Inside Beauty

There has never been a better time for manufacturers to capitalize on the health and wellness mega-trend. Datamonitor research shows that consumers are increasingly "acting holistically" by simultaneously taking a number of active steps utilizing diet, exercise and other health influencing factors to improve well-being related to beauty and physical and mental health. Given the growing concern among consumers of all age groups and both genders regarding certain health and beauty issues, there are several opportunities for nutraceutical and cosmeceutical players.

Affirmative Attitudes Toward Health and Well-Being

Historically, a major trend in healthy behavior, especially with regard to healthy eating, has been the dichotomy between what consumers say and what they actually do. This attitudinal-behavioral gap has characterized the moderate and unfulfilled impact that the health and wellness trend has had on the packaged goods sector in the past 10-15 years. However, times are changing and core values and attitudes are beginning to significantly affect behaviors. In a consumer survey of 3200 consumers in the U.S. and Europe conducted by Datamonitor in October 2004, 91% of U.S. consumers felt that improving physical health was either "important" or "very important." Even more significant, however, is that 70% of U.S. consumers actually took "steps" to improve their health over the prior year. Maintaining a healthy diet has been a key facilitator in this with 59% of consumers reporting that they took active steps to improve health through their diet over the same period. According to Datamonitor, this is reflective of a shift from "nutritionally curious" consumers to "nutritionally active" consumers and is symptomatic of how the attitudinal-behavioral divide is diminishing.

Why is this happening? First, there is an ever-increasing amount of information in the media about diet and healthy lifestyles, with many magazines, television shows and organizations dedicated to eating and cooking, and raising awareness of the link between health and food. Second, consumers have become increasingly knowledgeable about the self-management of health; consumers are self-medicating (often referred to as "do-it-yourself doctoring"), encouraged by government policy, as well as a growing culture of individualism. This can be seen in rising sales of over-the-counter medicines (OTC), vitamins, minerals and supplements (VMS) and herbals. As part of this shift away from a reliance on conventional medical professionals, consumers are increasingly seeking out new sources of health information and now are able to educate themselves about health through a growing number of media. Third, on the supply side, manufacturers have become more astute in recognizing that increasingly demanding consumers are unwilling to compromise taste for health benefits. Improved product formulation, often through flavor-masking techniques, has enhanced the sensory profile of healthy products, especially functional foods.

Food and Drink Products Focus on Specific Attributes

Consumers are actively focusing both on what is removed from food and drinks products and what is added to boost the health credentials of various offerings. Nearly half (44%) of the U.S. population claimed to be on some form of dieting program in 2004 and when it comes to what is removed, Datamonitor's consumer insight tracking shows that consumer habits are increasingly complex and diverse. Americans are cutting back on high-fat foods, foods high in calories, high-cholesterol foods and foods high in sugar and salt. Elsewhere, the "slow carb" diet is beginning to emerge as a more flexible alternative to the low-carb diet and is symptomatic of how consumers are embracing more complex approaches that facilitate better well-being.

More importantly, from a nutraceutical and cosmeceutical perspective, a trend toward "positive nutrition" means that functional health products are an increasingly important part of dietary well-being, especially for consumers acting holistically. The U.S. functional food, beverage and supplements industry was valued at over $28 billion in 2003, and is expected to continue growth at a CAGR of well over 6% over the next few years. Consumers are increasingly seeing a specific set of functional benefits from these products. Energy-related products dominate the functional sector, comprising 34% of the market share, while products marketed as beneficial for heart health accounted for over 21% of total functional food and beverage value. Datamonitor believes that gut health will be an important growth segment, as well as products offering long-term cardiovascular benefits.

Offering emotional comfort will also be increasingly significant because the need to alleviate stress is an important component of well-being and is well exemplified by consumers' reported struggle to achieve a desirable work-life balance. Datamonitor found that 81% of the European and U.S. population felt it either "important" or "very important" to "find ways to escape the pressures of everyday life" and 89% of respondents also felt the same about reducing stress levels. Again, consumer behaviors are reflecting these attitudes; 63% of U.S. consumers took active steps to reduce stress levels in 2003-2004. There are many ways consumers are doing this, including seeking therapeutic products to trying alternative therapies and pampering at home.

Products offering emotional comfort can capitalize on this growing trend toward mental well-being. For example, claimed to be the first anti-aging psychodermic treatment, Orlane Paris Hypnotherapy has recently been introduced in Europe. Orlane describes its Anti-Aging Cream as being one for women who are in a difficult emotional period. The cream is said to "hypnotize" the skin to disconnect cerebral hemispheres from one another. It is formulated with date extract and red tocol arctic berry, which is a source vitamin E and omega 3 fatty acids. Elsewhere, Danone's Zen has been introduced in several countries. Consumers are encouraged to consume Zen when they feel the need to unwind from the stresses of balancing careers, family life, longer commutes, and longer working hours.

Aging & Self-Aware Consumers Driving Personal Appearance Consciousness

A 2004 Datamonitor industry opinion survey of U.S. manufacturers found that 79% believed that consumers are more beauty-oriented than five years ago. This is because societal pressure to conform to an ideal physical standard is rising, which is tied to the pressure people feel when confronted by constant messages that it is undesirable (medically, socially and aesthetically) to be overweight. In addition, Datamonitor research shows that as consumers move toward an overall healthier lifestyle, it is becoming clear that many see external wellness and beauty as a sign of health. Nearly three-quarters (73%) of U.S. consumers felt it was either "important" or "very important" to spend time on personal appearance and 52% reported that they actually spent more time on their personal appearance.

Attitudes toward aging in particular create a strong need for "age-defying" products, especially with regard to one's appearance. As the population ages, there is an increasing interest in looking younger, more beautiful and more relaxed. This is why cosmeceutical creams and lotions used to promote skin, hair and nail health through the use of functional ingredients have proven to be lucrative products especially in targeting affluent, aging females. These form the core of consumers who are actively improving their health and beauty well-being through their growing uptake of functional health and beauty regimes (FBR's)-defined by Datamonitor as being a long-term pattern of repeated and regular use of a personal care product or supplement containing at least one functional, active ingredient-to the extent that sales of functional beauty products have outperformed the overall market growth rates.

Functional beauty products are expected to gain a greater share of the personal care market as consumers seek products to fight the effects of aging. Tapping into this, Avon Anew Daily Total Body Anti-Aging is a dietary supplement designed to address the top 10 aging concerns of women over 30. Variants include: Beautiful Skin; Healthy Hair & Nails; Strong Bones; Healthy Hormonal Balance; Memory, Focus & Concentration; Energy; Cardiovascular Health; Eye Health; Immune System Health and Healthy Antioxidant Levels. Elsewhere, Renergie Microlift is Lancome's first Active Redefining Treatment that targets multiple signs of aging and helps to visibly regain skin's youthful definition on the surface of the skin. It is said to be formulated with microlifters (made of nano-particles of silica and proteins that form a network to immediately lift and tighten skin), dermo-bonding peptides (rice proteins), malt extract (help to visibly firm and redefine facial contours while significantly reducing the appearance of lines and wrinkles) and maize extract (helps to improve the overall quality of the skin). Offering functional benefits will be increasingly relevant to cosmetics and make-up too; Collagen Building Lip Gloss Duos are included in the new Joey New York Color line from Aventura.

The 'Age Complexity' Mega-Trend

Datamonitor's consumer survey also showed that the number of European and American consumers who "like being the age" they are declines from age 19 through to 49. Taking this into account, it is unsurprising that within the last two years new product development within the dietary supplement category has focused largely on anti-aging products. However, from the age of 50 onwards there is an increase in those who report being happy with their age. This reflects the "age as identity" trend and highlights how older consumers, despite spending the most time on personal appearance, also look upon their age with a positive attitude.

In response, when targeting older consumers, marketers must place heightened emphasis on the use of older characters because they place more importance on advertising reflecting their age the older that they are. This can be attributed to the heightened sense of pride that accompanies getting older as well as the insecurities that aging and an inherent desire to look younger bring. These apparent contradictions are symptomatic of a mega-trend Datamonitor refers to as "age complexity." (See figures 1-3)

Inside Beauty: The Line between Health & Beauty Continues to Blur

Consumers are not only interested in functional health products that can stave off the illnesses associated with aging, but in products that can provide short-term, visible benefits for skin, hair, nails, and other external health concerns. Indeed, 43% of the 1002 nationally representative U.S. consumers Datamonitor surveyed in 2004 indicated that beauty benefits influence their purchases of functional foods, beverages and supplements. Consequently, nutraceutical products making beauty claims are growing in popularity as a subset of the anti-aging trend. After all, consumers are more likely to continue using functional health products if they can see external benefits; that way, consumers feel "rewarded" and assured that the products are actually working thereby serving as an incentive to continue using the functional health product.

There are a plethora of innovations, especially in drinks capitalizing on the "skingestibles" trend, especially in Japan, but increasingly in the U.S. too. Ardea Beverage Co.'s Radiant Nutrisoda contains skin health nutrients as well as natural colors, fruit flavors and zero calories. Amino acids L-lysine, L-proline and L-arginine, plus the herb gotu kola, help stimulate production of collagen and facilitate soft tissue repair and fight signs of premature aging. Borba Nutraceuticals Skin Balance Water comes in 3 "reconstituted" varieties, including Clarifying Pomegranate, Age Defying Açai and Replenishing Lychee. In France in 2004, Galeries Lafayette launched a water designed to prepare the skin for suntanning.

Convenience & Customization-Keys to Today's Health & Beauty Marketplace

In recent years consumers have increasingly favored prevention rather than cure. Datamonitor believes this is one of the main reasons for the growing adoption of FBR's; consumers are trying to prevent the appearance of problems in a pre-emptive rather than reactive manner. While functional products will benefit from this mentality, they are also relevant to a group Datamonitor refers to as Instant Gratifiers.

These consumers comprise around 30% of the U.S. population and are actively engaged in improving health and wellness through the use of short-term health treatments for immediate relief of minor, non-serious medical issues, as well as short-term maintenance for ongoing health needs. The strong growth of VMS has been driven by such consumers' increasing willingness to supplement poor dietary habits and to find quick-fix solutions to health problems. A strong part of this growth has been condition-specific supplements designed to offer benefits in specific areas (e.g., sports nutrition) rather than just general supplementation.

Quick-fix products with active ingredients must be increasingly personalized. Datamonitor found that over the course of 2003-04, 63% of U.S. consumers reported that they purchased products and services customized to their specific needs on a more frequent basis. In addition, 52% believed it was likely that they would buy cosmetics and toiletries with active ingredients for their specific requirements in the future. Increasingly, brands that have too broad an appeal with unfocused beauty benefits will fall foul of consumers' desire to see themselves and their needs as unique.

Feminization is Driving Male Acceptance of Functional Products

At present, women are seen as the main drivers for functional health products. However, the feminization of society is having a discernable impact on male attitudes and behaviors with a growing concern for external well-being and anti-aging. According to Datamonitor, more European and U.S. men (73%) felt that spending time on personal appearance was "important" or "very important" when compared to women (72%). And across Europe and the U.S., 47% of male respondents spent more time on their personal appearance in 2004 than in previous years, compared to 51% of females. It's no wonder then that Datamonitor predicts that the combined European and U.S. male personal care market is set to rise from over $31 billion in 2003 to nearly $38 billion in 2008.

Male dieting and actively seeking out healthier food and drinks also characterizes how males are defying traditional "macho" consumption. Indeed, men were on a par with women in terms of both the level of importance they placed upon improving their health through diet and marginally more actually reported taking active steps to eat more healthily in 2003-2004 than women. It is worth noting that products with active ingredients that target males may benefit from the fact that men place more importance upon function than fashion, so marketing communications should be tailored accordingly. For example, L'Oreal Menexpert Hydra Energetic Soin Hydratant is a new moisturizing skin cream, which is promoted as being "anti-fatigue" with "long-lasting" effectiveness.

Gaining Consumers' Trust will be Vital

Ultimately, the success of any functional food or beauty product will come down to product efficacy, and in the absence of short-term results-for example in the case of improved heart health claims-consumer trust in product claims. At present, this represents a very large barrier for the industry as a whole. Widespread acceptance of these products will be difficult, as generally consumers seem to somewhat lack trust in the specifics of product claims and types of marketing used when it comes to health products. Datamonitor fieldwork showed that as many as 42% of U.S. consumers distrust the nutritional claims made by food and drink players, 45% distrust health-boosting claims made by food and drinks players and 41% distrust claims made by cosmetics and toiletries players. Overcoming this apparent skepticism will be absolutely fundamental in fulfilling potential long-term demand for all nutraceutical and cosmeceutical products, even as the mass market increasingly embraces the notion of "positive nutrition."

About the author: Daniel Bone is a consumer market analyst with Datamonitor, New York, NY. He can be reached at 212- 652-5351; E-mail: [email protected]; Website:

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