Coming Clean for Kids

The landscape has changed in the baby and children’s toiletry category. Once it was dominated by licensed products, but now the emphasis has shifted away from Disney and toward natural and organic products that are more about health and less about play value.

“Even in the private label segment of the category, which accounts for nearly 18 percent of category sales, added benefits have become a significant part of the category,” affirms Margie Nanninga, home and personal care analyst at Chicago-based Mintel. “Benefits such as sensitive skin and calming formulas and natural and organic claims are broadening the offerings in the category beyond licensed products.”

Specialty products with higher retail prices have given the category a boost. “We’ve seen higher unit prices buoying a category that has been flat or declining,” says Virginia Lee, senior market analyst at London-based Euromonitor. “Private label dollar share has been declining in baby shampoo, for example, and we’re seeing natural products outperforming licensed products.”

Natural Preference

Natural and organic products are having a big impact on the toiletry category in general, but in the children’s segment, natural formulations are even more important. Research from London-based Datamonitor reveals that parents are generally educated, informed and health-oriented when it comes to baby and toddler care products. According to a recent report from the market research company, “rising concerns about harsh chemicals in personal care products [are] resulting in an intense movement toward natural, organic, ‘free-from’ baby product formulas,” and when asked about which benefits were important to them in a skin care product, consumers ranked natural/organic ingredients among the top three highest priorities. That concern increased among shoppers with children younger than 4 years old.

Further, parents are willing to pay more for products they believe are safer for their children. “Women are postponing having children until they are earning more, so we’re seeing growth in organic baby foods, and that trend is spilling into the personal care aisle,” notes Lee. As a result, sales of premium-priced natural/organic baby care products are growing, and not just at Whole Foods Market.

“Key retailers report substantial growth due to a number of factors, specifically increased sales of higher-priced brands, and more shoppers, especially new moms, who are looking for healthier options,” observes Wendy Liebmann, CEO of New York-based WSL Strategic Retail. “Walmart has reported double-digit growth in the area in the last year, and brands such as Babyganics, Honest Co. and SheaMoisture have grown significantly in the last two to three years.”

“We’ve seen more adult brands, like Tom’s, entering the children’s market,” says Mintel’s Nanninga. “CeraVe, an adult brand, has launched some baby items, and we’re seeing more mother and baby items from companies.” She notes that the top three manufacturers, Johnson & Johnson, Unilever and Merck, generate two-thirds of sales in the children’s personal care segment, which Mintel defines as soap, ointment, powder, lotion, oil and petroleum jelly.

Recently Launched Products

This past March, Tom’s of Maine introduced a line of hypoallergenic, pediatrician-tested natural baby care products. The Kennebunk, Maine-based company, a partially owned subsidiary of Colgate-Palmolive, took three years to develop a line that’s free of parabens, phthalates or phenoxyenthanol, and conventional preservatives. The line includes a Baby Shampoo & Wash that’s tear-free and gentle enough for everyday use, in lightly scented and fragrance-free options. Tom’s also launched nongreasy Baby Moisturizing Lotion, also available in lightly scented and fragrance-free formulas.

Suggested retail prices are $9.99 for the 10-ounce shampoo and wash and $10.99 for the 6-ounce lotion. While the retail prices are higher than those of traditional products, Tom’s research shows that parents want natural and effective products with only necessary ingredients.

Tom’s also recently debuted Toddler Training toothpaste for children ages 3 months to 24 months. The product is a natural option with no artificial ingredients, no fluoride or sodium lauryl sulfate (SLS) — especially important because children often ingest toothpaste while learning to brush their teeth.

The company competes with Clorox-owned Burt’s Bees, a Durham, N.C.-based brand that has become synonymous with natural/organic products. Burt’s Bees Baby line of personal care and soft goods, launched in 2012, has been growing steadily in mass-market outlets. CVS recently featured the brand’s gift and toiletry sets on an end cap in stores.

New Brunswick, N.J.-based HBC giant Johnson & Johnson, which has been reducing the number of chemicals in its personal care products, launched Johnson’s Natural baby products in 2010. Products in the line are made from naturally derived ingredients from coconut, palm, palm cottonseed, soybean and sugarcane, but they don’t have third-party certification. Priced from $4.59 for 9 ounces to $6.49 for 18 ounces the products also don’t carry a premium price tag. J&J’s Aveeno Baby has a natural/organic positioning and carries a higher price point, however.

A number of smaller brands have also been making inroads in the category, with products that have a natural/organic positioning. “The Honest Co. which was founded by actress Jessica Alba has been gaining shelf space,” says Euromonitor’s Lee.

“The brand’s health position has boosted sales.” Weleda SheaMoisture California Baby and Babyganics have all likewise gained shelf space in the drug store channel.

Some supermarkets have brought in sun care products from Babyganics and Goddess Garden. Sun care products and insect repellents, which traditionally contain more chemicals than other toiletries, are an especially sensitive area.

Smile Baby’s Momin line of organic herbal personal care products has seen sales of its Outdoor Shield product line, including Organic Herbal Outdoor Repellent, Organic Herbal Insect Bite Relief and Organic Herbal Soothing Ointment, grow significantly during spring and summer. “Our POS display for our outdoor products has really worked well,” notes Frank Wilson, managing director of Baldwin Park, Calif.-based Smile Baby Corp.

Reaching Out

While supermarkets are bringing more natural and organic products into their stores, few chains as yet are calling attention to the products on shelf with signage, shelf talkers or other merchandising vehicles.

“Education is key, especially for new parents, including sharing information on common conditions such as eczema, cradle cap, dermatitis and sensitivity, and how parents can use products meaningfully and effectively,” observes Richelieu Dennis, founder and CEO of Amityville, N.Y.-based Sundial Brands, maker of the SheaMoisture brand. Dennis adds that tools for reaching consumers include educational shelf talkers, end caps and website articles all of which can help parents learn about natural products offered at supermarkets. “We are just starting to test push notifications promoting special offers, as well as mobile savings offers in grocery,” he says of his product line. Baby toiletries and medications make up 12.3 percent of baby promotions in circulars, according to data from Solon Ohio-based ECRM, while price-point offer ads account for more than 50 percent of baby toiletry and medication promotions.

SheaMoisture’s Raw Shea, Chamomile & Argan Oil Baby Head-to-Toe Wash & Shampoo, Lotion and Oil Rub have been performing well in the supermarket channel, and the brand recently launched two new products formulated with natural and certified-organic ingredients (Fragrance-Free, Gluten-Free Baby Extra-Mild Wash & Shampoo and Fragrance-Free, Gluten-Free Baby Healing Lotion) made especially for babies and children with allergies and skin sensitivities, including gluten and fragrance intolerance. According to Dennis, research indicates that one-third of moms believe that their children have sensitive skin. SheaMoisture also offers a pre-natal collection that includes Stretch Mark Butter Cream, Stretch Mark Intensive Repair Oil, Mommy Soothing Nursing Balm, Firming Massage Lotion and Mommy All Over Body Scrub.

Skin in the Game

While the drug and mass channels can offer a broader selection of natural baby care items, supermarkets are also entering the game, albeit more carefully. “Grocery stores do best with our basic Body and Hair Wash, Baby Lotion, Tushy Cream, and Nighttime Wash,” observes Gregory Rubin, CEO of Calabasas, Calif.-based Garcoa Laboratories, maker of Just Hatched natural baby products. “Stretch mark products for moms are also important.” The company recently launched two Just Hatched for Mama products: a Stretch Mark & Scar Gel and a Nursing Balm.

“Supermarkets do need to carry a selection of the natural/organic brands, because that’s what many new moms — and grandparents — are interested in today, especially in higher-income and more ethnically diverse markets,” advises WSL’s Liebmann. “They also need to offer a range of price points: Good, better, best matters here. It’s not all about premium, but they shouldn’t get buried in too many different brands. With all the new entries, it’s easy to have an overproliferation and forget that the biggest sellers in units are still the traditional baby brands. So editing the mix is key.”

And while natural and organic products may be category drivers, retailers can’t rule out licensed products entirely. Never underestimate the power of a character like Elsa of “Frozen” fame on kids’ toiletry sales. As Liebmann points out, “Supermarkets need to be quick to pick up on a licensed trend since this is an area where ‘you snooze, you lose.’”

“Women are postponing having children until they are earning more, so we’re seeing growth in organic baby foods, and that trend is spilling into the personal care aisle.”
—Virginia Lee, Euromonitor

“Education is key, especially for new parents, including sharing information on common conditions, and how parents can use products meaningfully and effectively.”
—Richelieu Dennis, Sundial Brands

“Supermarkets do need to carry a selection of the natural/organic brands, because that’s what many new moms — and grandparents — are interested in today, especially in higher-income and more ethnically diverse markets.”
—Wendy Liebmann, WSL Strategic Retail