The Datamonitor report, entitled 'Ethnic Personal Care in the US, UK, and South Africa to 2008, highlights how the worldwide market for ethnic personal care has been characterised by a slow but consistent effort by the multinationals to take a hold of ethnic consumer spend. This has been achieved by either expanding existing product lines, acquiring existing niche companies or by developing new product lines that are specifically suited to the needs of ethnic consumers. These strategies mean that major multinationals are successfully edging their way into this market, but slowly.
L'Oreal has proved to be a market innovator in this field, having last year opened a research facility in Chicago, following a multi-million dollar investment. The L'Oreal Institute for Ethnic Hair and Skin Research is the first of its kind to focus specifically on the ethnic market. While much of the lab's efforts will centre on skin and hair care needs of people of African descent, research is set to expand to cover Asian, Hispanic and Caucasian consumers as the scope for the market grows.
The US market is generally seen as having underperformed in recent years, the Datamonitor report says. The general view is that the ethnic personal care market is in decline there because of mainstream brands increasingly targeting ethnic consumers. However, bucking this trend has been the spending pattern in mass merchandising outlets. The report says that spending in stores such as Wal-Mart has increased steadily since 1998 and is expected to do so through to 2008, as more products are promoted catering towards ethnic personal care needs.
Further to this, industry consolidation on the part of the multinationals is providing many of the ethnic niche brands with greater means of distribution and marketing, which in turn is helping to push these brands. Despite this, Datamonitor believes that the overall market in the US does not hold much potential for strong growth in the future.
At the turn of the millennium the UK ethnic personal care was tipped for major growth. Although market growth has run at 3 per cent a year between 1998 and 2003 - outstripping overall personal care sales - this has not met earlier expectations.
The UK, on the other hand, is an interesting market because ethnic diversity is widespread. Currently 2 per cent of the 60 million population is black and 4.4 per cent is of Asian origin. Of the total ethnic population 56 per cent is Asian, 25 per cent is black and 15 per cent is mixed race.
But perhaps the most interesting finding from the Datamonitor's research on this market is that black consumers and mixed raced consumers with black parentage tend to go for ethnic personal care products. On the other hand Asians tend to use mainstream products.
In line with the UK market, South Africa has shown steady growth of 3.1 per cent for ethnic personal care products between 1998 and 2003. Datamonitor points out that this figure was relatively strong, considering the economic woes of the country and high unemployment, which particularly hit the ethnic population during 2000-2001.
Although sales of personal care products to black Africans still make up a relatively small percentage of total sales, the sheer size of the population suggests great potential for this market. Currently the black population accounts for 40 million out of a total population of 46 million.
Historically there has not been many personal care products aimed specifically at the ethnic population in South Africa, but Datamonitor believes that this is about to change. Proof of this can be seen as cosmetic companies are increasingly marketing their mainstream products towards the black population. However, as the divide appears to grow between ethnic and non-ethnic personal care products, Datamonitor also points out that these changes may not necessarily prove beneficial to one another.