Changing Habits in Hair Care

Changing Habits in Hair Care
March 2010
Cosmetics & Toiletries: Hair Care
Euromonitor International
Introduction Global Snapshot Regional Overview
Competitive Environment
Forecast Overview
Introduction
Scope
This briefing on the global market for hair care covers the following products:
HAIR CARE
Salon Hair Care
Perms & Relaxants
Shampoos
2-in-1 Products
Conditioners
Styling Agents
Colourants
Disclaimer Much of the information in this briefing is of a statistical nature and, while every attempt has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omissions or errors Figures in tables and analyses are calculated from unrounded data and may not sum. Analyses found in the briefings may not totally reflect the companies' opinions, reader discretion is advised
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Introduction
Objectives of the Report

The objective of the report is to provide an assessment of the Hair Care category performance by region and by
category in 2008, with some preliminary insights into 2009, and in the forecast period It aims to identify and analyse the key trends behind sector performance. For the purpose of this analysis, Hair Care has been classified in three groups: Basic: includes Shampoo, Conditioner, 2-in-1 Products Non-essential: includes Salon Hair Care and the premium segment DIY Hair Care: includes Perms and Relaxants, Styling Agents and Colourants In the Competitive Environment section, the report aims to analyse both the successful and the less successful strategies of the key leading global companies in recent years, and their strategic positioning for the future, including key markets in which to invest.
Introduction
Key Findings
2008/2009: value slowdown while volume sustained Static competitive landscape Innovation and segmentation key Changing habits in BRICs Slowdown in growth rather than real declines, with the exception of NA. Volume growth has been sustained, thanks to changing habits in developing markets. However, consumption rationalisation does not mean downgrading at all costs. Static competitive landscape in global hair care a threat to sales growth, especially in developed markets. Leading companies are still too dependent on specific regions and expansion through local company acquisitions, with greater or lesser success. Still room for growth through innovation and further segmentation, and even premium if justified. In the US and Western Europe, consumers are keen on low maintenance hair styles, meaning demand is high for standard products and DIY hair care. Sales in China and India proved resilient with increased awareness about hair care and product sophistication. Brazil's new Escova Progressive technology may be a threat, while in Russia there are signs of maturity but sustained interest in premium. DIY HC performed well: P&R was the fastest growing category in 2008, while 2009 was a good year for colourants. Due to its dependence on developed markets (87%) Salon HC has been worst hit as consumers go back to more staple items. Internet retailing still fails to convince NA consumers of its good value, but increased in Europe, AP and LA. Discounters missed an opportunity as hair care offer is not developed enough and consumers are seeking choice even for basic products. Middle-East Africa and Latin America led growth in both 2008 and 2009. Frontier market HC sales were not directly impacted by the global economic slowdown, and growth was driven by local factors. EE halved its growth in 2009 (from 9% in 2008). The leading markets of the US and Japan saw declines that will persist in the next five years. Global hair care sales showed resilience in 2009 and sustained the growth levels seen in 2008 (3%).
5
Winning and losing categories

Uneven development in distribution Frontier markets lead sales 2009 and beyond for global hair care constant value sales
Forecast Overview
Global Snapshot
Hair Care Delivers Worst Growth Results

Hair care, the third largest sector in cosmetics and toiletries, grew by just over 3% in both 2008 and 2009,
representing a slowdown from previous years and the lowest growth rate in the industry after the premium segment Though growth in global hair care spending decelerated by 1.3 percentage points, the size of this relatively mature sector still made it the second largest contributor to absolute value growth during the review period. Slowdown in growth was driven by discounting, promotions and a weak demand in most established markets, such as the US, as consumers traded down from premium priced salon hair care products to cheaper brands and private label.
Cosmetics & Toiletries Performance by Category

9 Deodorants 8 Growth (2007/2008 US$) 7 6 Depilatories 5 4 3 2 1 0 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Bath & Shower Oral Care Hair Care Baby Care Sun Care Fragrances Men's Grooming Skin Care
Colour Cosmetics
2008 size (US$ million, fixed exch rate) 7
Global Snapshot
Shampoos Withstand Economic Pressures

The effect of the economic downturn on hair care differs
Hair Care Performance 2008

25 US$bn 20 % 8 10
according to the product type. Although considered an essential purchase, shampoos have still been hit by the slowdown. Many companies have begun to discount regularly to try to maintain prerecession sales levels. This is resulting in consumers developing a habit of only purchasing shampoo when on offer. Growth levels were sustained in 2009 (5%), which indicates that basic and staple items show greater resilience despite economic woes. Conditioners, still have a relatively low penetration rate in some key emerging markets, such as China, and are not considered a necessity. This means that as the recession deepens, in many households conditioners will be dropped altogether from the weekly shopping list. The 2-in-1 category saw its decline slow in 2008, although it could have taken more advantage of the rationalisation of demand. No effort was made to upgrade its image or support it in terms of innovation. The category saw its fortunes reversed in 2009 , however, as it posted positive results after years of decline (+3%). This was supported by increased expenditure levels in Eastern Europe and Latin America. Better insulated segments include naturally positioned hair care products, while added benefits, such as antiageing and UV protection have helped maintain average unit prices.
15 Sales (US$ billion)
6 Year-on-year % growth 8
10
-5
-2
-10
-4
Global Snapshot
Are Long-term Changes in Consumer Habits Realistic?

Perms and relaxants have seen significant
P&R 2008 Value Sales and Growth

500 2008 % growth 2007/2008 25
growth, but in-depth structural long-term changes in consumer habits are not expected. As a result, P&R is doomed to have difficulties to get out of its core consumer target. The highest per capita consumption of P&R is in Latin America. Going to the hairdresser is deeply anchored in everyday culture in this region. Going to the hairdresser for the perms and relaxant routine is almost as important than the result itself, as it is a social and cultural event. Even in times of recession the majority of women stay loyal to their hairdresser rather than going for cheaper at-home products, as this would mean losing much more than a professional result for the hair. It is a key part of the culture and lifestyle and not just a simple beauty step. In the forecast period, a third way to consume P&R could appear in this region in the form of informal at-home salons, where friends and family meet up at a home to use P&R products, while retaining the social aspect. Consumption of P&R is deeply linked to lifestyle. As a result changing habits for the category are not sustainable and are just the consequences of short-term factors.
400
20
300
15 % growth 2007/2008 9
US$ million
200
10
100
-100
-5
-200 AA EE AP WE MEA NA LA
-10
Global Snapshot
What's Next for Premium?

Premium cosmetics grew by just 2% in 2008 (-0.4% in 2009), as they bore the brunt of the effects of falling consumer
spending. Going forward, sector growth will be pressurised as reduced disposable incomes lead consumers to trade down to varying degrees. This will affect primarily basic toiletries products, such as hair care. Actual sales of premium hair care products only decreased in North America and, to a lesser extent, in Western Europe, but it was enough to see premium hair care's share fall from 13% to 12% between 2007 and 2008 (down to 11% in 2009). The decline in premium hair care had started earlier, but 2008 and 2009 saw its strongest decrease. Premium hair care sales have been decreasing since the 2001 economic crisis in the US, and the sector has not recovered since. With North America, and the US in particular, being the largest market, the region's sales impact strongly on global performance. This should not overshadow the otherwise good performance of premium, which is still gaining share of hair care in the Middle East and Africa and Latin America. In the case of Eastern Europe, premium took a dip in 2009, as the economic crisis hit home.
% of Premium Sales (US$) 2006-2008

Region North America Middle East and Africa Australasia WORLD Asia-Pacific Western Europe Eastern Europe Latin America 2006 31.6 18.0 13.9 13.5 11.2 10.3 2.2 1.6 2007 31.7 17.9 13.9 13.1 11.2 10.5 2.4 1.6 2008 30.6 18.2 13.7 12.3 11.3 10.2 2.5 1.5
Premium in 2009
Some lower end retailers are trying to
increase their premium offerings in an effort to retain the new customers they have gained during the recession, many of whom were previously devotees of high-end retailers. Time will tell if this tactic will retain these consumers in the long term. This strategy is especially important in developed markets, as premium HC is not likely to recover before 2011, meaning there is a real opportunity for lower end retailers to sustain these changing habits of shopping for premium products in non-luxury outlets.
10
Global Snapshot
Changing Habits in Channel Distribution

Department stores the main channel for premium products tend
2008 Distribution Split, % Value

100
to suffer first in an economic crisis. Hence, not surprisingly, it was hit hardest in 2008 and 2009 with an estimated 6% fall in global sales for the year. There have been double-digit declines in key national markets, such as the US, Japan and Germany, as hundreds of outlets closed. However, it has not only been the developed markets that have been affected. Sales in Russia have fallen by nearly a third. A slump in the department store channel added to difficulties in nongrocery channels in North America and Western Europe. Beauty specialists saw decreases in Asia-Pacific and Latin America. Grocery retail has been growing faster than non-grocery retail since 2007, and 2009 saw the latter tumble into negative territory in terms of growth for the first time in a decade or more. Grocery channels fared better than non-grocery, being seen as more affordable and benefiting from one-stop shopping habits, taking consumers from specialists. Within grocery retailing, discounters' share remained stable at best, as they missed the opportunity to gain significant share in a time of economic hardship. The geographic reach of this relatively young format is still limited. 2009 was a landmark year for non-store retailing. For the first time in a decade, Internet retailing was not the fastest growing retail channel, dropping into single-digit growth. Internet retailing has proved a success but is still a niche. In geographical terms, the development of non-store retailing varied, with success in Europe, Asia and Latin America, a lacklustre performance in North America, Australasia and the Middle East and Africa.
80
60
40
20
0 WE EE NA LA AP AA MEA
Grocery retailers Mixed retailers Health & Beauty retailers Other Non-grocery (includes Outdoor markets) Non-store retailing 11
Forecast Overview
12
Regional Overview
Key Regions at Play

Global growth in hair care slowed down in
Regional CT Value Share (US$)

LA AP AA MEA NA
2008 and 2009 (+3%), despite dynamism in Eastern Europe (down to 5% in 2009) and Latin America. It was held back by an almost 2% fall in North America (-3% in 2009) and just 1% growth in Western Europe. The two mature regions together account for 44% of the world hair care market. The biggest region for hair care in 2008 was Western Europe, but it was overtaken by Asia Pacific in 2009, the gap becoming even more pronounced by 2014. With value sales of just under US$3 billion in 2009, Germany alone accounts for higher hair care value sales than the Middle East and Africa (US$2.8 billion). The biggest single market for hair care is still the US, with value sales of over US$10 billion in 2009, or a 16% share of the global hair care market. Americans are also the biggest consumers of salon hair care, with an annual spend of US$2 billion in 2009. In 2008, the category's sales nose-dived by 6%, as consumers cut back on their spending. This contributed to an overall decline in US hair care value sales, a trend that continued in 2009. All product categories, except 2-in-1 products, saw declines in North America in 2009.
EE
WE
Hair Care Value Sizes and Growth 2008

20,000 US$ bn % 12 % growth 2007/2008 13
2008 US$ million
15,000
10,000
5,000
0 WE EE NA LA AP AA MEA
-4
Regional Overview
Developed Markets Worst Hit by Recession

North America, Western Europe and Japan account for
54% of hair care sales and have the highest per capita consumption. Hence, any change of market dynamics in these regions impacts global sales significantly. Taiwan, the US, France, Israel and Sweden saw declines in hair care sales in 2008, with a clear negative shift versus 2007 (except in the case of France). The US market alone lost US$200 million in that year. Sales declines in those markets continued into 2009. In France, hair care value started declining in pre-crisis years, due to the high level of maturity of the sector, but for other national markets it was a complete U-turn. Even while they saw positive growth, a number of developed markets, such as Canada, Japan, Spain Germany and the UK, were still impacted, with growth rates slowing by 1-2 percentage points. Consumers stopped testing and buying different products and stayed more loyal to one, resulting in a slowdown in growth for "basics" products, such as shampoo and conditioners. In Japan, growth slowed down further in 2009 (-2%), as consumers adopted more conservative spending patterns and discounting activity was prevalent in shampoos. The only categories which posted positive growth levels were conditioners and medicated shampoos.
Hair Care % Growth Least Dynamic Markets

Country Taiwan US Sweden France Israel Greece UK Japan 2007 2008 Country 4.9 1.1 3.3 -0.4 4.5 1.2 0.5 0.4 -3.7 Portugal -1.9 Austria -1.7 Germany -1.2 Canada -0.5 Italy 0.0 South Korea 0.3 Finland 0.3 Netherlands 2007 1.4 1.7 2.4 2.4 0.4 1.4 3.5 1.1 2008 0.4 0.4 0.6 1.0 1.1 1.3 1.7 1.8
Section Summary: The key trend is "Back to basics", with consumers seeking low maintenance, easy to use and straightforward products in order to fit their more conservative spending patterns, aiming to "consume less but better". However, this trend does not overshadow the continuing need for innovation. Segmentation is still key for growth, especially in mature markets and product categories, such as shampoo and conditioners. The low maintenance hair cut is popular, as it fulfils demand for cutting back on spending on higher end hair care products.
14
Regional Overview
Developed Markets: DIY Hair Care vs Non-essential

Winners
DIY Hair Care: Perms and Relaxants, and Colourants P&R enjoyed the strongest growth in 2008 thanks to strong performances in NA and LA, while standard shampoos were the best performer in 2009. Colourants enjoyed smaller but still significant growth in WE and NA, with the success of cheap at-home kits, such as Tesco's 99p line in the UK. 2009 showed a clear increase in sales, with products such as Clairol Touch Ups successfully promoted as an interim at-home solution for inbetween salon visits. In order to maintain volume sales, manufacturers increased promotional offers. Discounting became more widespread, with offers like BOGOFs multiplying in order to boost sales in the very mature developed markets. Private labels also saw their shares increase in North America, Western Europe and Japan, although their success was limited.
Discounting and cheaper products
Losers
Premium and Salon hair care
Salon hair care has been hit hard, with Japan and North America the main casualties, thus global sales declined in both 2008 and 2009. Premium hair care sales decreased in Western Europe and North America, as well as Eastern Europe which saw the category decline sharply in 2009 (-5%) from double digit growth rates in previous year.
In the midst of the "back to basics" trend, styling agents and 2-in-1 products underperformed in 2008. Styling agents were made redundant in their two main markets NA and WE as consumers sought a "natural" look, however, 2-in-1s managed to make a come back in 2009 after years of decline as consumers sought the benefits of multifunctionality
15
Styling agents and 2-in-1 products
Regional Overview
Slowing Growth in Eastern Europe

In 2008, hair care in Eastern Europe was unaffected by recession. Growth continued, driven by premiumisation, with
sales rising by 9%. The traditional department stores channel suffered while the new Internet retailing channel boomed (+157%) as it gives more choice to consumers seeking novelty and innovative products. The recent development of highly specialist shops has helped drive strong demand for salon hair care, as the category is still niche and the range on offer is expanding rapidly. While salon hair care in Ukraine and Russia expanded by a massive 30% in 2008, both countries, as well as the overall region, dipped into negative territory in 2009 as spending was heavily reduced and consumers cut back on non-essentials. The economic crisis had a much later impact in Eastern Europe, and 2009 showed a substantial turnaround in fortunes, as real GDP growth slumped from 4.9% in 2008 to -6.3% in 2009. Secondly, growth rates in 2008 were artificially boosted by high inflation rates, with hair care sales actually declining by 0.4% in real terms in that year.
2009: A reversal of fortune

The whole region, and Russia in particular, was not
Hair Care 2008 Value Share (US$)

Poland 17% Ukraine 9% Czech Republic 7% Hungary 4% Romania 4% Slovakia 2% Belarus 2% Lithuania 2% Bulgaria Other 2% Eastern Europe 7% 16
greatly affected in 2008, but the situation changed completely in 2009. The repercussions of the global credit crunch were felt fully in Q1 2009, with collapsing commodity prices, exports and credit access. The region's economy is expected to contract by 6%, with a slight recovery in 2010 (0.8% real GDP growth). The downturn will be sharper in CIS states including Russia, the Baltic states, as well as Hungary. Russian consumers stocked up on premium cosmetics as the economic crisis intensified in Q4 2008, and the rouble continued to depreciate. Spending on premium products declined in 2009 hurting perfumeries and smaller store-based beauty retailers in particular, with Arbat Prestige having recently gone bankrupt.
Russia 44%
Regional Overview
Regional Developments: Disparities and Similarities

Premiumisation in Asia-Pacific, mass at its highest level in Latin America
Salon hair care sales were lacklustre in AP in 2009, held
DIY hair care: styling agents and colourants going up in LA, but stable in AP
DIY hair care, such as styling agents and colourants,
back by Japan, but posted double-digit growth in LA. Mass brands tried to move their image upmarket, with the Pantene Shine Hair Spa in Australia and a pop-up hair salon by Unilever. From negative results in 2008, Brazil's Salon HC market posted positive growth in 2009 due to an increase in unit prices and depreciation of the local currency against the US$. Volume sales, however, continued to decline.
performed well in Latin America (with the exception of colourants in Brazil - below regional average - due to Escova Progressive). Colourants are very popular among teens and young adults. Product penetration is high and should increase further, as consumers reduce their visits to hair salons and are seeking at-home alternative. AP, on the other hand, saw sales of DIY hair care remain stable in both 2008 and 2009, as consumers were not shifting towards at-home solutions.
Disparities in volume consumption/depreciation in average unit price due to discounting

2009 saw the highest contributions from Asia-Pacific in
Changing habits and perception impact sales

In LA, the perception of conditioners is gradually
volume terms, while value growth was maintained (at 4%) thanks to the good performance of Indonesia and the Philippines. On the other hand, after being strong in the review period, LA's volume growth rates decreased sharply in 2008 and 2009 Taiwan's poor performance contributed to unit prices depreciating overall (except for 2-in-1s), due to stiffer competition, with widespread discounting and BOGOF offers, although no real increase for private label.
changing from that of a non-essential item to one that 60% of women buy regularly. Demand for pricier products is high, boosting the average unit price. Salon HC saw a 11% rise, and only colourants prices decreased in 2009. Premium HC sales in LA are still a niche. In markets where premium is already developed, such as Japan, no significant changes in habits were witnessed, thanks to strong consumer loyalty.
17
Regional Overview
BRICs: Brazil and Russia Take the Plunge

A key driving force behind the success in the emerging regions have been the BRIC economies. Five years ago, the
BRICs were identified as the key market drivers for FMCG growth on a global level. In 1997, BRIC sales represented 10% of global HC sales, while in 2009 they represented nearly a quarter of sales worldwide. However, after seeing double digit growth in previous years, their combined sales increased more moderately in 2008 and 2009 due to a slowdown in Russia and Brazil. Despite the slowdown, the BRIC hair care market continued to perform above the global average, with India up by 15% to US$1.5 billion in 2009, China (10%), followed by Russia (5%) and Brazil (7%). There was a noticeable reduction in demand in perms and relaxants and styling agents in Brazil; and major cutbacks on styling agents and salon hair care in Russia. In Russia and China, sales have been slowing down because they have started to reach certain saturation levels, and new consumers are more difficult to attract.
Few opportunities
Premium products sustained their share and
Escova Progressive to hit some categories in Brazil

Escova Progressive is a recent type of blow-
growth even in more difficult economic times across all four markets with high-income consumers aspiring to upgraded luxury alternatives. Brazil and Russia witnessed significant success for 2-in-1s in 2009 due to extensive promotional offers by Unilever and Procter & Gamble in Brazil and at the expense of huge expenditure cutbacks on conditioners in Russia.
dry technique, which is highly favoured by consumers in Brazil. Its success directly impacted hair care sales. However, numerous products, such as colourants, cannot be applied on hair using the Escova Progressive. This new technique could, however, create a new segmentation, with HC products specifically developed to be used in parallel with it.
18
Regional Overview
India and China Sustain Their Sales

Significant changes in consumption habits are apparent in India and China. In China, after focusing on very basic
products, such as 2-in-1s, in the 1990s, more added-value products, such as conditioners and styling agents, are now being introduced, helped by the development of specialist retailers. In India, consumers historically bought shampoo and conditioners as general or family-use products, but by 2009, with growth in disposable income levels and greater awareness about hair care, purchases have become more targeted, with consumers starting to opt for specific hair type variants. Hair colouring is also catching up and colourants have been growing dynamically in both markets. Premium hair care still performed well in the RICs in 2009,creating over US$40 million in additional sales.
RIC Hair Care Sizes (US$ Million) 2007-2008

4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Salon HC Shampoos 2-in-1 Conditioners Styling Agents Colourants 2007 2008
Russia more fragile?

Russia saw a substantial rise
in the share of Internet retailing between 2007 and 2008, from 0.8% to 3.1%. Internet retailing provides easier and more convenient access to an extensive range of products, including premium brands. Russia is now facing a more grim outlook, as it was strongly hit by the recession in 2009. Consumers are expected to shift their habits considerably in 2009, with salon HC declining, while standard shampoo and 2-in-1 see strong increases.
19
Regional Overview
The Next BRICs: Frontier Markets

In the past, the BRICs were among the most rapidly developing countries, with the greatest potential for hair care
growth. With these countries gradually maturing, the next tier of emerging economies has come to the forefront.
Fastest Growing Markets Historic vs Forecast

Absolute Growth in Hair Care: US$ mn 2003-08 Brazil China Russia Mexico India Spain USA Venezuela Argentina Japan 3,038 1,154 1,051 624 510 491 464 457 451 341 Key Markets for Hair Care Absolute Growth in Hair Growth: % CAGR 2003-08 Care: US$ mn 2008-13 Key Markets for Hair Care Growth: % CAGR 2008-13 United Arab Emirates India Peru China Belarus Tunisia Morocco Vietnam Ukraine
Venezuela
Belarus Argentina Uzbekistan Azerbaijan Ukraine Uruguay United Arab Emirates Dominican Republic
33
26 21 21 19 18 16 16 16
China
Brazil India Mexico Russia Peru United Arab Emirates Poland Spain
1,432
765 664 193 174 171 128 110 96
12
9 8 7 7 7 5 5 4
Romania
15
Ukraine
95
Azerbaijan
3
20
Regional Overview
Country Focus: Argentina

Hair care in Argentina grew by 33% in 2008
(+24% in 2009) more than twice its 2007 growth rate and eight times the global average. This was attributable to rises in disposable income, supported by population expansion and a high inflation rate. As the Brazilian market saturates and matures, and growth slows, all eyes will be on Argentina. Premium products gained share in hair care (as well as in all other beauty and personal care categories) as the recent years of strong economic growth created a feeling of economic security. As a result, consumers became less careful about spending, and began to purchase premium products that had previously been out of their financial reach during the economic crisis. The success of premium products (+41% in 2008, + 15% in 2009) was also underpinned by changes in distribution patterns. Beauty specialist retailers and "other" health and beauty outlets have both gained market share over the last two years. While volume sales growth in 2009 was maintained for basic categories, such as shampoo, there was reduction in demand for less staple products, such as colourants and styling agents.
Argentina Hair Care Category Performance 2000-2008

45 35 25 15 5 -5 -15 -25 -35 Year-on-year growth (%)
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08

Salon HC Styling Agents Shampoos Colourants Conditioners 2-in-1
Summary: Argentina's strong performance effectively represents a relatively fragile growth boosted by inflation rather than real long-term changes in consumption habits. Argentinian consumers show a clear taste for premium products when they can afford it, but readily switch back to more basic offers if economic circumstances dictate. In the last economic crisis of 2001/02, the share of premium hair care sales dropped by half a percentage point. Similarly in 2009, the premium segment decelerated sharply by losing a third of its value growth seen in the previous year.
21
Forecast Overview
22
Static Competitive Landscape

Since 2006, the global share of the top five companies has fallen slightly, from 58% to 57%. Together, smaller
players will less than 1% shares gained one percentage point over the same period. In comparison, in the overall beauty and personal care market, the top 5 (and the top 10) companies combined gained one percentage point in value share between 2006 and 2008. In hair care, while Procter & Gamble, L'Oral and Kao saw their shares decrease, Unilever saw a slight increase, while Henkel maintained its share at the same level.
Hair Care: % Value Shares US$ 2008

Rank 1 2 3 4 5 6 7 8 9 10 Name Procter & Gamble Co, The L'Oral Groupe Unilever Group Henkel KGaA Kao Corp Alberto-Culver Co Shiseido Co Ltd Colgate-Palmolive Co Beiersdorf AG Private Label Global 20.1 18.8 10.7 4.8 2.7 1.9 1.8 1.7 1.6 1.6 NA 25.7 26.4 7.2 0.9 1.5 6.2 0.4 1.0 WE 19.2 33.0 6.5 11.0 2.4 1.4 1.4 2.8 4.5 AME 26.5 13.8 12.1 3.1 0.2 1.0 1.5 1.9 0.0 AP 18.2 3.8 15.1 1.3 7.7 0.4 7.3 0.9 2.1 0.7 AA 25.5 21.8 13.9 13.6 10.1 4.0 0.9 EE 19.8 13.6 7.1 13.8 0.1 1.3 3.3 1.1 LA 16.8 14.1 15.4 0.8 0.9 5 0.2
23
Share Movement in Key Markets

In shampoo, Procter & Gamble lost share to L'Oral in Latin America, with L'Oral focusing on product development
to cater to local tastes. L'Oral introduced a shampoo called Volume Control, designed for Brazilian hair types. The product was well received by Brazilian consumers.
Hair Care Company Performance

NA P&G
WE
LA
AP
China Brazil

Russia
India
L'Oral
Unilever
Comments Doing well in Asia-Pacific, thanks to Pantene Pro-V brand. Good coverage and performance, gaining ground on P&G and Unilever. Should focus more on AP in shampoo (for example with Garnier) and LA for colourants. Amongst the high growth sectors, Unilever 's main coverage is in hair care. Like its competitor L'Oral, Unilever might focus more on other categories, such as skin care, with the Pond's brand. Beiersdorf should continue to focus on HC in China to regain competitive edge. Strong increase in 2007 in WE shows future opportunities are still there, notably in France. Limited regional focus but good opportunities through targeted expansion in China. Kao should focus on regional expansion, given that Japan is a saturated market. The company will benefit particularly from pursuing growth opportunities in China's skin and hair care markets.
24
Beiersdorf
Shiseido
Kao
Case Study: P&G in China First Mover Advantage

Product development and packaging innovation to gain share
Procter & Gamble's innovations in packaging were a success in 2008. Clinicare offered a smaller one wash
treatment pack, and Pantene introduced the concentrated Miracle Line for treating highly damaged hair. Miracle Line also claims anti-ageing properties. It is now difficult to challenge Procter & Gamble's position in China, as it operates 31 manufacturing facilities across the country, with a deeply entrenched distribution system. One approach for a newcomer is to acquire a local company which has expertise in local products, in addition to owning manufacturing units and having an established distribution network. Unilever has been investing in advertising and sponsoring popular TV programmes. Its maintaining share is positive, given the intense competition, but improving its packaging may help it actually increase its share. Beiersdorf's growth in hair care in China fell below overall sector growth in 2008. China's hair care sector saw Bawang's launch of products based on traditional Chinese remedies to address hair loss amongst the middle aged and the elderly. L'Oral's value share remained stable in 2008, as it focused more on skin care. Given the choice between skin care and hair care in China, skin care is a better option, since it is a bigger sector and has greater growth prospects. However, in the long run, L'Oral may focus on the hair care sector.
China: Hair Care % Value Share 2005-2008

2005 2006 2007 2008 Rank
Procter & Gamble Co, The

Beiersdorf AG Unilever Group L'Oral Groupe
34.3
1.2 9.3 1.5
33.5
1.3 9.4 1.5
32.5
9.4 8.7 1.5
32.9
8.7 8.7 1.5
1
2 3 8
25
New Product Development Helps L'Oral in Brazil

L'Oral focuses on product launches
In 2008, L'Oral's value share in Brazil's hair care sector increased marginally. L'Oral has been investing heavily in
new product development and publicity campaigns, appointing Angelica, a famous Brazilian celebrity, as its brand ambassador. L'Oral introduced new shampoos and conditioners under the Garnier Fructis and Elsve brands during 2007, which continued to do well in 2008. The main launch under Elsve was Elsve Volume Control, which was backed by a television advertising campaign. L'Oral Imdia and Garnier Nutrisse are important brands in L'Oral's portfolio, and offer a wide variety of colourants inspired by fashion trends.
Big spending not helping Unilever

Unilever is the sector leader, but lost share in 2008, due to increased competition from L'Oral. Unilever's strategy in
this market has involved investing in advertising, broadening its distribution network and offering competitively priced products, but the company needs to invest in product development to beat its competitors.
P&G's share continues to slide

Procter & Gamble's market share
% Market Share Hair Care Brazil 2004-2008

18 16 % market share 14
declined in 2008. The company's products are considered expensive, and price is a major issue for Brazilian consumers. In 2007, Procter & Gamble signed a contract with well-known Brazilian model Gisele Bndchen to promote the Pantene brand, which has been totally revamped, but still accounts for only a small share of sector sales. Procter & Gamble needs to market products at more competitive prices to succeed in the Brazilian market.
12 10
8 6 4 2 0 2004 Unilever Group 2005 2006 2007 2008
L'Oral Groupe
Procter & Gamble Co, The 26
L'Oral Closing Gap in Hair Care in India

L'Oral puts pressure on Unilever
Unilever and L'Oral are the two major players in the
% Market Share Hair Care India 20042008

25 % market share 20 15 10 5
Indian hair care sector. Unilever leads the market, but L'Oral is increasingly closing the gap. L'Oral gained approximately two percentage points in share in 2008. Its strategy involves investing in new product launches and promotional activities. Elvive Revitalising Conditioner was one of the most heavily advertised brands in 2008. In addition, L'Oral's Garnier Fructis brand is becoming popular for its competitive pricing and natural positioning. Hindustan Unilever saw a further share decline in 2008. Dove was one of the most advertised hair care launches in 2007. Apart from advertisements in print and on television, Dove was also promoted through a tie-up with Yahoo India. The site hosted interviews on hair care and Dove. The company also carried out a Dove "hair wash experience" at leading malls, which further reinforced brand recall. Despite the heavy promotional activities, Unilever's share dipped, due to competition from L'Oral. Unilever should consider allocating advertising spending to its other major brand, Clear Plus, the share of which fell significantly. Along with 100ml and 250ml plastic bottles, sachets continue to play an important role in promoting sales of hair care, especially shampoo, and also in encouraging new consumers to make trial purchases.
0
2004 2005 2006 Marico Ltd 2007 2008 Unilever Group L'Oral Groupe
US$ million 2008-2013
Hair Care Prospects India

250 200 150 100 50 0 25 15 10 5 0 Forecast % 27 20
2008-13 Absolute
2008-13 CAGR %
Major Players Look to Expand Salon Business

In general, the leading firms have been focusing on salon HC, with P&G, L'Oral and Unilever acquiring salon HC
brands. This has not yet proved very successful for P&G and L'Oral, as investing in salon HC is a long-term strategy. Investing in expanding the shampoo business could deliver quicker and more concrete results in terms of sales.
Key M&A Activity

Acquired company/ brand Este Lauder Johnson & Johnson L'Oral Forest Essentials Dabao Columbia Beauty Supply Sector Cosmetics and toiletries Cosmetics and toiletries Professional hair care Year Strategic assessment Este Lauder bought a minority stake in the Indian company to gain greater exposure to the natural/organic market in the country. Aims to increase exposure in the Chinese market and leverage the distribution channels of a local company. Can further exploit the opportunities in the hair care market. Le Club des Createurs de Beaut sells via mail order and the Internet. L'Oral bought a 50% stake in the company, giving it access to an alternative distribution channel to regular retail outlets. Its hair care brand is Jean-Marc Maniatis. PureOlogy is specially designed for coloured hair. In the year prior to the acquisition, PureOlogy's sales were worth US$57 million. The brand is popular in the US, and L'Oral aims to market it in other parts of the world. Will help gain exposure in premium salon hair care, which operates with high margins as people are willing to pay extra. Will increase exposure in the salon hair care sector.
28
2008 2008 2008
L'Oral
Le Club des Cosmetics Createurs de and toiletries Beaut PureOlogy Research LLC Frederik Fekkai Tigi
2008
L'Oral Procter & Gamble Unilever
Premium hair 2008 care Salon hair care Salon hair care 2008 2008
Companies Active in Acquisitions/Divestments

Major Company Activity
Beiersdorf Beiersdorf has had a cautious approach to acquisition. In 2007, the firm acquired C-Bons, to enter China's hair care sector, which is predicted to grow by more than US$1.4 billion in absolute terms between 2008 and 2013, leading growth in global hair care. Beiersdorf has also stated that it will make future acquisitions if they fit with its overall business strategy. Procter & Gamble has been streamlining its business to focus more on its billion dollar brands. Johnson Products Company (comprising around 30 hair care products for African-Americans, including the Gentle Treatment and Ultra Sheen brands) was sold to an entity comprising several private equity firms. The disposal is one of a long line in company divestitures, including the sale of Noxzema to Alberto Culver, as a move to free up resources for its core brands. Unilever has been lying low in terms of acquisitions. The company's strategy has been to focus on limited markets in mass product sectors, such as bath and shower products and deodorants. However, towards the end of 2008, the firm acquired salon hair care brand Tigi, which may not have been a good move, given that its competitors L'Oral and P&G have suffered from similar acquisitions. Unilever has acquired Sara Lee's personal care products arm, which has men's hair care brands like Brylcreem. Unilever now has the task of investing in product development to make the brand Brylcreem more up-to-date. It may be worth the investment, since men's hair care has good growth prospects. L'Oral has been on an acquisition spree, buying a number of cosmetics brands. It has acquired three salon hair care brands in the US, which, however, pulled down the company's revenues due to unfavourable market conditions. In 2008, L'Oral acquired the beauty division of Yves Saint Laurent, a premium brand. This again may not immediately bear positive results, given the current economic downturn, which has led to a trend away from premium cosmetics, but the purchase of Yves Saint Laurent gives L'Oral greater regional coverage in both Western and emerging markets.
29
Procter & Gamble
Unilever
L'Oral
Private Label, Where Are You?

Private label sales amounted to US$1 billion in 2008, with their share static at 1.6%. HC was one of the sectors
within C&T with the lowest share for private label, just marginally ahead of colour cosmetics and fragrances. Within the sector, its strongest presence was in styling agents (3.6%), followed by shampoo and conditioners (both 1.8%). Private labels share increased only in North America and Western Europe, the two regions where it is most developed. However some local initiatives show potential. In India, many retailers have recently introduced tiered pricing in private label (long favoured by retailers in the West) to cater to a wider audience. Recession and rationalised demand had the potential to cause private label sales to boom in 2008 and 2009, but this was not the case. While some consumers reduced their consumption, they remained concerned with quality. In addition, discounts on many branded products overshadowed private labels' main selling point, price.
Global Private Label Share (US$, Fixed Exchange Rate) 2001/2005/2008

% value Hair care P&R Shampoos 2-in-1 Conditioners Styling agents Colourants 2001 1.6 0.3 2.5 1.1 1.7 2.8 0.2 2005 1.6 0.4 2.1 1.2 1.8 3.3 0.3 2008
Private Label Value Share Per Geography (US$ - 2008)

Switzerland Others WE UK
1.6 0.1 1.8 1.4 1.8 3.6 0.5

Germany 30 Spain France
AsiaPacific
Australasia Eastern Europe Latin America MEA North America
Country Focus: Switzerland

Switzerland has the highest share of private label in
hair care, at 14% in 2008. In some categories, such as 2-in-1, its share is as high as 19%. Private label's success is down to the dominance of Migros, the leading Swiss retailer (34% of grocery retailing). Migros offers a very comprehensive range of private labels, from budget (M-Budget) through herbal and natural (Belherbal, I am Natural), to high-end "masstige" (Golden Hair Professional), and even highly specialised (Bircal Expertise, the scalp specialist). In stores, Migros products take up to half the shelf space allocated for hair care. In other categories, such as packaged food, Migros products can take up to 90% of the shelf space. Far from a discounter image, the products are perceived as the equivalent of branded products. Price is not the main consideration, it is more about the wide choice. Slovenia is the country with the next highest private label share (10%), and this is for similar reasons: high quality products offered at reasonable prices by specialist retailers, such as the drugstores dm-drogerie markt and Mueller. In Germany and Austria, where the discounter culture is much more developed, private labels are perceived as cheaper alternatives above all, and cannot really compete with brands in terms of quality appeal.
Top Five % Shares Hair Care Switzerland 2008

L'Oral Groupe
Henkel KGaA Procter & Gamble Co, The Private Label Beiersdorf AG
Private Label % Share Switzerland 2008

Shampoos 2-in-1 Products Conditioners Styling Agents Colourants 13.3 19.3 12.5 16.2 15.5
31.8
15.1 14.6 14.0 7.2
Distribution Hair Care in Switzerland 2008

Small Grocery Retailers 6% Discounters 8% Department Stores 20% Chemists/ Pharmacies 2% Parapharmacies/ Drugstores 9% Beauty Specialist Retailers 7% Others 6% 31
Supermarkets/ Hypermarkets 42%
Exploiting the Geographic Dividend to the Maximum

Too dependent on just a few markets, but Western markets should not be overlooked
The leading companies are still too dependent on
Expansion in emerging markets through acquisitions to reduce exposure to West

Beiersdorf paid US$81 million for an 85% stake in the
Western markets. This is even truer for the Asian giants, apart from the Salon HC category. Beiersdorf needs to focus more on product development in the regions in which it operates, such as China, by offering products to suit local needs. However, the arrival of a strong actor can help boost sales, as shown in France, where Nivea Hair Care was launched in September 2007 and contributed to 90% of growth in conditioners in 2008.
Chinese C-Bons hair care business in 2007. This led to Beiersdorf's share in China's hair care sector increasing from 1.3% in 2006 to 9.4% in 2007. However, in 2008 Beiersdorf's growth faltered, as a local hair care company, Bawang, launched a product for hair loss based on a natural Chinese remedy, and the product became very successful, generating growth in China's hair care sales. Colgate-Palmolive has announced expansion plans in hair care, but no acquisitions are planned yet.
Local knowledge and understanding the way forward

L'Oral acquired the Turkish hair care company Ipek in
In which categories to expand in the West?

Products helping DIY and low maintenance routines are
2007, which lifted its share in the hair care market in Turkey from 9% in 2006 to 19% in 2007. In 2008, L'Oral was able to increase its share in Turkey's hair care further, to 20%, through product development. Beiersdorf may consider incorporating C-Bons under its overall Nivea hair care brand in China. which may help the brand to benefit from the overall Nivea brand equity. as well as advertising synergies.
forecast to be a hit. Examples are everyday products to maintain hair styles between more thorough hair care sessions (eg colourant products to re-touch roots only). Demand is increasing for "easy and straightforward" solutions, minimising the products used but without going as far as "all-in-one". In all cases, manufacturers need to offer added value through segmentation and specific claims. Consumers are not looking for one product good for all issues, but for simple products adapted to their specific needs.
32
Forecast Overview
33
Forecast Overview
Hair Care Shows Relative Resilience

Recession does not mean a major disaster for hair care in the long term, but it certainly means manufacturers will
have to work harder than during the review better to sustain similar value sales. Consumers still need hair care product but will be pickier, more demanding and less sensitive to marketing bluff. While a majority of markets are set to show resilience, considerable sales declines in the next five years are expected in France due to high saturation levels and in Japan, with the economy still facing deflation and a weak demand forcing many operators to cut prices. Although not significantly, sales in the USA, Greece, Taiwan and a number of Eastern European markets are also likely to suffer as economies remain volatile and consumers opt for cheaper alternatives and low end-outlets.
34
Forecast Overview
2010: Recovery Ahead?

2009 may prove to be the worst year for hair care, with a notable decline in North America and sales in the key
region of Western Europe remaining virtually flat. Global growth is expected to pick up again in 2010 on the back of improved sales in Asia Pacific and Western Europe, and a slight bounce back in Eastern Europe. In actual terms, hair care will remain the second largest contributor to global sales (after skin care) with and additional US$6 billion of extra revenue by 2014. Salon hair care value sales are likely to suffer further in 2010 due to the sector's overdependence on developed markets. Volume consumption should, however, recover mid-way through the forecast period. Respectable sales growth in staple products, such as shampoos and conditioners, as well as the recent upsurge in colourants are likely to follow the same path in the short to medium term. After sales increasing in 2009, 2-in-1 products will retain their popularity, with further expansion opportunities seen in Latin America and Eastern Europe.
Hair Care Nominal Value Growth (%)

25 20 15 10 Latin America 5 0 -5 07/08 08/09 09/10 10/11 11/12 12/13 13/14 35 Middle East and Africa North America Western Europe World Asia Pacific Australasia Eastern Europe
Forecast Overview
Developed Markets: Back to Basics, But With Added Value

Developed markets should still account for almost 50% of hair care constant value sales by 2013.. As in the review
period, this will be more a reflection of the rapid growth in developing markets than of decline in developed ones. Across the board, higher demand for innovation and segmented products shows that innovation is a safe bet to balance both maturity in developed markets and slowing growth in developing ones. Additional claims of benefits should flourish, focusing more on long-term effects (eg the possibility of washing hair less often). In terms of segmentation and innovations, the forecast period should see the success of refills, which are already a big success in Japan, thanks to lower prices and eco-friendliness. In the distribution landscape, Internet retailing could provide a strong opportunity to both manufacturers and consumers, through reduction of costs by cutting out middle-men and a large range of products available in one place to fulfil segmentation demand. Discounters, on the other hand, will need to upgrade their game and image if they want to take advantage of the down-trading trend, as so far only cheaper branded products and to a lesser extent super/hypermarket private labels are taking advantage of it.
WE+NA+Japan Sales (US$ Million Constant) 2008/2013

10,000 8,000 6,000 4,000 2,000 0 2008 2013
Future key trends and product development

Natural and HW trends: Products marketed as
fair-trade, eco-friendly and organic should still grow well, albeit at a lower rate than previously expected. Technical products: Anti-ageing is still in its early stages, while medicated hair care will increasingly become part of routine hair care. HC for pregnant women is already on the map. "Beauty from within" trend: Hair supplements to be developed together with hair care products, as witnessed in skin care products, with the use of key functional ingredients such as aloe vera.
36
Forecast Overview
Stagnation of Eastern Europe and Middle East and Africa

EE and MEA had in common a very positive volume
growth rate until 2008, but stagnation is expected in the forecast period. This is due to demand maturing, coupled with difficult economic situations in South Africa and Iran. However, Iran's high inflation means in current terms the value growth should be very positive, even if it is to the detriment of real added value in the sector. The poor forecast for Eastern Europe is largely due to Russia's slowdown. In constant value terms, EE's sales will be maintained, as premiumisation and high demand for salon products continue, even though this will be dampened by economic recession.
2,500 US$ billion 2,000
3 2 1 0 -1
1,500
1,000 500 0
EE US$ bn
EE % growth
There are clear development opportunities for 2-in-1
1,000 US$ billion 800 600 400 200
products in Middle East/Africa, Latin America and Eastern Europe, thanks to changing habits. 2-in-1 should seize the opportunity it missed in developed markets: convincing consumers of real added value, high quality and appropriate segmentation regarding hair type and hair style, for a lower price and a more convenient format than other hair care products. Between 2008 and 2013, 2-in-1s are expected to grow by 9% in EE and 7% in LA in constant value terms, and by 11% in volume terms in MEA.
3 2 1 0 -1 -2 -3
MEA US$ bn
MEA % growth 37
Year-on-year % growth
A real opportunity for 2-in-1 products
MEA 2013 Value Sizes and 2008-2013 Growth
Year-on-year % growth
EE 2013 Value Sizes and 2008-2013 Growth
Forecast Overview
Asia-Pacific and Latin America: What's Next?

Low per capita gives room for growth
AP has one of the lowest
High interest for high value products

Consumers are keen on
Key markets slowdown

Japan, South Korea and
Local HC habits can be a threat to HC products

Escova Progressive will
per capita spends, at only US$4. Average per capita spend is much higher in LA (US$21), but some key countries, such as Mexico, as still far behind.
high-value products and switch as soon as they can afford it, meaning even if growth is fragile it can recover much more quickly than in more developed markets.
Taiwan (49% of AP HC sales in 2008) all forecast decline while giants Brazil, Mexico and Argentina (78% of LA HC sales) should slow down.
continue to dampen hair care sales in Brazil particularly of shampoo and conditioners, at least in the short term.
Strengths Weaknesses Opportunities Threats

Premium and addedvalue product
High demand for premium
Where is the growth?

Mexico will create US$200
Price image irreparably damaged in Taiwan?

Discount and BOGOF
Economic slowdown
Economic boom is
and value-added products, with claims inspired by skin care and salon HC HW impact with natural promises around protection and prevention
million additional sales over the forecast period and should still be a focus for companies. Other key growth markets are China (7% CAGR) and India (9%).
strategies are to be used with care. These can be damaging in the long terms, as in Taiwan, where constant value sales are forecast a -2% CAGR.
expected to slow growth in Argentina (2% CAGR forecast). This is a threat to sales development: consumers will not be willing to go premium at all costs.
38
Forecast Overview
Challenges for the BRICs

By 2014, the BRICs should add an extra US$4billion to global hair care revenues. China and India will still be the
ones driving growth, with overall increases of 42% and 52%, respectively. In India, hair care represents 24% of total industry sales and should remain key, accounting for 27% in 2013. Even though China has by far the largest population, Brazil still has the bigger cosmetics and toiletries market. This is largely because the Chinese economy is still partially controlled by the government and foreign manufacturers wanting to operate in the country still have to partner with a Chinese company. Brazil's economy is a lot freer and this has made it easier for foreign investors. The biggest challenge will be Russia's hair care market. Maturity and increasing saturation are expected, as the market is seen as having peaked, and growth will thus slow down. With 2009 having seen a strong decrease in sales on the back of a very fragile economy, the development of premium hair care products will take a big step back, with forecast growth halved compared to the review period. The exception is 2-in-1 products, as consumers find a new interest in low added-value and very basic products.
Hair care as cosmetic and added-value product

The men's HC niche is showing promising
Russia reaching its limit while Brazil has particular local challenges
Russia is reaching maturity and even slight
results. By becoming more mainstream men's HC influence HC perception as a whole and contribute to change habits in the long term. Salon HC still negligible in China should perform extremely well in India, more than doubling in size and sustain well in Russia, with only a small step back in Brazil (-US$1 million between 2008 and 2013).
saturation, and with more difficult economic times ahead, consumers will not turn to premium products as quickly In Brazil, Escova Progressive will continue to see success, meaning hair care will suffer further. Manufacturers need to come up with products adapted to this type of treatment, or with a credible at-home alternative routine.
39
Forecast Overview
Frontier Markets: Volume Growth Forecast to Slow

Opportunities in Key Frontier Markets
Country Forecast synopsis Val (US$, con): +12% CAGR 0813 Vol alternative (units): +12% CAGR 08-13 Val: +7% CAGR Vol: +7% CAGR Strategic assessment UAE consumers will demand more added-value products, specifically adapted to harsh climatic conditions. The most important factor to consider is even while slipping into economic slowdown, UAE consumers are not likely to trade down, but will rather look for special discount offers on premium products. Another big trend is the strong demand for natural and herbal products. The success of the Himalaya Herbals range is inspiring manufacturers in the same vein. Tunisia is forecast to see strong growth in hair care. Sales may be boosted by segmented products, such as Style Sunsilk Bouncy Curls, as conditioners and styling agents are the two fastest growing categories. Argentina's value growth is very fragile, as it is mostly based on high inflation and the strong economic performance in 2008, which will be difficult to sustain all the way to 2013. Consumers are happily trying new high value added products ,such as Capilatis UVA Hair Therapy a range of anti-ageing HC with UV protection. The market is being driven predominantly by the under 25s, who represent a sizeable proportion of the population of over 85 million. In stark contrast to most Western markets, the population is very young, with an average age of only 26, making it very interesting for cosmetics and toiletries manufacturers. Demand for high-value added products is increasing, with the share of premium HC sales expected to reach 16% by 2013, a one percentage point increase compared to 2008. Salon HC has the most positive forecast, with Thailand entering the top five in AP in per capita terms for the category. Mini-sized packaging is already very successful in skin care and fragrances and should be the next big thing in hair care too.
40
United Arab Emirates
Tunisia
Argentina
Val: +2% CAGR Vol: +2% CAGR
Vietnam
Val : +5% CAGR Vol: +4% CAGR
Thailand
Val: +3% CAGR Vol: +2% CAGR
Forecast Overview
Conclusions
No gloom and doom for hair care India and China still top of the class Discounting strategy to handle with care Premium not to be left aside Economic factors only have a limited impact on hair care sales, impacting habits only in the short term, and reducing consumption rather than stopping it altogether. Consumers become pickier and more demanding, but still need hair care products. Manufacturers have invested heavily in China in recent years, and India should be next. With significant room for growth and changes in habits, multinationals need to get closer to local hair care manufacturers. Private label is not a major threat in the sector. While consumers are price sensitive, discounting strategies should be used with care, as they can compromise the longterm image of a brand and category, as seen in Taiwan. Premium still has opportunities, even if only in second half of the forecast period, especially in Eastern Europe. A high quality image is essential to sustain sales in hair care, as shown by Migros's private label range in Switzerland. More people changing their habits in China/India and frontier markets means more potential consumers. Manufacturers need first mover advantage, to adapt to local needs and address consumer education. DIY hair care is doing reasonably well, but could do much better if supported properly. There is a need for more products for maintenance between hairdresser visits, and real alternatives to the "hairdresser experience" in colourants and P&R. Manufacturers need to go the extra mile with additional claims (eg anti-age, hair spa salon by major shampoo brands) for the same price. This is key especially in developed markets, which should not be overlooked despite their maturity. BRICs might still be the key markets to invest in over the forecast period, but with the slowdown of sales in Russia and Brazil, frontier markets such as the UAE should be the next in line for manufacturers looking for first mover advantage.
41
Capitalise on changing habits

DIY hair care to push further Going the extra mile with innovation and segmentation Frontier markets next to be in focus
Report Definitions
Definitions and Abbreviations

Developed markets: North America, Western Europe and Japan BRICs: Brazil, Russia, India and China Frontier markets: Argentina, Bulgaria, Croatia, Estonia, Kazakhstan, Kenya, Lithuania, Nigeria, Pakistan, Romania,
Saudi Arabia, Serbia, Slovenia, Thailand, Tunisia, Ukraine, United Arab Emirates, Vietnam Escova Progressive: progressive blow-dry technique very popular in hair salons in Brazil. The product contains formaldehyde, which smoothes and straightens the hair. Women are advised not to wash their hair for a few days and to reduce the frequency of washing during subsequent months. Use of colourants is also proscribed. Grocery retailers: includes Supermarkets/Hypermarkets, Discounters, Small Grocery Retailers and Other Grocery Retailers Mixed retailers: includes Department Stores, Variety Stores and Mass Merchandisers Health and Beauty retailers: includes Pharmacies/Chemists, Parapharmacies/Drugstores, Beauty Specialist Retailers and Other Health and Beauty retailers Other Non-grocery: for the purpose of this comparison includes Outdoor Markets Non-store retailing : includes Vending, Direct Selling, Homeshopping and Internet Retailing Unless stated otherwise, all sizes and shares are in US dollars, fixed exchange rate value. In the Trends and Competitive Environment sections, value sales are quoted in current terms (including inflation). In the Forecasts section, value terms are in constant terms (ie real terms, without inflation) unless otherwise stated.
Abbreviations
HC: Hair Care P&R: Perms and Relaxants 2-in-1: 2-in-1 Products PL: Private Label Regions: AA= Australasia, AP=Asia-Pacific, EE= Eastern Europe, LA= Latin America, MEA= Middle-East Africa,
NA=North America, WE=Western Europe C&T: Cosmetics and Toiletries

42
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Changing Habits in Hair Care

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Changing Habits in Hair Care

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Changing Habits in Hair Care

Cosmetics & Toiletries: Hair Care

Introduction Global Snapshot Regional Overview

Cosmetics & Toiletries: Hair Care

Salon Hair Care

Perms & Relaxants

Cosmetics & Toiletries: Hair Care

Objectives of the Report

Cosmetics & Toiletries: Hair Care

Winning and losing categories

Cosmetics & Toiletries: Hair Care

Introduction Global Snapshot Regional Overview

Cosmetics & Toiletries: Hair Care

Hair Care Delivers Worst Growth Results

Cosmetics & Toiletries Performance by Category

2008 size (US$ million, fixed exch rate) 7

Cosmetics & Toiletries: Hair Care

Shampoos Withstand Economic Pressures

Hair Care Performance 2008

15 Sales (US$ billion)

Cosmetics & Toiletries: Hair Care

Are Long-term Changes in Consumer Habits Realistic?

P&R 2008 Value Sales and Growth

Cosmetics & Toiletries: Hair Care

What's Next for Premium?

% of Premium Sales (US$) 2006-2008

Cosmetics & Toiletries: Hair Care

Changing Habits in Channel Distribution

2008 Distribution Split, % Value

Cosmetics & Toiletries: Hair Care

Introduction Global Snapshot Regional Overview

Cosmetics & Toiletries: Hair Care

Key Regions at Play

Regional CT Value Share (US$)

Hair Care Value Sizes and Growth 2008

2008 US$ million

Cosmetics & Toiletries: Hair Care

Developed Markets Worst Hit by Recession

Hair Care % Growth Least Dynamic Markets

Cosmetics & Toiletries: Hair Care

Developed Markets: DIY Hair Care vs Non-essential

Discounting and cheaper products

Styling agents and 2-in-1 products

Cosmetics & Toiletries: Hair Care

Slowing Growth in Eastern Europe

2009: A reversal of fortune

Hair Care 2008 Value Share (US$)

Cosmetics & Toiletries: Hair Care

Regional Developments: Disparities and Similarities

Disparities in volume consumption/depreciation in average unit price due to discounting

Changing habits and perception impact sales

Cosmetics & Toiletries: Hair Care

BRICs: Brazil and Russia Take the Plunge

Escova Progressive to hit some categories in Brazil

Cosmetics & Toiletries: Hair Care

India and China Sustain Their Sales

RIC Hair Care Sizes (US$ Million) 2007-2008

Russia more fragile?

Cosmetics & Toiletries: Hair Care

The Next BRICs: Frontier Markets

Fastest Growing Markets Historic vs Forecast

Cosmetics & Toiletries: Hair Care

Country Focus: Argentina