This is actually a turnaround from 2004, when the market had decelerated in current dollars and real terms as a result of department store closings and mass retailers' slow entry into the premium sector. Business began to pick up in 2005, once the "mass to class" migration was more or less completed, and premium products were on mass shelves. Sales were also boosted by premium and mass channels' broadening of anti-aging offerings.
Sales are also being buoyed by growth in the ethnic population (Hispanic, Asian and black numbers grew by 14.9%, 14.1% and 6.3%, respectively, between 2002 and 2007). Ethnic groups clearly use more skincare products than Caucasians--although, as Mintel's analysts note, companies have yet to target these segments with marketing programs specifically geared to their needs.
The male population grew by 4.4%, and older men, who are more open to skincare products--including the growing number of male-specific products, like Beiersdorf's Nivea for Men--are leading that population growth.
The masstige movement--which is making drug stores and other mass outlets destinations for premium skincare products, widening the selection and expanding the consumer base--is a key factor in category momentum. This movement continues to blur traditional distinctions between the mass segment (which, while down slightly from 2005, still owns nearly 65% of the market, with sales of $1.5 billion for '07) and the premium segment (up slightly from 2005, to $819 million and a 35% market share).
Drug retailer partnerships with dermatologists to launch exclusive skincare lines, which lend a "more scientific pedigree" to the market, are a significant development, Mintel stresses.
The continuing wellness trend and its reflection in the plethora of products with natural and scented ingredients, designed to pamper and relieve stress, is another driver.
Overall, Mintel projects category sales will grow by 19% in current prices (5% in constant prices) between now and 2012.
The category continues to be dominated by six manufacturers, although acquisitions and product demand trends have created some competitive shifts. A summary of some recent big-six highlights from Mintel:
* Johnson & Johnson, including Neutrogena, consolidated its market lead with last year's purchase of Pfizer Consumer Healthcare and its Lubriderm and Corn Huskers brands. The acquisition added $59 million to J&J's food, drug, and mass-merchandise (FDM) body care sales (mostly of Lubriderm products, with over $57 million in 07 sales). The Pfizer acquisition also makes J&J the world's premiere consumer healthcare company.
Mintel estimates J&J's FDM-only 2007 U.S. sales at $188 million, up 7.4% from 2005. (All FDM data exclude department stores, specialty stores, direct marketers, online retailers and Wal-Mart.) J&J's share of market rose 0.1 percentage point over the two years, to 20.7%.
Sales of Aveeno, J&J's leading skincare brand, were steady during the period. Lubriderm Daily Moisture and Lubriderm Skin Nourishing, now its number two and three brands, both showed growth (respectively, from $10 million to $17 million, and $11 million to $15 million). Lubriderm Advanced Therapy was flat, and IRI data indicate that the brand has been steadily declining since 2002.
* Kao now holds second position. The phenomenal success of Jergens Natural Glow--which generated FDM sales of $37 million in '05 and $42 million in '06--actually slowed a bit in 2007 (to $39 million), a result of the slew of imitators now on the shelves, according to Mintel.
Kao's other leading products were flat to down during the two years, but smaller launches from its Curel brand have helped the company maintain its position.
Mintel estimates Kao's '07 FDM sales at $124 million, down 3.7% from '05, and its market share at 13.7%, down 1.5 percentage points from '05.
* Beiersdorf FDM sales grew 3.2% over the two years, to $110 million, while its market share declined 0.4 percentage points, to 12.2%.
A renewed marketing surge pushed Eucerin Hand & Body Lotion sales up 21%, to $38 million. But other leading products declined. Nivea Hand & Body Lotion dropped 22.7%, to $1.7 million.
* Unilever's Chesebrough-Ponds markets just one skincare brand, Vaseline, but Vaseline Intensive Care is the No. 1 product in the category. VIC's FDM sales for '07 are at $68 million, a gain of 13.5% since 2005.
Mintel notes that newer Chesebrough-Ponds entries, including Vaseline Intensive Care Renewal, Intensive Care Healthy Body Glow and Intensive Care Nightly Renewal, also contributed to the company's 15.3% FDM growth (to $80 million) during the period.
* Pfizer saw a slight two-year FDM sales gain (up 2.6%, to $59 million), although its share declined by 0.2 percentage points, to 6.6%.
* Procter & Gamble joined the top-six list, although its FDM sales declined 8.3%, to $46 million, and its share declined by 0.9 percentage points, to 5%.
Its leading product, Olay Body Quench, had initial FDM sales of over $35 million in 05, but sales have slipped to $27 million this year. Olay Moisturinse fell very steeply--nearly 52%, to $7 million.