A recent study by US market research company Kline Group shows that the European market for natural personal care products grew by 15 per cent in 2008, to reach $3bn in total sales (€2.3bn).
This compares to growth of 19 per cent in the US, where a less developed and mature market is now valued at $2bn.
German market continues to shine
Kline points out that Germany will continue to dominate the naturals landscape in Europe, where nearly a third of all sales are attributable to natural-based personal care products.
The UK and France are also likely to remain close behind, as maturity in these market leads to more launches from private label producers, including many of the major supermarket groups.
One particular characteristic that has come to mark the sector in Europe is the fact that consumers are increasingly going for certified natural products, rather than just ‘natural-inspired’ brands, the Kline study indicates.
Naturals demand to continue in 2009
What is also expected to feed further growth during the course of 2009 is the fact that consumer interest to switch to natural products is still there, while the distribution network is being developed to feed that demand.
However, it remains to be seen whether consumers will be prepared to pay the premium pricing that certified natural personal care products command in Europe.
The health of the European economy and consumer spend is likely to influence this outcome considerably, but intense interest in the category is expected to provide a degree of insulation.
Will consumers pay the naturals premium?
Product prices in this category start at 20 per cent higher than their non-natural counterparts – pricing that is justified by the fact that sourcing natural ingredients is significantly more challenging and expensive than synthetic products.
But despite the pricing challenge, the experts at Kline believe there are still opportunities, especially as the bigger players get more involved in the category.
“Major marketers are in an excellent position to leverage the naturals proposition that began with the smaller niche players,” said Carrie Mellage, director of Kline’s Consumer Products division.
Bigger players move in on the act
“Manufacturing economies of scale, a stronger position for negotiating supplier agreements, and well-developed distribution channels will allow master brands like Unilever’s Dove and Colgate-Palmolive’s Softsoap to ride the naturals wave even during the lean times," Mellage added.
Kline has recently published the US volume of its Natural Personal Care 2008, which examines the various brands on the market as well as the type of ingredients they are using.
Highlights from the study will be revealed during a web conference, which will be broadcast on Thursday, 19 February at 9:00am EST.