As has been highlighted by many industry analysts, the financial information service notes that the change in consumer shopping patterns has led to a big shift away from premium brands to more affordable mass market products.
This is evinced by recent financial results from some of the biggest players present in the prestige and ‘masstige’ segments; consumer spend has dropped significantly in the past few quarters, with companies such as Estee Lauder, Elizabeth Arden and Revlon announcing big drops in turnover.
Mass market players grow, in contrast
In contrast to the bigger players who have a significant presence at the prestige end of the market, Fitch points out that players such as Avon and Henkel, which are more clearly positioned at the mass end of the market, have both reported organic sales growth during the first half of 2009.
Fitch notes that in contrast to luxury sales, which actually dipped during the first half of 2009, organic sales of mass market personal care products actually increased, albeit marginally.
“Although cyclicality is an obvious reason for the decline in demand for luxury products, as consumers trade down for a short time period before trading up again when economic conditions improve, there are also arguments for a structural shift in consumer behavior,” Fitch Ratings stated.
“This is because mass market products are increasingly being perceived as offering similar benefits to luxury care products at much lower price points.”
Surgical procedures mirrors down grade trend
Fitch also points out that this trend is being mirrored in the cosmetics procedures market, where consumers are concluding that minimally invasive and less expensive procedures such as dermal filler jabs are more desirable.
Statistics from the American Society of Plastic Surgeons show that these sort of procedures rose by 5 percent in 2008 to reach 10.4 million, a phenomenon that is happening along similar lines in Europe.
Meanwhile big names such as L’Oreal and Nestle are muscling in on this area, after the two companies formed a joint venture named Galderma to produce a rival product to Botox called Azzalure - a product that is currently in the throes of receiving world-wide approval.
Personal care set to slow in 2009
Overall Fitch points out that the trend in the personal care market for 2009 is that it will slow to reflect weakening demand in developed countries, whereas growth in the developing market will go some of the way to counteract this trend.
The main areas of growth potential are likely to be the men’s grooming category, products that target the aging population and the bigger developing markets, particularly India, China and Brazil.