Haircare growth is patchy

Shampoo sales are flat, so manufacturers are having to turn to styling products and smaller, premium packaging, to increase market value

Product launches and innovation have helped the UK haircare market to maintain growth. The market, comprising shampoo, conditioners, styling products and hairsprays, was worth more than £712m in grocers and chemists for the year ending August 2002, according to the latest Information Resources (IRI) research. This represents growth of one per cent.

Although market prices are down across all sectors, a trend towards smaller – and proportionately more expensive – packs continues. This is most noticeable in styling products, where smaller, premium-priced packs continue to perform well. Consumers will pay £2.22 on average for a styling product, but only £1.74 for a shampoo.

Shampoo remains the key haircare sector, accounting for 41 per cent of sales. Although sales have remained flat year on year, even this is a marked improvement on the declines of last year. Medicated shampoos are offsetting a decline in the two-in-one shampoo sector. Sales of medicated shampoos are driven by traditional brands, such as Procter & Gamble’s Head & Shoulders, and not by anti-dandruff variants of other beauty brands.

Conditioners are performing well (sales up four per cent year on year) and making some gains as consumers shift away from two-in-one shampoos. Convenience appears to be declining in importance, with the two-in-one market now accounting for only 19 per cent of the overall shampoo market, with sales down seven per cent year on year.

Only 50 per cent of people buy conditioning products, which presents an opportunity for growth if brands can persuade more consumers into the market. Taylor Nelson Sofres purchase data shows that on the occasions when people buy a shampoo and a conditioner at the same time, they are more likely to pick up the shampoo and conditioner from the same brand.

Promotions continue to be popular in the haircare market and the volume sold as part of promotional deals has increased year on year. Over half of conditioner sales by volume are through promotions. “Multi-buy” offers have proliferated in both the shampoo and conditioner sectors, with a quarter of volume in both these markets sold through such offers. The continuation of such heavy promotion continues to encourage consumer switching and hampers brand loyalty.

The key manufacturers in the market remain the same, but through company acquisitions, the major players are continuing to expand. Procter & Gamble, now incorporating Clairol, is the largest manufacturer with a 21 per cent market share by value and sales up by 1.2 per cent. The L’Oréal group (which includes Garnier) follows with a 16 per cent share, but sales are declining at four per cent year on year as the Elvive brand suffers, despite continued support and price cuts in shampoo.

Of the top manufacturers, Wella shows the strongest growth, benefiting from the launch of Vivality in 2001. This was soon followed by Lever Fabergé’s Dove at the start of this year. Although both made an impact on existing brands, these launches have failed to add any true growth to the market. However, Dove has contributed to Lever Fabergé’s strong overall performance this year.

Haircare consumers tend to shop for promotions and new products. Perhaps influenced by assertions that shampoos need to be changed regularly, or possibly because of the glut of multi-buy promotions of the late Nineties, consumers are now much more fickle than in the past. Whatever the cause, IRI has found that new brands have made life more difficult for established beauty brands such as Elvive and Lever Fabergé’s Organics as consumers continue to experiment.

Perhaps the only area of haircare where new product development can drive growth is styling. Styling now accounts for 21 per cent of the haircare market. New launches have included Spritz from Fructis, with its spray-gel format, and mud and clay products from designer manufacturers. Styling products still have relatively low penetration – only 45 per cent of consumers purchased styling products in the year to August. This compares with 79 per cent who bought shampoo, suggesting there is still plenty of opportunity to capture non-users.

The trend across haircare is to add value to the market. This is happening through a shift away from convenience products to larger haircare product repertoires, and innovation in styling and conditioning. The market’s focus has returned to beauty, while consumers continue to switch to find new and improved brands. With shampoo in almost every British home, marketers will need to focus more on styling and looks, rather than the functionality of cleaning.

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