Within the specialty actives market, consumers are often the trend-setters. A growing consumer understanding of active ingredients in personal care products driven by extensive media coverage is compelling active ingredients manufacturers to innovate. The desire to look younger has raised consumer expectations regarding efficacy of active ingredients, resulting in functionality becoming increasingly important. Consumers expect results, and this is reflected in the trend towards more effective skin care products where validated active ingredients are the key. Consistent above average growth rate in active ingredients in general, particularly specialty actives, is the consequence. Nikola’s presentation will explore new trends in the specialty actives market and the parallel between consumer demands for skin care products and actives offerings. An overview of the present global active ingredients market and its outlook will also be discussed.

Hear Nikola speak on Opportunities in Skin Care: Exploring Specialty Actives at in-cosmetics Barcelona, April 17, 2012 at 10:30AM in the Marketing Trends Theatre.

Likewise, Clarisonic is a logical acquisition candidate. It is the #1 brand in the explosive $1 billion at-home skin care devices market in the U.S. It has the unique premise of sonic technology in addition to being fashion-forward and trendy. As we had predicted in our recent market research report, At-home Skin Care Devices 2011: U.S. Market Analysis and Opportunities, the market is ripe for acquisition activity, and we are happy to see L’Oréal be one of the first to make a move here.

There is a lot of potential for Clarisonic under its new owner. L’Oréal has strength in globalizing once-local brands, as it has done with Maybelline and Redken. The devices market is flourishing all over the world and is particularly advanced in Asia (which Kline plans to examine in the next edition of our study), so Asia could be a next logical step for Clarisonic.

Essie is another good example of Clarisonic’s potential at L’Oréal. In just a little over a year from its acquisition, Essie’s share of the U.S. mass nail polish market has reportedly grown from virtually nothing to more than 10%. L’Oréal clearly recognized Essie’s potential and quickly married it with the booming nail polish market to successfully generate quick results.

Clarisonic has strong potential in its own right. Its patented sonic technology is unique and could be extended beyond cleansing and anti-aging to other skin care concerns, perhaps at different price points and in different channels under L’Oréal’s other brands like Vichy or Garnier.

This definitely seems like a good match and we believe it is a win-win for both L’Oréal and Clarisonic.

Sales of cosmetic and toiletry products through alternate channels have exploded over the last five years, fueling a 5.2% growth in direct sales that is outpacing the total market more than three-fold. While conventional person-to-person sales are declining gradually since 2005, multi-media driven channels have snapped up sales, with e-commerce growing by more than 26%, home shopping networks up nearly 20%, and infomercials posting just over 17% growth. This upward trend is expected to continue as mobile technologies, social media, and online deal-hunting converge to help bricks-and-mortar and direct sales-only retailers reach a wider, more diverse, and engaged audience.

Manufacturers’ Sales of Cosmetics and Toiletries by Retail Channel, 2005 and 2010

Faced with increasing competition from alternate channels, bricks-and-mortar stores have looked to physical enhancements to their retail space to build beauty momentum, with upgraded fixtures, increased floor/shelf space, and expanded brand lines. However, while all this revamping has spurred some sales, particularly in the drug store channel, bricks-and-mortar growth remained paltry in comparison to alternate channels. This begs the question: if you can’t beat ‘em, why not join ‘em? Rather than continually try to reinvent themselves to draw customers out of their homes and into the store, perhaps bricks-and-mortar retailers should take a lesson from the alternate channels and look at ways to leverage the tactics that seem to be working so well.

Online Channels Open New Doors
The omnipresence of the Internet combined with the convenience of online shopping have drawn beauty customers to the web in droves. The channel also enables retailers to reach a huge audience with incredibly affordable marketing tactics.

Online stores connect easily and seamlessly with free social media networks like Twitter and Facebook that can be used to build a following, connect with shoppers, and grow loyalty with easily distributed discounts, “how to” tips and other useful content, and special members-only deals. YouTube videos that demonstrate how to use and/or apply products, show before/after results, and incorporate testimonials offer a multi-media appeal that engages shoppers and overcomes the physical/tactile barrier of the Internet.

Some of the big players are working the online angle, but there is definitely room for expansion. RiteAid.com, Walmart.com, and Macys.com now offer e-commerce beauty sales, and Walgreens’ recent purchase of drugstore.com is obviously aimed at capturing this channel. In fact, Walgreens is even experimenting in some markets with a “double-play” of sorts: letting consumers buy online, then pick up their purchases in-store in a bid to work both channels.

However, none of the major retailers seem to have fully tapped the social media potential as of yet, at least specific to their beauty lines. With this option in place, retailers could even easily run their own flash sales (similar to HauteLook, Rue La La, and Gilt Groupe), Tweeting and Facebooking deep-discount, exclusive offers to fans and followers with a built-in sense of urgency that spurs consumers to act now to get in on the special limited-time-only offer.

The Power of the Demo
With more consumers staying at home, either by virtue of unemployment, telecommuting, or simply going out less to save money, the Internet was not the only place for beauty purchases. This dynamic has also helped to boost sales for home shopping networks like HSN and QVC. Combining product quality, value, and selection with information and entertainment, this channel is becoming a growth-leader in the beauty business, leveraging how-to-use and product application demos as an incredibly powerful sales tool.

With a storytelling platform that focuses on problem solving, home shopping channels are able to create a personal connection with consumers, weaving expert advice and customer testimonials into the presentation to help drive viewer engagement and sales in a way that straight-up traditional advertising never could. Luxury brands like Elizabeth Arden and Shiseido have worked with HSN to leverage the power of the demo with special packaging and other promotions exclusive to HSN shoppers, and earlier in 2011, Lancôme launched a new eye cream exclusively on HSN for a limited engagement specifically to demonstrate the product.

But, devoid of a massive television audience, how might bricks-and-mortar retailers leverage the power of the demo to beef up beauty business? In fact, Duane Reade is already making headway with its urban-located Look Boutiques boasting full-time beauty advisors, in-store aestheticians, and other on-site beauty services. The chain (now owned by Walgreens) is banking on its interactive motif, premium brands and upscale décor to attract more shoppers and build beauty sales. Other retailers could launch a similar approach, even if on a limited engagement: a Saturday morning Covergirl eye makeup demo at Rite Aid, for example, or a Lancome-sponsored anti-aging clinic at Macy’s.

Infomercials Tell the Story
Infomercials have also emerged as a beacon of growth in the beauty business. Combining effective storytelling with contemporary celebrity spokespersons, endorsements and abundant customer testimonials, Guthy-Renker is the industry’s powerhouse having pioneered the channel and launched many well-known and successful beauty brands, including ProActiv, Meaningful Beauty, Natural Advantage, Youthful Essence and Wen by Chaz Dean. In fact, its ProActiv acne treatment formula is the company’s largest selling product with $310 million in sales for 2010 introduced through infomercials.

Leveraging the same powerful storytelling model as the home shopping networks, infomercials take a truly multi-channel approach that offers consumers virtually unlimited purchase options. For example, Guthy-Renker’s ProActiv is available through toll-free numbers flashed during the 30-minute spot, by mail order through direct response cards tucked into magazines and coupon mailers, online at the company’s website (complete with video testimonials snipped from the full-length infomercial), and even at vending machines positioned strategically at shopping malls throughout the country.

Without a doubt, diversification is the most powerful lesson for retailers to learn from the infomercial model. The industry has managed to create multiple consumer touchpoints and purchase channels that have made it incredibly easy for consumers to buy no matter what their media preference or location. It is exactly this kind of ubiquity that consumers crave, and retailers must evolve to provide in order to catch shoppers at every available opportunity. stry has managed to create multiple consumer touchpoints and purchase channels that have made it incredibly easy for consumers to buy no matter what their media preference or location. It is exactly this kind of ubiquity that consumers crave, and retailers must evolve to provide in order to catch shoppers at every available opportunity.

The Marriage of Fun and Function
Perhaps more effective than the specific tactics employed by the alternate channels is the overall strategy: make it easy, fun and entertaining to buy. By integrating social media and interactive tools to engage customers in conversation, reach into their homes, and permeate their daily lives, alternate channels are appealing and effective for their immediate call to action and effortless purchasing options that reduce friction for consumers. By taking a lesson from the best practice tactics of the alternate channels, traditional beauty retail channels can use these same tools to marry fun with function and hold onto market share in the digital age.

Karen Doskow, Industry Manager, Consumer Products

Most consumers are completely unaware of the critical role excipients play in delivering the beneficial medicines millions rely on to fight diseases and stay healthy. Yet it is the fillers, binders, disintegrants, lubricants, and coatings that ensure the accurate, timed delivery of drugs required to safely maintain optimum active ingredient levels in our system and give the OSDF drugs we take every day their palpable size, texture, and flavor.

With average growth forecast to exceed 4% through 2015, the excipients market for OSDF is expected to keep pace with the 6% growth on the pharmaceutical horizon. While the two industries commonly track together for obvious reasons, the volume-based excipients market typically lags the value-based drug market.

Challenges at Home and Abroad
U.S. excipients manufacturers are facing some formidable new challenges. Consolidation in the pharmaceuticals industry is beginning to shrink the number of potential customers as merged/acquired drug makers tap into pre-existing supplier agreements with their new partners. Increased focus by the U.S. Food and Drug Administration on the quality and documentation of OSDF clients is resulting in tighter regulation and oversight.

Meanwhile, growth in the outsourcing of drug manufacturing to lower-production-cost countries in Southeast Asia and South America is whittling away at domestic market share. And, in the fillers/binders business, a run-up in the price of pulp, particularly carboxymethylcellulose, is driving up the cost of cellulosics and contributing to the shift of manufacturing/tableting operations to developing markets like India and China.

Stable Market Drives Steady Growth
Despite these challenges, the competitive landscape and overall market remains quite stable. For the most part, there is stability at the customer base, as drug makers are prone to sticking with a formulation that works, rather than make changes and risk alterations in the safe delivery, timed release or effectiveness of their product. Foreign competition from imported excipients remains a minor concern, as most manufacturers are hesitant to switch to more cheaply made Asian ingredients over fears of specification adherence, as well as the real or imagined risk of reduced quality or issues such as radiation contamination.

With the market for generic drugs still going strong, thanks in large part to the recession and continued weak economy, this tried-and-true formulation business has enabled excipient manufacturers to worry more about maintaining market share and less about technological innovation. However, as the economic cloud lifts, excipient manufacturers are shifting their attention back to R&D, working to develop new formulas to optimize drug delivery for the patient and manufacturing processes for drug makers.

Innovative Coatings, Disintegrants Support New Drug Systems
One of the most quickly evolving areas is the formulated coatings business, where interest is growing in both instant- and controlled-release products. Instant-release coatings enhance the drug flavor, making them more palatable, and enable the rapid delivery of medication to speed relief of pain and other symptoms. On the other end of the spectrum, it turns out some patients are not very compliant about taking their maintenance drugs when they should. Controlled release products that combat this problem and deliver sustained effects are also growing at about 5.5%.

Another fascinating area of growth and innovation is the disintegrants market, which is expected to add 5% over the next four years. By enhancing the rate at which the drug is made available to the body, these agents play a critical role in disintegration of the tablet as well as dissolution of the active ingredient. For the patient, it is the disintegrant that enables tablets and capsules to pack a powerful punch of medication in a tiny form that is easier to swallow, particularly for children and the elderly. The demand for rapid-relief, fast-melt tablets is driving 6% volume growth in crospovidone, which has become the disintegrant of choice for its better solubility and functionality compared to sodium starch glycolate and croscamellose sodium.

Blends: The Next Big Thing
Without a doubt, the biggest opportunity in the oral solid-dosage-form is in the development of custom-blended products that provide a one-stop-shop supply for drug makers. Pharmaceutical makers are eager to optimize their processes and reduce production. Customized blends or packaging programs that include a binder, filler, disintegrant, and coating specifically designed for the clients’ drug delivery goals allow the drug manufacturer to have greater control over their active ingredient, and save time and money in the blending process.

The problem is most excipient suppliers are not set up for this kind of broader service and customer-intimate relationship. In fact, the majority is very product-centric, and the industry as a whole is quite siloed in terms of expertise. However, this environment is actually quite perfect for strategic partnerships and alliances with non-competing suppliers of complementary products to meet drug makers’ more specific needs.

In fact, we’ve already seen early signs of this trend with the 2007 “controlled release alliance” between Dow and Colorcon. The deal, aimed at providing a broader solution set and more agile product development to drug makers, combines Dow’s expertise in controlled-release cellulosics with Colorcon’s proven experience and deep portfolio in the formulated coatings business.

Calling the alliance, “a natural progression for both companies in providing increased value to the pharmaceutical formulator,” Colorcon VP Jim Coward also accurately characterized the opportunity in custom blends for the entire industry. It is a natural progression that will no doubt better meet the needs of the market and provide for exciting innovations that will drive growth for years to come.

Anna Ibbotson, Industry Manager

Specialty Actives and Delivery Systems in Personal Care 2011: Europe Market Analysis and Opportunities

Join us for an insightful presentation focused on the European market for specialty actives and delivery systems in the personal care industry!

We Will Share:
• Key findings about the size of the specialty actives and delivery systems market by product category and application
• What are the growth prospects within each region and application for specialty actives and delivery systems?
• Who are the leading suppliers?
• What are comparative pricing differences for each product?
• Which new products have entered the marketplace, and from whom have they taken market share?

Who Should Attend:

This webinar will help attendees understand the evolution of the market and the opportunities and threats represented by these categories.

To register for this event, please click on the button below.

Sunday morning the PBA Symposium kicked off with a keynote address by Stedman Graham. I was a bit star struck the day earlier when I bumped into Stedman (yes, Oprah’s man!) while checking in to the hotel.

Stedman had always stayed out of the spotlight when it comes to Oprah, so I was unsure what he would be talking about and how it would pertain to professional beauty. I was quite impressed by what was a very powerful talk. He outlined his nine-step plan to success, which is described in detail in his book. Along the way he described the various steps—know yourself, define your vision, understand your obstacles, build a cheer team—while adding in some personal experiences and tailoring the message to the beauty industry.

When Stedman got to the step on Information and Knowledge—it really struck a chord with me. He stressed the importance of being an expert in your field, understanding the dynamics that affect your business, and knowing what your competition is up to. It is this precise kind of knowledge and insights that we at Kline are always striving to provide to our clients.

The rest of the show was a stream of meetings and meals with various clients. This was my favorite part of the trip as it is always exciting to engage with our clients to find out what they are up to and how we can help them. We discussed Kline’s plans to begin delivering quarterly data in the coming year, which was well received by everyone.

I also enjoyed walking the floor for trend spotting purposes. I saw many exciting products and brands which I look forward to examining further in our next round of market research reports. I also got some ideas for new topics to start reporting on; I plan to announce details about these in the fall. Kristy and I also got our hair “blinged” with some sparkly strands and crystals.

I have no shortage of words to describe the show—uber stimulating, informative, exciting, exhausting, worthwhile—and am glad to have attended.

We will be sharing valuable data and insights from our personal care, home care, healthcare, and chemicals reports. These webinars will not only provide you with an excellent view of the entire value chain, but will also explain the benefits of Kline’s highly reliable and helpful reports, which are unmatched in the scope and detail of their coverage.

	Beyond the Lotions - Tuesday, July 19, 2011, 09:30 AM EDT – Today’s skin care market offers a wide range of products that are becoming increasingly customized to meet individual needs. To see and compare how these products perform, attend this webinar covering skin care markets across all channels, and uncovering the latest insights on the emerging market of at-home skin care devices in the United States.  REGISTER
	Which Cosmetics and Toiletries Sell and Why? – Wednesday, July 20, 2011, 09:30 AM EDT – Want to learn  where consumers shopped for cosmetics and toiletries, and which products performed or lagged behind in this competitive market? Did value-oriented retailers perform better than usual in today’s economy? Or how are upscale retailers tackling the change in consumer spending habits? All this will be discussed in the webinar focusing on the cosmetics and toiletries market and retailing in the United States. REGISTER
	Clean and Fragrant Homes Boost the Market – Tuesday, July 26, 2011, 09:00 AM EDT – Cutbacks on travel and dining out have driven a growing number of consumers to reinvest in their homes to make them a more welcoming and inviting space. The escape-to-home trend sent the U.S. home fragrances and the household cleaning products market into recovery mode back in 2009. See what happened in 2010, and where the market will go in 2011 in this webinar. REGISTER
	Anti-ageing Remains Key for Specialty Actives – Wednesday, July 27, 2011, 09:00 AM EDT  - Functional activity has become a key marketing focus for skin care in recent years. An array of actives for skin care have been rolled out by raw materials suppliers sourced from plants through to biotech-based ingredients. In this webinar, learn about the market for specialty actives, namely those used in cosmetic applications for anti-aging, anti-acne, anti-inflammatory, and so on. REGISTER
	Natural OTCs and Private-label OTCs Thrive in 2010- Wednesday, July 27, 2011 , 11:00 AM EDT -  During 2010, price-conscious consumers turned to private-label OTCs and the market for natural OTCs is also becoming a threat to traditional OTCs.  Kline’s in-depth look at the natural OTC segment reveals that the market for these products was up nearly 6.0% in 2010 while sales of traditional OTCs were flat.  The relative size of natural OTCs compared to traditional OTCs and revelations on how consumers use natural OTCs will be shared at this informative webinar. REGISTER

I kicked off the session by sharing some highlights and data from our recently-published market research studies. I focused on the latest trends and developments which have helped the industry to recently rebound. Along the way I reviewed the hottest categories and brands, competitive landscape, channel shifts, and future outlook. My presentation can be found by clicking here.

Two different product development specialists followed me—one from a leading personal care manufacturer, Jennifer Giannotti-Genes from Colgate-Palmolive, and one from a smaller branding agency, Kelly Kovack of Purpose-Built.  It was interesting to hear their contrasting points of views and unique challenges they each face while tackling similar challenges. They each stressed the importance of not redesigning for the sake of design, having the courage to stand behind your ideas, and being true to your brand.

Russ Napolitano from Wallace Church moderated the session and added insights from a branding strategy point of view along the way.

The audience members walked away with a better understanding of the industry dynamics and issues they should take into consideration as they look to develop their own brands and businesses.

While water treatment is the leading volume application group for biocides, Mexico’s dynamic biocide market is also being boosted by increased awareness for health, safety, and environmental concerns. Since the recent widespread outbreak of the H1N1 virus in Mexico, stricter hygiene and disinfection practices have been adopted in the consumer and institutional sector, stimulating sales for disinfectants, and sanitizers. Mexico is also the world’s tenth largest car producer and leading companies in the sector, such as Comex, Sherwin Williams, and Akzo Nobel, are establishing new plants, expanding their biocides businesses through the acquisition of minor local players. Read full article here…

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