Economic slowdown hinders natural & organic market growth

15-Nov-2012 - Last updated on 03-May-2013 at 08:05 GMT

The economic slowdown in Europe is beginning to take its toll on natural and organic personal care brands, as the market stutters, forcing companies to focus on distribution.

The debt crisis impact on retailers consumer spend has seen the growth rate for the market drop to single digits for the first time this year, according to research by Organic Monitor.

“Slowing growth rates are leading brands to target new distribution channels for growth,” says Organic Monitor. “Brands are making most inroads in drugstores, pharmacies, beauty retailers and department stores.”

Specialist retailers, which are the traditional channel for natural and organic brands, still comprise most sales with 40 per cent market share, whilst the market share for mass market retailers remains below 10 per cent at the European level.

Financial crisis

The financial furor appears has hit the UK hard as revenues have been increasing by about 6 per cent per annum since the crisis started in 2008, leading to many UK natural and organic brands to target export markets for growth.

Germany has the largest market for natural and organic personal care products, but is showing sluggish growth this year.

The country also leads in terms of market share; natural and organic products comprise 7 per cent of total personal care products. Private labels have had most success in the German market.

The French market has witnessed the largest number of new product launches in recent years, as many large cosmetic companies have introduced natural and organic lines.

Recovery

Although mass market distribution has increased significantly, the channel comprises less than 15 per cent of natural and organic personal care product sales.

In its upcoming European market report, Organic Monitor expects market growth rates to recover as economic conditions improve.

“However, competition is expected to remain intense as natural and organic brands increasingly jostle for shelf-space with large cosmetic firms. Brands that have a clear strategy in terms of product offering or distribution are expected to succeed in the changing market landscape,” it says.

This will be one of the topics discussed at the Sustainable Cosmetics Summit next week. For more information, click here.