPD, it was the worst first half for skin care in the past three years, but it still had the softest losses of all beauty categories in terms of both dollars and units. Sales of U.S. prestige skin care dropped 6% to $1.2 billion.
U.S. prestige beauty sales (first half of 2009)
|DOLLARS*||% CHG 2009 v. 2008|
The news may be grim for the prestige segment, but a separate NPD report released in July found that specialty stores were among the three most cited channels shopped for beauty products in the past year, surpassed only by mass merchants (53%) and drug stores (41%).
Echoing the sentiment, consulting and research firm Kline & Co. issued a report earlier this year that indicated that consumers are showing a preference for competitively priced products from the mass and direct trade classes in light of the economy. “The new frugal mind-set imposed by the recession has altered spending and product consumption habits, some of which will probably continue into the foreseeable future,” stated Nancy Mills, Kline industry manager of consumer products practice.
“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,” Mills continued. “To be successful, companies will likely continue to infuse the mass segment with more sophisticated products to compete with luxury products.”
Kline also noted that some brands that did very well in the previous years, such as Bare Escentuals, had slower growth in 2008, whereas such mass brands as Garnier skin care and Neutrogena sun care showed very strong growth.
Demeter Fragrance Library launches line at CVS
NEW YORK The Demeter Fragrance Library, a U.S.-based company that consists of more than 250 fragrances inspired by real-life objects and experiences, has launched select classic scents in CVS stores nationwide.
The fragrances now available at CVS are baby powder, pure soap, patchouli, honeysuckle, laundromat and lilac.
“We are thrilled to introduce Demeter to the mass consumer market through CVS,” said CEO Mark Crames. “Making our unique products available to a wide array of consumers is a strategic growth opportunity that is perfectly aligned with Demeter’s mission of providing fun and affordable fragrances to everyone.”
CVS stores carry the new .5 fl oz. purse sprays, as well as the 1 fl oz. cologne sprays, priced at $5.99 and $9.99, respectively.
Unilever seeks to buy personal care sector of Sara Lee
LONDON Unilever is looking to acquire the personal care business of the Sara Lee Corp. for $1.2 billion in cash, a move Unilever believes will further strengthen its positions in skin cleansing and deodorants.
The transaction is subject to regulatory approval and consultation with European employee works councils.
“Personal care is a strategic category and a key growth driver for Unilever. This transaction builds on our portfolio in Western Europe and also in Asia. The Sara Lee brands enjoy strong consumer recognition, offer significant growth potential and are an excellent fit with Unilever’s existing business,” stated Paul Polman, CEO of Unilever.
Vindi Banga, president foods, home and personal care added, “We are delighted to have the opportunity to acquire such a strong stable of brands, which will help build on our global leadership positions in Skin Cleansing and Deodorants. They are a perfect complement to Unilever’s existing portfolio of brands like Dove, Axe and Rexona.”
According to Unilever, the acquisition will strengthen its positions overall in Western Europe. In addition, Unilever sees significant potential to build these brands in developing and emerging markets, which already generate approximately 15% of its annual sales.
The Sara Lee brands generated annual sales in excess of $750 million with an EBITDA of $128 million for the year ending June 2009.