Do you remember the days of tremendously high annual natural product growth rates? In those early times, the natural products value chain had trouble making the products quickly enough to address the rising tide of demand that lasted over a decade! Are these growth rates gone forever? Is there nowhere for you to turn to meet your lofty ROI expectations and satisfy your stakeholders?
It is true that consumer demand for nutritional supplements, functional foods, and a variety of healthy and natural meal and snack alternatives promised to fuel the industry for decades – or so it seemed. Now these areas show signs of maturation as consumer demand has slowed and oversupply has plagued the marketplace, in addition to a variety of other issues.
Today, much of the opportunity for growth in the natural world is found in products that consumers use on their skin, in their hair, on their teeth, and in the everyday household products they use. This is good news for the supply side, since ingredient manufacturers, in their strategic marketing planning processes, must look at several industries simultaneously --nutritional supplements, food and beverage, OTC/pharmaceutical, and personal care/household products-- so that they can maximize their ingredient applications and thus sales. Until recently, many industry analysts have overlooked this last category due mainly to its small size relative to other natural segments. All of this is now changing!
Nutrition Business Journal reports that the natural personal care industry is currently at US$4.6 billion in the United States, representing almost 15% of the overall health and beauty market. The last time the Canadian market was measured, in 2001, it stood at US$365 million. Several sources over the past few years have estimated annual growth rates in the U.S. at between 10-20%. This is again good news for suppliers who are tired of lackluster growth within the more mature natural products segments and can position their ingredients toward personal care as well as manufacturers and marketers who wish to offer branded products in the broadening channels of distribution.
Personal Care Breakdown
Natural ingredients are multi-functional by nature since each ingredient has several uses. Many botanical ingredients can be used in both hair and skin products, for example. Green tea, as an anti-oxidant and UVA/UVB protector, is a perfect example. Some essential oils have dual purposes as bio-actives and fragrances. And manufacturers can even use some of these ingredients in oral care products and household cleaning products as well.
Major natural personal care segments include skin, hair, oral care, aromatherapy, make-up/color cosmetics, and household products. Each area has its own nuances and ingredient suppliers, manufacturers, and retailers alike need to maintain a thorough understanding of what continues to make this market attractive. Other areas of special interest include organics, men’s care, ethnic care, home spa, sun care, cosmeceuticals, and a host of others.
What to Expect
Expect continued growth in this area, throughout the entire supply chain. Consumer demand remains strong, products are of increasingly higher quality and efficacy, and channels have broadened to make these products more available to the mainstream consumer.
Over the coming months, we will analyze each segment; discuss trends and drivers; assess consumer attitudes and behavior; understand what natural and organic really mean; look at new ingredients, ingredient categories, and applications; sort out regulatory and legislative issues; analyze the channels and value chains; discuss niches within the overall category; product development challenges; strategic marketing planning and implementation; and a variety of other areas. I look forward to working with you!
Darrin C. Duber-Smith, MS, MBA, is president of Green Marketing, a Colorado-based strategic planning consultancy offering marketing planning and marketing plan implementation to natural products companies in all stages of growth. He has 15 years of specialized expertise in the natural products industry and is currently an adjunct marketing professor at Metropolitan State College’s School of Business in Denver, CO. He can be reached at [email protected].