BW Confidential - Issue #2 - May/June 2010 - (Page 20)

Insight: skincare Category overview Poised for growth Prestige skincare continues to grow despite confusion in the category, a decline in high-priced items and competition from emerging distribution channels by Oonagh Phillips kincare is still one area of beauty that the industry can rely on for growth. The global market for skincare (bodycare and facial care combined) grew by 3.3% last year to $80bn. Facial skincare, meanwhile, saw sales increase by 3.1% to $64.30bn. The market suffered however, in North America with sales down by 0.3% although in prestige, NPD points out that skincare was the only beauty category to see growth in the fourth quarter in the US. Anti-aging products continue to drive the category. According to NPD, 75% of consumers in the US say they “use skincare products to look the best they can for their age,” while 53% claim that anti-aging benefits (such as wrinkle/line reduction and firming/lifting) were ‘extremely or very important’ to them. But there is still room for S growth: 21% of facial skincare users do not use anti-aging products and of those who buy anti-aging serums or treatments 23% use them less than once a day. There is also potential to develop the segment beyond the treatment of fine lines or wrinkles and into the category of brightening and radiance. Skincare gift sets and at-home kits are also performing well, as are specialized products, for example those that target anti-redness or uneven pigmentation. Indeed, last year products for sensitive skincare outperformed anti-aging growth in the prestige segment in the US for the first time. Research group Kline & Co consumer products director Carrie Mellage also says that products with a natural positioning have seen strong growth in skincare. The losers have been high-priced items. The frenzy to increase prices and push products into the premium segment has calmed in recent years, and with the recession brands are questioning the strategy even further. NPD Group vice president and global industry analyst Karen Grant comments: “The premium end took a dip in the third quarter of 2008 and has not come back. There is a new pragmatism, with consumers asking what they should spend on and why.” This puts pay to the theory that consumers won’t give up high-priced skincare when times are tough. Indeed, analysts say many have traded down to masstige lines from companies such as BDF, P&G and L’Oréal. The Asian drive What will drive skincare’s growth is an increased focus on the category by the industry’s major groups. Most global players 20 May-June 2010 - N°2 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #2 - May/June 2010

- Brand and retail news recap
Take note
- Market facts, figures and trends
The latest fragrance, skincare and make-up launches
Best of BW
- Market highlights
- Clarins Fragrance Group president Joël Palix
Insight : skincare
- Category overview
- Industry viewpoint
- Trends
- Training in spas
- Spa case studies
Market watch : Asia
- Regional analysis
- Japan
- China
- South Korea
Focus : Fragrance creation
- Fragrance regulations
- Perfumer roundtable
- Six up-and-coming beauty brands
Travel retail
- Asia regional roundup
- Interview with Korea duty-free
Last word
- Morning Star equity analyst Erin Swanson on beauty’s threats and opportunities

BW Confidential - Issue #2 - May/June 2010