The success story of the natural personal care segment continues, with growth in the double digits since 2005, the year Kline first initiated in-depth research of the market. And yes, there has been a slight drop in growth since then during recession years in some regions, but it was negligible in comparison with other markets. What’s more, this double digit growth is forecasted to continue through 2015, of course with various deflections happening in each region. But overall, unless something dramatic happens, there will be steady growth.
One aspect of the market which has shown unsteadiness is the degree of naturalness in products. When Kline first took the initiative to investigate the market, it was a big challenge to make a distinction between natural and non-natural products. There was a plethora of companies who were marketing both natural-inspired and truly natural products. There were also marketers who were marketing their non-natural products as natural by just making a few changes in their packaging such as wrapping their products with green labels or green colored bottles.
In an attempt to clear up the confusion, we have developed a system that groups naturals in two different segments: natural-inspired products and truly natural products. With this principle, Kline has come a long way to segment the naturals market as accurately as possible. When we first started exploring the market, it was dominated by natural inspired products. Today natural-inspired products continue to dominate the global natural personal care market, accounting for 76% of sales.
An increasing number of brands reformulated their products in 2010 to move into the truly-natural segment from natural-inspired, or to get some of their product lines certified. There is an exception in some Asian countries where, as part of recession strategies aimed at cost reduction, marketers’ focus on natural-inspired products has increased and natural-inspired products have dominated new product activity in 2010. In Europe, the growth rate of truly natural brands continues to increase and to outpace the one of natural-inspired brands. Also, in the United States marketers are speeding up the reformulation process to move from natural-inspired to the truly natural segment.
Although there is a trend for reformulating towards truly natural products, we expect more mainstream brands to enter the “nature-inspired’ segment boosting the segment’s growth.
Several certifying agencies are taking initiatives to regulate the market. The biggest challenge for the certifying agencies is to scan every product to check its naturalness. Furthermore, there are only a few marketers that approach the certifying agencies to get their products evaluated and assessed.
In many Asian countries marketers are not required to even list product ingredients on the packaging. Lack of certification and government regulations are encouraging marketers to formulate pseudo-natural products. Even though there is a tendency for some companies to go ahead with certification in order to differentiate themselves from their competition, the process is still in its early stages.
An increasing number of certification bodies are starting operations in Brazil (attracted by the great opportunities for growth in the Brazilian naturals market), improving the standards of certifications available in the country.
Unlike certifications in Europe, the certification process in the United States is fairly unstructured. However, with growing awareness among consumers and marketers about the need to certify, several products have entered the market in 2010 with natural certification from USDA Organic or Europe’s Ecocert seal. The U.S. market lacks a uniform standard for the naturals market although there are several certifying agencies and associations including the USDA, NPA, NSF, and OASIS.
With a wider availability of natural ingredients, the truly natural segment will be growing in order to attract more consumers and get certifications. However, over the years we spent investigating the natural personal care market, we have realized that natural-inspired and truly natural products are equally important. We think that in the entire value chain of the naturals segment, marketers of natural-inspired products play an equally important role as the marketers of truly natural products. There are, and there will always be, consumers for both truly natural and natural-inspired products.