Sean Moloughney03.01.10
As consumers continue their quest to stay healthier and look younger later in life, the market for natural, functional beauty products seems poised for expansion, despite some obvious economic obstacles.
Ingestible products that promote “beauty from within” continue to attract consumers—even while skepticism persists. At the same time, manufacturers are developing more topical formulas that contain naturally sourced ingredients, such as botanical actives, enzymes, proteins and vitamins.
Market research firm Kline Group estimated the global market for these natural beauty products was worth $1.5 billion in 2007, and is expected to grow to $2.5 billion by 2012. While some experts believe growth estimates need to be revised in light of harsh economic conditions, there seems to be consensus that significant potential still exists, especially in the U.S.
Alisa Marie-Beyer, president of the Benchmarking Company, a research and branding firm focused on the beauty industry, noted that Europe and Japan dominate this category, with 55% and 41% of all product sales, respectively. But they are also mature markets with limited space for expansion. Conversely, the U.S. accounts for only 3% of overall sales, indicating significant potential for future growth.
Sharrann Simmons, senior marketing manager, Cognis Nutrition & Health, LaGrange, IL, said she believes there could be sustainable growth in this market given consumer tastes for naturally sourced ingredients. Consumers often cite environmental reasons for choosing natural beauty products, but safety also seems to be top-of-mind for many customers. “People feel safer with something that’s natural as opposed to a synthetic chemical,” said Ms. Simmons.
“I think the market is going to be driven by clearly-defined target markets,” she added. “Obviously, one of those is the Baby Boomer female trying to maintain her appearance. But there’s also a high level of interest from a younger female audience who want to prevent damage to their skin early on, and enhance their natural beauty.”
Nika Lewis, head consultant, Beauty Innovation, Mintel International, said the push toward natural beauty represents a larger, general shift to more holistic approaches to health and wellness. “I firmly believe that based on data and trends we’ve seen, ingestible beauty is here to stay.”
Presented with such opportunities, what will it take to reach more consumers? What challenges do manufacturers and marketers need to overcome? And what products offer a sound investment?
The Identity Challenge
As an industry still in its infancy, “natural beauty” in the U.S. is still defining itself, and its terms. For example, some experts have drawn different distinctions between cosmeceuticals and nutricosmetics. Others use them interchangeably. Still, FDA clearly states the Food, Drug and Cosmetics Act doesn’t recognize either term. As the lines between pharmaceuticals, nutrition and personal care continue to blur, and with certain terms offering different connotations in different countries, consumers are often left confused and skeptical about what they don’t understand.
When speaking of cosmeceuticals, industry experts often mean topical products—creams, lotions and oils—that offer some functional benefit to the skin. Conversely, nutricosmetics may refer to ingestible products (food, beverages or supplements) marketed for beauty benefits—to the skin, hair, nails, etc. (For the purpose of clarity, this article will work with these definitions.)
The definition of beauty itself has been open to interpretation for ages. Is beauty about what you see, or how you feel? Or both? Factors like diet and different aspects of health, like digestion or inflammation, may lie at the outer edge of this market space—or arguably, constitute its core.
Additionally, the absence of a clear definition for the term “natural,” and unified standardization of what constitutes a natural product has allowed companies to cut corners and introduce products that may not truly constitute “natural,” as the industry’s staunchest advocates envision.
“Transparency is the word of the decade,” said Darrin Duber-Smith, president Green Marketing Inc., and visiting assistant professor of marketing at Metropolitan State College in Denver, CO. “People want to know what’s in their stuff. That’s a trend that’s lasted decades and it’s not going away. I wonder if some of the bigger brands will maintain their integrity in the absence of a meaningful U.S. standard. I hope that they will.”
Synergy & Skin Care
Given this marketing backdrop, one thing is for certain: the synergy between ingestible and topical products—alongside a healthy diet—has emerged as a noteworthy trend. “Topical skin care products work best in conjunction with a healthy, antioxidant- and essential fatty acid-rich diet and supplements,” said Steve Holtby, president and CEO, Soft Gel Technologies, Inc., Los Angeles, CA. “Aging has been attributed to inflammation, particularly at the cellular level. Free radicals damage cells and may be introduced into the body as a result of environmental toxins, stress, a sugar- and trans fat-laden diet and exposure to ultraviolet light, to name a few.”
Reflective of inner health, the skin is the largest elimination organ of the body, he added. “A radiant, clear complexion begins with proper nutrition, efficient digestion and assimilation of nutrients by the body and regular elimination of waste products. If you eat well, drink plenty of water, exercise regularly, sleep adequately and find ways to alleviate the stress in your life, your skin will reflect this healthy lifestyle.”
Skin care has been, and continues to be, at the heart of the beauty market. A recent report from Business Insights titled “The Evolution of Beauty Ingredients in Food and Drinks: Innovation and Future Strategies for Success,” indicates that by 2011 the U.S. will be the largest market for anti-aging skin care goods.
According to the Benchmarking Company, the top two skin care concerns of women aged 30-50+ are lines and wrinkles, and aging prevention. Studies reveal nearly two-thirds of women feel more pressure to look good compared to previous generations, noted Ms. Marie-Beyer. And younger women indicate they feel more pressured than older women to look good (nearly 50% of consumers aged 18-24).
Antioxidants have risen among the brightest stars in the skin health market. According to Mr. Holtby, “Many natural skin care product manufacturers are adding antioxidants to their facial creams and moisturizers, such as grape seed extract, green tea, CoQ10, alpha lipoic acid, vitamin C, lycopene and various other botanicals, vitamins and minerals that act as ‘natural age fighters’.”
Missy Lowery, marketing manager, Capsugel, Americas Region, Greenwood, SC, said the addition of an oral nutricosmetic can enhance a brand’s current line of beauty products. “They also can shift the focus of how and when products work to create a beauty benefit. The market is saturated with topical cosmetics that claim to moisturize dry skin and reduce or eliminate wrinkles. They work to treat an existing condition. But consumers also look to oral cosmetics to slow or prevent developments of certain conditions.”
Capsugel’s portfolio of antioxidant products, like vitamins C and E and lycopene, tend to be popular because they hide or slow down the signs of aging, she said. Some innovative nutricosmetic products with collagen, lycopene and lutein, among others, have also done well.
Resveratrol continues to be one of the hottest antioxidants for supplement and functional food and beverage formulations, but some experts still note a lack of human clinical studies to substantiate its efficacy.
In fact, overall, research in the beauty from within arena is still in its infancy, Lori Stern, senior nutrition scientist, DSM Nutritional Products, Parsippany, NJ, admitted. “The majority of human studies focus on the ability of carotenoids (e.g., beta-carotene, lycopene, lutein and zeaxanthin) to help protect the skin from the damaging effects of sunlight.” However, evidence is mounting. For example, she cited a 2007 study involving Flora GLO lutein and zeaxanthin, which significantly improved hydration and reduced signs of oxidative damage in the skin upon UV exposure.
Consumers demand efficacious products. Companies with substantiated research on their ingredients or finished products could be a step ahead. Communicating such benefits to consumers, who are becoming more savvy and sophisticated, would be a notable marketing tool.
“People don’t buy features, they buy benefits,” said Mr. Duber-Smith. “That’s the marketers primary task, to translate product features into benefits.”
Collagen has demonstrated benefits to skin health, Ms. Lowery noted. The skin loses 1.5% of collagen per year from the age of 25 onward. “Collagen makes up 75% of the body’s skin tissue and about 90% of dermal volume. Knowing that collagen diminishes with age, oral supplements with collagen can work to prevent or at least slow deleterious effects. This is a powerful long-term anti-aging protein. Collagen works to plump the skin, reduce lines and wrinkles, and improve the skin’s elasticity and suppleness.”
According to Asma Ishaq, vice president of marketing, BioCell Technology, Newport Beach, CA, BioCell Collagen II (a bioavailable, natural source of hyaluronic acid and collagen) has several benefits.
“Hyaluronic acid (HA) is a naturally existing component in the body, and is responsible for the moisture in skin, joints, eyes, hair, all over,” she said. “It steadily decreases with age, and ingesting BioCell Collagen II showed an increase (60-fold in a steady state bioavailability assay) in HA levels, and has been proven to inhibit hyaluronidase, the enzyme that degrades HA.”
Alongside an expansive list of other ingredients, Mary Ann Siciliano, national sales manager, Arista Industries, Wilton, CT, said natural oils, like almond, apricot, avocado, hazelnut, jojoba, olive, safflower, sesame, sunflower tea tree and wheat germ have become very popular. “Many of these products are still used as bases, carrier oils, emollients and thickening agents, but they can also help rebalance certain skin types and improve complexion; moisturize, nourish and protect skin from external conditions; heal and repair bruised or damaged skin and leave the skin soft and smooth.”
Beauty from within, or “beauty from the inside out,” has also expanded the application possibilities for products like omega 3s as well as oils like borage or evening primrose, which contain GLA (gamma linolenic acid). “Contrary to traditional personal care products, which are primarily used topically, taken internally, these oils help promote healthy skin, hair and nails and some have anti-inflammatory qualities, which have been used for improving the symptoms of acne, eczema and psoriasis,” Ms. Siciliano added.
According to trend spotters like Mintel’s Ms. Lewis, some other emerging ingredients include vitamin D, griffonia, astaxanthin, N-acetyl glucosamine and MSM (methylsulfonylmethane).
Generally speaking, U.S. consumers can often be impatient, and they demand results. According to a poll from the Benchmarking Company, when asked “how long should you need to wait to see results from nutricosmetic use,” 41% of consumers said two weeks, 39% said one month and 10% said two months, while only 6% said three months and 5% said more than three months.
Delivering Beauty
In terms of delivery systems, beauty beverages have become a popular format for new product launches. “A beauty beverage nicely combines two beauty aspects: that of ‘hydration’ inherent to the beverage itself and that of the skin nutrients that are in it,” said Caroline Brons, senior marketing manager, DSM Nutritional Products.
BioCell’s Ms. Ishaq agreed, saying, “a liquid product is likely to be better absorbed, and if the components are bioavailable, it makes for an effective and convenient delivery system.”
Bars represent another good delivery system for beauty from within formulations, according to Ms. Brons. “Effective skin health formulas often consist of multiple ingredients that work synergistically. A typical beauty formula would consist of carotenoids, antioxidant vitamins C and E, vitamin B-complex and other specialty nutrients, such as CoQ10. Unlike any other delivery system, bars are excellent carriers of such complex formulations, allowing for flexibility in color, texture and taste. What’s more, the ‘on-the-go’ nature of bars allows consumers to incorporate skin health into their busy schedules at any point of the day.”
Younger consumers seem especially receptive to the idea of fortifying foods and beverages with additional beneficial nutrients. Nearly 30% of U.S. consumers are interested in and actively buying food and beauty products to improve overall appearance, according to a Datamonitor report, “Seeking Beauty Through Nutrition: Opportunities in Oral Beauty Products.” Half of U.S. consumers are interested but not yet actively purchasing food and beverage products that deliver results for overall appearance.
The key to retaining and expanding the industry’s customer base will be to balance efficacy, taste and price.
Probiotics & Oral Care
The growing popularity and understanding of probiotics has also opened a path to the beauty market, particularly in oral care. “Some evidence shows certain strains of probiotics do a good job of knocking down the bacteria that causes dental caries,” said Mike Bush, vice president of business development, Ganeden Biotech, Cleveland, OH. ”Probiotics in general have good anti-inflammatory effects and do a good job of supporting the immune system. If you have a good immune system and keep inflammation at bay, that’s going to help you look and feel better. The healthier you are the better you look.”
A unique delivery system will certainly help product manufacturers gain an advantage in the marketplace, he added. And with better technologies today, probiotics offer manufacturers several innovative avenues.
For example, Ganeden recently partnered with Life Extension Foundation to launch an oral care lozenge that contains Ganeden’s patented probiotic strain GanedenBC30. “With the technology that’s out there the possibilities are limitless, depending on the probiotic strain you use,” Mr. Bush added.
Many companies are also incorporating probiotics to cater to a much younger audience. Oragenics, Tampa, FL, recently extended its EvoraPlus oral care system with EvoraKids, a probiotic-based, all-natural oral care chewable created to promote oral health for children three to 10 years old. Available in Wild Very Cherry Berry flavor, this chew contains the company’s patent-pending probiotic blend ProBiora3.
Signs of the Times
Overall, the economy took its toll on U.S. food and drink manufacturers in 2009, according to a recent review of Mintel’s Global New Product Database (GNPD). Food and drink product launches declined substantially, nearly 30% from 2008.
According to Cognis’ Ms. Simmons, so many companies had products lined up at the starting gate, but were simply too afraid to launch. “There’s always a high risk in launching any new product and when you have this huge economic recession as a hurdle to overcome it makes it very difficult to achieve success.” However, she predicted the industry would bounce back, given some hopeful economic indicators, such as increased merger and acquisition activity.
Several factors will dictate success in an arena where it has become difficult to compete for shelf space in retail stores. For one, the importance of value during tough economic times may seem obvious, but remains paramount.
“If there’s a strong enough motivation, people will prioritize their spending,” said Ms. Simmons. “I think people place a very high priority on their appearance. As we age that priority probably increases.”
So price positioning is key, she added. “If some of these products are priced at a level consumers think is totally out of range for their value or totally out of range of their budget, it’s going to be very difficult to achieve any significant market growth.”
Speaking of value, Mr. Duber-Smith noted that luxury goods have taken a hit across the board. “Everyone trades down in a bad economy, and this bad economy has lasted for years. I believe there’s a huge social shift away from conspicuous consumption. There’s a semi-permanent pendulum swing. In other words, you look like a tool in your Hummer.”
That doesn’t mean prestige products will go away completely, he added. “But just pricing your product way up there at whatever you want, and saying, ‘We’re natural and organic, therefore we’re expensive’—don’t you think those days are numbered?
