Retailer private labels are the major winners in the European natural cosmetics market in the current business environment. New research by Organic Monitor (www.organicmonitor.com) shows that private labels of natural & organic products are gaining favour with consumers during the economic slowdown.
Alverde, the private label of DM drugstores, is becoming the leading brand of natural cosmetics in Germany. The German market for natural cosmetics is the second largest in the world, with natural products comprising over 5% of total cosmetic sales. Launched in 2004, Alverde comprises a range of over 300 products, many of which are certified. With many products priced below 2 Euros, some have prices lower than non-natural cosmetic products.
Private labels are also gaining popularity in other countries, such as France, the UK, Switzerland and Denmark. They are also slowly making inroads in other regions. A leading American supermarket launched a range of natural cosmetics this year, with others likely to follow.
Consumers are attracted to the value prepositions offered by private labels: natural & organic products at low prices. Some argue that they are capitalising on natural & organic values, without making any of the associated investment. Indeed, the natural cosmetics industry has been built by pioneering brands, the very same ones that are becoming marginalised as consumers trade downwards.
Slowing market growth rates and rising consumer price sensitivity are popularising retailer private labels. Private labels for natural cosmetics are most evident in Germany where they have been introduced by discounters, drugstores, supermarkets as well as organic food shops. Almost all German retailers that have private labels for organic foods have private labels for natural cosmetics.
Organic Monitor expects the adoption rate of private labels to follow that of organic foods. Retailer private labels have become ubiquitous in the global organic food industry. They are now prominent in every region, dominating many organic product categories. In many countries, private label products are outselling branded products.
Some private labels are transcending traditional boundaries. In the US, the O Organics private label has expanded from Safeway retailers into foodservice outlets. It has also developed an international presence, marketed by numerous food retailers in Latin America, Asia and Africa. Reporting sales above USD 400 million, it has become the leading brand of organic foods in North America.
Could the same happen in the natural cosmetics industry? Could Alverde and other private labels expand outside their retailers as well as into other countries? With demand for natural & organic product continuing to strengthen and consumer price sensitivity remaining, the question may not be ‘could they?’ but ‘when?’.
European Market for Natural & Organic Cosmetics: Future Outlook & Projections (Organic Monitor)