Supermarket NONFOODS Business: Ethnic HBC: The secret's out
In February G.P. Putnam's Sons, an imprint of Penguin Group, announced the acquisition at auction of "The Beauty of Color: A Makeup Celebration for All Skin of Color" by Iman, the Somalian-born model and founder of Iman Cosmetics and I-Iman Makeup, two companies specializing in cosmetics and skin care brands for women of color. The book, to be released in 2005, will be the first beauty guide to embrace global beauty, with text emphasizing the nuances of cosmetics and skin care for women of African, Latina, and Asian descents.
This announcement points out just how far ethnic HBC has come over the years. No longer hidden in dusty corners of skin and hair care departments, these products are now being placed front and center.
And the numbers are showing this. According to MarketResearch.com's "Packaged Facts Report: The U.S. Market for Ethnic HBC: Hair Care, Skin Care, Color Cosmetics," retail sales of ethnic HBC products are expected to reach $1.9 billion in 2006. This view is based on the assumption that marketers will seek ways to better mine the potential for ethnic-specific hair care, skin care, and color cosmetics.
The most powerful factor in ethnic HBC market growth is the expansion of the ethnic populations that are targeted. All three of the ethnic or racial minority populations that figure notably in ethnic HBC product use will experience major growth in the coming years, according to the report.
The African-American population -- the largest ethnic HBC market -- will expand by almost 12 percent by 2010, while the number of Hispanics will grow a whopping 30 percent, and the Asian sector will jump 31 percent. "The structure of the American population is undergoing massive change," says Candace Matthews, president of SoftSheen-Carson in Chicago, part of L'Oreal USA's Consumer Products Division. "The ethnic population grew 11 times as rapidly as the Caucasian population between 1980 and 2000."
The amount of disposable income of ethnic minorities also continues to grow very quickly, Matthews says. "Spending power among ethnic minorities is increasing 3.5 times faster than that of Caucasians," she says. "It's estimated that the 36 million African-Americans have a spending power greater than $800 billion."
The lion's share of the ethnic HBC market is for products geared toward African-Americans. "African-Americans have more hair and skin care needs," says Don Montuori, editor of MarketResearch.com's "Packaged Facts" report.
According to SoftSheen-Carson's Matthews, African-Americans spend far more per capita on their hair than other groups do. "While African-Americans represent 13 percent of the total population, the hair care market for people of African origin accounts for one-third of the total hair care market," she points out. "According to beauty statistics, these consumers purchase on average three to five times more products per visit than Caucasians."
MarketResearch.com's Montuori sees this beginning to happen with the Hispanic market, as well. "Hispanics can use both ethnic and traditional HBC products," he says. "But the growing Hispanic market is driving more development in this area."
The Hispanic market for HBC can be tricky, because it's really composed of several submarkets, according to Vinny Durante, president of Fairfield, N.J.-based Dax, Inc. a global mass market and multicultural hair care company that manufactures and distributes products under the Dax and natucor brands. "There are two different types of Hispanic markets that we have seen," Durante says. "There's the Mexican population and the Northeast and Southeast Hispanic population, and each has different needs and buying patterns. For example, the Mexicans generally have straight, jet-black hair, which doesn't have many hair care needs. South Americans, however, have curly hair, and tend to have some of the same hair care needs as African-Americans."
From spa to shelf
Much of the development of ethnic HBC products starts with smaller, more targeted companies making higher-end products commonly found in spas and boutiques. "What we're witnessing is the emergence of consumer-specific products being developed and introduced at an accelerating pace," says Louis E. V. Nevaer, a director at New York-based consultancy Hispanic Economics and author of nine books, including The Rise of the Hispanic Market in the United States. "One of the strongest consumer products continues to be the personal care -- or 'indulgence' -- industry, one reason for the explosive growth of day spas."
Nevaer has seen a shift in development of high-end ethnic HBC products, which eventually funnels down to the retail shelves. "While these lines are high-end, there's rapid mass marketing once a distribution network is established," he says. "We tend to forget, for instance, that many of the products on supermarket and grocery store shelves first were exclusive products of hair salons and upscale boutiques. L'Oreal's Studio One hair gel and Crew hair products for men are perfect examples."
Addressing very specific needs is what ethnic HBC is all about. "A big trend now in ethnic HBC is the development of products targeted toward very specific needs," says Rebecca Brown, director of marketing of Englewood Cliffs, N.J.-based E.T. Browne Drug Co., makers of the Black & Beautiful and Palmers product lines. "They have to address common issues found among ethnic groups, such as uneven skin tone or ashy, flaky, and irritated skin, for example."
To meet these needs, ethnic HBC manufacturers have developed a broad variety of products, many of which are influenced by trends in mass market HBC, such as more natural products, products for teens, and products for men.
Black & Beautiful, for instance, recently came out with a line of organic hair treatments, styling products, and skin care products that includes the following:
-Black & Beautiful Hair Butter provides therapeutic moisture by combining the healing and moisturizing properties of natural cocoa butter and African shea butter.
-Carrot Gro is specially formulated with natural carrot extract, known for its strengthening and antioxidant properties. It helps repair the damage that chemical and heat processing can cause, enabling hair to grow.
-Braid Repair Serum helps restore hair to a healthy state between damaging processes such as braiding and weaving. It's formulated with rich emollients and natural wheat protein, which acts as an antioxidant. It simplifies braid removal by detangling hair to prevent breakage.
-Shea Butter Spray is a lightweight formula in a convenient spray bottle, designed to moisturize both skin and hair.
Dax has also expanded its line to include a host of natural products. Called Daxensual Botanicals, the products are enriched with exotic, deep-penetrating conditioning oils to transform dry, brittle, and lifeless hair into strong, manageable hair. Some products from the line are as follows:
-Tea Tree Cream is a lightweight formula that, when used daily, results in shinier, softer, and revitalized tresses. Tea tree oil penetrates the hair and scalp while keeping styles smooth and providing moisture.
-Tea Tree Butter is a blend of oils that offers protection from the elements, eliminating dry, brittle, and hard-to-manage hair, and also adding shine with daily use.
-Cocokui Pomade, a mix of coconut oil and kukui nut oil, is a quick-action formula that penetrates the driest hair to deliver moisture and improve texture.
-Indian Hemp is a unique oil, made from soothing extracts, that stimulates the scalp while repairing damage from chemical treatments.
Dax has also intoduced its Wave and Groom Texturing Kit to transform men's hard-to-manage hair into soft, natural-looking curls and waves, while at the same time rehydrating hair. "African-Americans have been texturizing their hair for centuries, but few companies have specifically addressed the male market," Durante says. "We added the Wave and Groom line to address this underserved market with an easy-to-use and affordable product."
SoftSheen-Carson's product lines, which address the needs of hair care, men's grooming, and young consumers, include:
-Dark & Lovely hair relaxer, hair color, and hair care products, which have recently been relaunched with new moisture-replenishing technology. The product line has a brand awareness in the United States of 82 percent, according to Matthews.
-Optimum Care, which has recently been relaunched both in the United States and Europe, offering advanced antibreakage performance.
-Breakthru, the first SoftSheen-Carson product launched with a L'Oreal technology, Ceramide R, a patented formula that reinforces hair shafts.
-Magic Shave, which provides for the unique shaving needs of African-American men.
To appeal to the needs of young, urban, multiethnic consumers, SoftSheen-Carson has also launched Megahertz, a line of six contemporary styling products especially formulated to tame all types of curly hair.
Offering such a variety of products translates into increased sales for the retailer, especially if it pays close attention to the ethnic diversity of its markets. "Everything comes into play -- gender, ethnicity, skin type," Hispanic Economics' Nevaer says. "You have to target each consumer's needs, and you can only do this by understanding the ethnic makeup of the markets you sell to."
The CPG giants have caught on, as well, adding lines of ethnic HBC products to their already prolific number of brands and developing marketing programs around them. In addition to L'Oreal, both Procter & Gamble and Unilever have strengthened their presence in the ethnic market. In April of last year Unilever created the new position of multicultural marketing manager to drive multibrand initiatives while helping brand teams develop ethnic strategies, plans, and programs.
Just two months later P&G announced the expansion of existing relationships with two African-American advertising agencies to support the company's continuing efforts to reach African-American consumers. Included among its brands is Texture & Tones, a new beauty care line aimed at meeting the needs of African-American women.
Also, P&G's Pantene brand now includes Relaxed & Natural, which was specifically created for women of color.
The result is greater attention to ethnic-specific products, due to these company's vast monetary resources. The money these companies put behind research and development will result in the creation of many new products, and such companies' strong advertising and marketing capabilities will help to drive sales to the category as a whole. "This will definitely have a positive impact on the ethnic HBC market," Nevaer notes. "We should expect to feel the impact of this within the next 12 to 36 months."
This announcement points out just how far ethnic HBC has come over the years. No longer hidden in dusty corners of skin and hair care departments, these products are now being placed front and center.
And the numbers are showing this. According to MarketResearch.com's "Packaged Facts Report: The U.S. Market for Ethnic HBC: Hair Care, Skin Care, Color Cosmetics," retail sales of ethnic HBC products are expected to reach $1.9 billion in 2006. This view is based on the assumption that marketers will seek ways to better mine the potential for ethnic-specific hair care, skin care, and color cosmetics.
The most powerful factor in ethnic HBC market growth is the expansion of the ethnic populations that are targeted. All three of the ethnic or racial minority populations that figure notably in ethnic HBC product use will experience major growth in the coming years, according to the report.
The African-American population -- the largest ethnic HBC market -- will expand by almost 12 percent by 2010, while the number of Hispanics will grow a whopping 30 percent, and the Asian sector will jump 31 percent. "The structure of the American population is undergoing massive change," says Candace Matthews, president of SoftSheen-Carson in Chicago, part of L'Oreal USA's Consumer Products Division. "The ethnic population grew 11 times as rapidly as the Caucasian population between 1980 and 2000."
The amount of disposable income of ethnic minorities also continues to grow very quickly, Matthews says. "Spending power among ethnic minorities is increasing 3.5 times faster than that of Caucasians," she says. "It's estimated that the 36 million African-Americans have a spending power greater than $800 billion."
The lion's share of the ethnic HBC market is for products geared toward African-Americans. "African-Americans have more hair and skin care needs," says Don Montuori, editor of MarketResearch.com's "Packaged Facts" report.
According to SoftSheen-Carson's Matthews, African-Americans spend far more per capita on their hair than other groups do. "While African-Americans represent 13 percent of the total population, the hair care market for people of African origin accounts for one-third of the total hair care market," she points out. "According to beauty statistics, these consumers purchase on average three to five times more products per visit than Caucasians."
MarketResearch.com's Montuori sees this beginning to happen with the Hispanic market, as well. "Hispanics can use both ethnic and traditional HBC products," he says. "But the growing Hispanic market is driving more development in this area."
The Hispanic market for HBC can be tricky, because it's really composed of several submarkets, according to Vinny Durante, president of Fairfield, N.J.-based Dax, Inc. a global mass market and multicultural hair care company that manufactures and distributes products under the Dax and natucor brands. "There are two different types of Hispanic markets that we have seen," Durante says. "There's the Mexican population and the Northeast and Southeast Hispanic population, and each has different needs and buying patterns. For example, the Mexicans generally have straight, jet-black hair, which doesn't have many hair care needs. South Americans, however, have curly hair, and tend to have some of the same hair care needs as African-Americans."
From spa to shelf
Much of the development of ethnic HBC products starts with smaller, more targeted companies making higher-end products commonly found in spas and boutiques. "What we're witnessing is the emergence of consumer-specific products being developed and introduced at an accelerating pace," says Louis E. V. Nevaer, a director at New York-based consultancy Hispanic Economics and author of nine books, including The Rise of the Hispanic Market in the United States. "One of the strongest consumer products continues to be the personal care -- or 'indulgence' -- industry, one reason for the explosive growth of day spas."
Nevaer has seen a shift in development of high-end ethnic HBC products, which eventually funnels down to the retail shelves. "While these lines are high-end, there's rapid mass marketing once a distribution network is established," he says. "We tend to forget, for instance, that many of the products on supermarket and grocery store shelves first were exclusive products of hair salons and upscale boutiques. L'Oreal's Studio One hair gel and Crew hair products for men are perfect examples."
Addressing very specific needs is what ethnic HBC is all about. "A big trend now in ethnic HBC is the development of products targeted toward very specific needs," says Rebecca Brown, director of marketing of Englewood Cliffs, N.J.-based E.T. Browne Drug Co., makers of the Black & Beautiful and Palmers product lines. "They have to address common issues found among ethnic groups, such as uneven skin tone or ashy, flaky, and irritated skin, for example."
To meet these needs, ethnic HBC manufacturers have developed a broad variety of products, many of which are influenced by trends in mass market HBC, such as more natural products, products for teens, and products for men.
Black & Beautiful, for instance, recently came out with a line of organic hair treatments, styling products, and skin care products that includes the following:
-Black & Beautiful Hair Butter provides therapeutic moisture by combining the healing and moisturizing properties of natural cocoa butter and African shea butter.
-Carrot Gro is specially formulated with natural carrot extract, known for its strengthening and antioxidant properties. It helps repair the damage that chemical and heat processing can cause, enabling hair to grow.
-Braid Repair Serum helps restore hair to a healthy state between damaging processes such as braiding and weaving. It's formulated with rich emollients and natural wheat protein, which acts as an antioxidant. It simplifies braid removal by detangling hair to prevent breakage.
-Shea Butter Spray is a lightweight formula in a convenient spray bottle, designed to moisturize both skin and hair.
Dax has also expanded its line to include a host of natural products. Called Daxensual Botanicals, the products are enriched with exotic, deep-penetrating conditioning oils to transform dry, brittle, and lifeless hair into strong, manageable hair. Some products from the line are as follows:
-Tea Tree Cream is a lightweight formula that, when used daily, results in shinier, softer, and revitalized tresses. Tea tree oil penetrates the hair and scalp while keeping styles smooth and providing moisture.
-Tea Tree Butter is a blend of oils that offers protection from the elements, eliminating dry, brittle, and hard-to-manage hair, and also adding shine with daily use.
-Cocokui Pomade, a mix of coconut oil and kukui nut oil, is a quick-action formula that penetrates the driest hair to deliver moisture and improve texture.
-Indian Hemp is a unique oil, made from soothing extracts, that stimulates the scalp while repairing damage from chemical treatments.
Dax has also intoduced its Wave and Groom Texturing Kit to transform men's hard-to-manage hair into soft, natural-looking curls and waves, while at the same time rehydrating hair. "African-Americans have been texturizing their hair for centuries, but few companies have specifically addressed the male market," Durante says. "We added the Wave and Groom line to address this underserved market with an easy-to-use and affordable product."
SoftSheen-Carson's product lines, which address the needs of hair care, men's grooming, and young consumers, include:
-Dark & Lovely hair relaxer, hair color, and hair care products, which have recently been relaunched with new moisture-replenishing technology. The product line has a brand awareness in the United States of 82 percent, according to Matthews.
-Optimum Care, which has recently been relaunched both in the United States and Europe, offering advanced antibreakage performance.
-Breakthru, the first SoftSheen-Carson product launched with a L'Oreal technology, Ceramide R, a patented formula that reinforces hair shafts.
-Magic Shave, which provides for the unique shaving needs of African-American men.
To appeal to the needs of young, urban, multiethnic consumers, SoftSheen-Carson has also launched Megahertz, a line of six contemporary styling products especially formulated to tame all types of curly hair.
Offering such a variety of products translates into increased sales for the retailer, especially if it pays close attention to the ethnic diversity of its markets. "Everything comes into play -- gender, ethnicity, skin type," Hispanic Economics' Nevaer says. "You have to target each consumer's needs, and you can only do this by understanding the ethnic makeup of the markets you sell to."
The CPG giants have caught on, as well, adding lines of ethnic HBC products to their already prolific number of brands and developing marketing programs around them. In addition to L'Oreal, both Procter & Gamble and Unilever have strengthened their presence in the ethnic market. In April of last year Unilever created the new position of multicultural marketing manager to drive multibrand initiatives while helping brand teams develop ethnic strategies, plans, and programs.
Just two months later P&G announced the expansion of existing relationships with two African-American advertising agencies to support the company's continuing efforts to reach African-American consumers. Included among its brands is Texture & Tones, a new beauty care line aimed at meeting the needs of African-American women.
Also, P&G's Pantene brand now includes Relaxed & Natural, which was specifically created for women of color.
The result is greater attention to ethnic-specific products, due to these company's vast monetary resources. The money these companies put behind research and development will result in the creation of many new products, and such companies' strong advertising and marketing capabilities will help to drive sales to the category as a whole. "This will definitely have a positive impact on the ethnic HBC market," Nevaer notes. "We should expect to feel the impact of this within the next 12 to 36 months."