Specialty Actives: Insights from the Mature Markets Day 1, 14 December
Specialty Actives: Insights from the Mature Markets Insights from the USA and Europe Day 1, 14th December www.KlineGroup.com © 2011 Kline & Company Today’s presentation What is the current situation of the global personal care market? Which are the most important specialty actives used in personal care? What are some important trends driving the personal care market? What is the outlook for specialty actives? © 2011 Kline & Company 1 Kline & Company is a leading management consulting and market research firm, active within chemicals and related industries Kline Market Research Kline Management Consulting Working with individual clients to resolve tough issues and help implement solutions Generating information and insights for multiple clients through syndicated research Managed flow of people, ideas and data © 2011 Kline & Company 2 Today’s presentation What is the current situation of the global personal care market? Which are the most important specialty actives used in personal care? What are some important trends driving the personal care market? What is the outlook for specialty actives? © 2011 Kline & Company 3 Post recession, industry sales have rebounded, thanks to rising consumer confidence, aggressive promotional activity, technological advances, and social media Consumers comfortable spending again Advances in technology © 2011 Kline & Company Social networking enables closer communication with customers 4 Europe remains the largest region, but is losing share to developing markets, in particular China and Brazil Manufacturers Sales, 2005 - 2010 Regional Growth 2010 - 2015 100% India China 75% Latin America C&E Europe Middle East & Africa 50% >7% 4-5 % 25% North America Japan Western Europe 0% 2005 Europe North America Other 2010 <2% Asia Latin America © 2011 Kline & Company 5 Skin care is the largest and fastest growing product class globally Global Personal Care Share by Category Global Product Category Growth (2010) Skin Care Oral Care Hair Care Make Up Toiletries Skin Care Toiletries Fragrance Hair Care Make Up Oral Care Fragrances 0 © 2011 Kline & Company 2 4 6 6 Skin care also outpaces growth in the USA and Europe Development of the European and US Personal Care Market by Category, 2005 to 2010 Volume Growth, % © 2011 Kline & Company 7 Skin care in particular is benefiting from strong growth drivers Growing society pressures and stresses of modern living have made more men and women seek for “Looking good, Feeling good” experiences − Consumers are looking for result-oriented solutions, but at the same time solutions that are not harmful to the skin Simultaneously, customers have placed more attention on personal care and on the products they are using − They are willing to spend more money on personal care products − They have become more knowledgeable about their skin, various skin conditions, and on product ingredients Development of the professional arena increases awareness for specialty actives − The professional arena provides customers with a place that offers trust and comfort − Customers are provided guidance by skin specialists (e.g. estheticians, dermatologists) − Products are often being perceived as being of higher quality than with products for mass brands − Professional outlets offer a place of relaxation and calm © 2011 Kline & Company 8 Today’s presentation What is the current situation of the global personal care market? Which are the most important specialty actives used in personal care? What are some important trends driving the personal care market? What is the outlook for specialty actives? © 2011 Kline & Company 9 The market for active ingredients in personal care consists of five major product categories Active Ingredients Botanicals • Unsubstantiated Extracts • Substantiated Actives Biotechnology Products • Hyaluronic Acids • Ceramides • Others Marine Ingredients • Substantiated Algae Extracts • Chitosan Proteins & Peptides • Botanical • Biological • Synthetic peptides Enzymes & Coenzymes • Coenzyme Q10 • Others © 2011 Kline & Company 10 Botanicals are the most important product category in both the USA and Europe, with sales over EUR 100 million in Europe Market Breakdown by Product Category, 2010 Europe USA a- Excludes unsubstantiated extracts b- Includes synthetic peptides © 2011 Kline & Company 11 Specialty actives in personal care target a wide variety of performance benefits – although anti-ageing functionality dominates DNA protection Anti-aging Energizing Anti-stress Anti-acne Anti-wrinkle Anti-inflammatory Active Ingredients Skin whitening/ lightening Anti-oxidant Moisturizing Skin firming/lifting –Tensors Anti-cellulite Slimming Sun protection © 2011 Kline & Company 12 Anti-ageing accounts for around 60% of specialty actives targeted functionality in Europe and the USA Market Breakdown by Functionality, 2010 Europe USA a- Excludes unsubstantiated extracts b- Includes synthetic peptides © 2011 Kline & Company 13 Anti-ageing functionality focuses on ‘Age Spots, Anti-Wrinkle, Firming, Moisturizing, and Skin Radiance’ Active Type Supplier Trade Name BOTANICALS SOLIANCE TEPHROLINE INDENA XILOGEL SEDERMA MOIST 24 CPN/CONTIPRO HYACTIVE MIBELLE SILAB PHYTOCELLTEC MALUS DOMESTICA STEM-C-GUARD LIPOTEC ADIFYLINE SEDERMA MATRIXYL SYNTHE’6 ISP VINCIENCES COLLAXYL IS BIOTECHMARINE ANTILEUKINE 6 CODIF PHYCOJUVENINE VARIOUS UBIQUINONE BIOTECHNOLOGY PRODUCTS PROTEINS/PEPTIDES MARINE INGREDIENTS ENZYMES / COENZYMES © 2011 Kline & Company 14 Today’s presentation What is the current situation of the global personal care market? Which are the most important specialty actives used in personal care? What are some important trends driving the personal care market? What is the outlook for specialty actives? © 2011 Kline & Company 15 Specialty active suppliers usually use a combination of direct sales and distributors to reach personal care products marketers Industry Structure, 2010 From a market segment to another, the industry structure can be slightly different, however similarities exist Suppliers of high volume, or pseudocommodity products such as some protein hydrolyzates, use distributors more often than suppliers of highly specialized products which require more technical support to customers Most of the leading suppliers of specialty actives are based in Europe Specialty Actives Suppliers Distributors Personal Care Products Marketers Consumers © 2011 Kline & Company 16 Green remains at the forefront of the industry Companies are moving toward being “green” and shifting focus towards being sustainable and socially responsibility Areas of focus include: − Raw material sourcing − Packaging − Review of manufacturing processes − Social responsibility Leaders within sustainability include: Naturals trend is inherently linked with sustainability © 2011 Kline & Company 17 Manufacturers need to explore other areas for growth Innovation has slowed in some categories, as the industry waits for the next mega-trend: − Naturals − Home devices − Beauty from within − Men’s grooming Efforts are directed towards improved product formulations and product packaging to drive sales DermaPlus’ DermaLastyl-β Concentrated Skin Rejuvenation Formula Incorporating technology developed for “wound healing on the battlefield” © 2011 Kline & Company 18 What trends are occurring at the brand level? The majority of focus in the skin care product class is directed towards maintaining a youthful appearance − Anti-aging and acne treatment products continue to be in vogue EXAMPLE: Kinerase C8 Peptide Intensive Treatment “Reduces the depth and appearance of wrinkles caused by repetitive facial expressions up to 34.9%” Contains: − SNAP-8: a neuropeptide − Kinetin: antioxidant − Stabilized vitamin C − Green Tea Eco − Vitamin E − Beta-glucan − Hyaluronic acid © 2011 Kline & Company 19 Example of a skin care product sold through the luxury channel La Prairie Cellular Cream Platinum Rare “Skin transforming formula that recharges the skin’s electrical balance with pure Platinum to ensure ageless performance, protects the skin’s DNA, and replenishes moisture continuously for a look of soft splendour” Contains: − Nano-sized particles of negatively charged platinum suspended in colloidal platinum water (reportedly serves as an electron donor to maintain a proper electrical balance in the skin) − Active cocktail (peptides, vitamins, and antioxidants) − Controlled-release nano-sized heseperidin Smart Crystals to protect DNA in the cell nucleus and act synergistically with Resveratrol for antioxidant protection and improve microcirculation in skin − Climate-activated Moisture Matrix which adjusts to humidity and temperature EUR 700 / 1.7 ml © 2011 Kline & Company 20 Example of a skin care product sold through the masstige channel Lumene’s Excellent Future line of antiaging skin-care products “Prevent and delay damage from surfacing, and help prevent the formation of wrinkles and to smooth the appearance of wrinkles that has already formed.” Contains ApplexcellT an apple extract protecting skin’s stem cells. EUR 25 / 50 ml © 2011 Kline & Company 21 Example of a skin care product sold through the professional channel Mary Cohr’s Crème Spécific Rides “The ultra-comfortable fluid texture is specially designed to plump out wrinkles from the inside and to give the skin new elasticity. The skin is visibly younger.“ Contains: − Apricot Kernel Oil − Hydrolyzed wheat protein − Sodium hyaluronate − Ginkgo Biloba Leaf Extract − Hexapeptide-1 EUR 40 / 50 ml © 2011 Kline & Company 22 Example of a skin care product sold through the direct channel Oriflame’s Ecollagen 3D+ Anti-Wrinkle Day Cream “Brings firmness back and re-pumples wrinkles from within.” Contains: − Tri-peptide complex − Hyaluronic acid EUR 20 / 50 ml © 2011 Kline & Company 23 Today’s presentation What is the current situation of the global personal care market? Which are the most important specialty actives used in personal care? What are some important trends driving the personal care market? What is the outlook for specialty actives? © 2011 Kline & Company 24 Due to an increased demand for activity and efficacy, the specialty actives market is expected to grow faster than the personal care industry Market Drivers and Constraints Influencing the Specialty Actives Market, 2010 Overall growth of the personal care market Demand for natural-inspired personal care products boosts the consumption of suitable actives Demand for sustainability could represent an issue for some of the products considered such as botanicals or marine ingredients Increased demand for proven product efficacy Ageing of population REACH and other regulations may represent a challenge for innovation © 2011 Kline & Company Increased demand for product activity Personal care market is reaching maturity in Europe and the USA 25 The specialty active market in Europe is expected to grow at an average annual rate of 4.6% per year between 2011 and 2015 Value Growth by Product Category, 2011 to 2015 Value Growth Rate, % © 2011 Kline & Company 26 Sun protection is forecast to develop at the fastest rate, whilst antiaging actives will continue to take advantage of solid growth drivers Value Growth by Functionality, 2011 to 2015 Value Growth Rate, % © 2011 Kline & Company 27 Markets adjacent to specialty actives are also benefiting, for example delivery systems Delivery Systems Market Growth, 2007-2010 Following growth of 7% since 2007, the European market for delivery systems in personal care is valued at Euro 81 100 80 CAGR (2007-2010) = 7% 60 40 20 0 2007 2010 Liposomes and Others Microcapsules © 2011 Kline & Company Millicapsules Others 28 Opportunities for specialty actives will continue to come from a variety of sources Naturals Naturals Skin SkinCare Care Men’s Men’sGrooming Grooming Delivery systems Specialty actives Traditional Ingredients Chemical/polymer Chemical/polymer science science Fixative polymers, delivery systems Drug Drugdevelopment development Synthetic peptides, stem cells, and other actives © 2011 Kline & Company Food Food Vitamins, antioxidants, actives 29 Today’s Presentation Thank you for attending today’s presentation © 2011 Kline & Company 30 With over 40 years activity in this industry, our personal care domain expertise covers the whole value chain Personal Care Value Chain Direct Direct Basic Chemical Supplier Personal Care Raw Material Supplier Personal Care Raw Material Distributor Direct Contract Manufacture Brand Owner Antimicrobials Conditioning polymers Emollients Film formers Hair fixative polymers Rheology control agents Skin whitening agents Specialty actives Specialty delivery systems Specialty and commodity UV absorbers Consumer Finished Goods Distributor Direct Direct Fragrances Hair care Makeup Nail care Oral care Skin care Toiletries © 2011 Kline & Company Retail Department stores Direct sales Drug outlets Food stores Mass merchandisers Pharmacies/ perfumeries Salons Spas/beauty institutes Specialty stores 31 Data in this presentation is sourced from: “Specialty Actives in Personal Care 2011” Reports available in the series: Specialty Actives in Personal 2011 Europe USA Japan China Brazil Data is also accessible via an interactive online database © 2011 Kline & Company 32 Kline is a worldwide consulting and research firm dedicated to providing the kind of insight and knowledge that helps companies find a clear path to success. The firm has served the management consulting and market research needs of organizations in the chemicals, materials, energy, life sciences, and consumer products industries for over 50 years. For more information, visit www.KlineGroup.com. If you require additional information about the contents of this document or the services that Kline provides, please contact: Anna Ibbotson Industry Manager, Chemicals & Materials Phone: +44-1865-487-160 E-mail: [email protected] Pilar Pardo Senior Account Manager +32-(2) 776-0737 [email protected] Kristina Zablecke Account Manager +32-(2)-776-0736 [email protected] Michelle Klement Account Manager +1-973-435-3368 [email protected] Americas ____________ Asia ___________ Europe ___________ Kline & Company, Inc. 35 Waterview Blvd. Suite 305 Parsippany, NJ 07054 Phone: +1-973-435-6262 Fax: +1-973-435-6291 www.KlineGroup.com © 2011 Kline & Company 33
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