ATTRACTIVE BUSINESS OPPORTUNITY

LAURA KLEPACKI

Supermarkets are awakening to the real dollar potential of ethnic health and beauty care with awareness being driven by sophisticated marketing and the development of quality product lines.

For the first time, Supervalu's Atlanta division will be advertising its ethnic HBC products during Black History Month in February. "It is a great opportunity to tap into an untapped market," said Randy Coleman, category manager.

At D&W Food Centers, Grand Rapids, Mich., "there is definitely an increased demand for ethnic hair care products," said Nancy Landry, buyer. D&W is now working to expand its selection, she said.

The African-American population is expected to rise from the current 32.3 million, representing 12.7% of the population, to 40.1 million accounting for 13.4% of the population by the year 2010, according to the U.S. Census Bureau.

But beyond that, African-Americans, on a per capita basis, spend more on hair care products than their Caucasian counterparts.

Market research data provided by Pro-Line Corp., Dallas, an ethnic hair care supplier, said that while African-Americans account for 12% of the population, their spending accounts for 30% of all hair care products sold.

A category review performed by Supervalu's Atlanta division found that their African-American customers spend 15% to 20% more on hair care than the general market consumer, said Coleman.

Alex Agee, president and chief executive officer of Milani, an Indianapolis-based cosmetics company, expects sales of ethnic skin, hair and cosmetics products to top $730 million this year.

"Retailers want a piece of that tantalizing pie," said Agee. "It is becoming very clear to retailers that the number of African-Americans and Hispanics is growing and the spending power of these two communities continues to grow, so the minor category is becoming a major category."

Mass merchandisers and drug stores outpace supermarkets in sales of ethnic HBC, according to the retailers and suppliers surveyed by SN. But a large share of the market, at least throughout the Southeast, is held by small beauty shops and supply stores, said Coleman.

Meanwhile, Pro-Line has launched an initiative called Pro-Line Focus 2000, a merchandising-support program for retailers.

"A large area of concern for us is having the right kind of information for our retail partners to help us lead to positive change and profitability as it relates to the African-American consumer," said Patricia Bailey, vice president of marketing for Pro-Line.

Pro-Line plans to provide retailers with semiannual newsletters featuring profit-based promotions; merchandising ideas for ethnic products; planograms based on national movement data and other tailored promotional program support.

Bailey said their strategy is based on the typical 80/20 rule. "We want to give the retailers the top movers, and then decide what should make up the other 20% of the dollars," said Bailey. "We look for new items in the industry that build dollar profit into the category, and look at data to distinguish unique items."

She noted that a mailing scheduled to go out this month will include information on consumer usage by demographic groups, and what items should go into an 8- or a 12-foot planogram. "There are over 1,500 items in ethnic health care," said Bailey.

AM Cosmetics, New York, which markets products under the Tropez, Black Radiance and Dark & Lovely brands, recently formed a food distribution task force to develop business opportunities with supermarkets.

"The bulk of our sales are really in the big mass merchandisers and the chain drug trade, but what has happened is that it is a slightly different challenge in the food trade because everything needs to be carded," said Shari Carson, vice president of marketing for AM Cosmetics.

"We understand that women may or may not enter a drug store or the mass retailer, but we know every week she is in the grocery store," said Carson. "So that is an important chain of distribution because our customer is always going to be there."

The company, under its Carson Products division, recently introduced a premier cosmetic line, Dark & Lovely, that is hypoallergenic, oil- and fragrance-free. During its launch this summer, cross-sampling promotions were held, tying in the cosmetics with Dark & Lovely hair care franchise items.

Lori Pennisi, public relations manager for Long Island City, N.Y.-based BioCosmetic Research Labs, manufacturer of the Black Opal cosmetics line, said its stockkeeping units have grown from seven four years ago to a dozen today. And while its distribution is primarily through mass merchandisers and drug chains, it is represented in supermarket chains including Kroger Co., Cincinnati; Raley's Supermarkets, West Sacramento, Calif.; and Dominick's Finer Foods, Northlake, Ill.

Some promotional efforts have included providing in-store make-up artists, while tying in the event with local radio stations via remote broadcasts.

Otherwise, for the past several years, some general market cosmetic brands, such as Cover Girl, have been incorporating color cosmetics for darker skin tones into their traditional product lines.

And there are a handful of other products that cross demographic groups.

The consumer base for Esoterica, a fade cream, is 40% African-Americans, age 30 and up; 20% Hispanics, age 30 and up; and 40% Caucasians, age 60 and up.

To capture the attention of its diverse consumer base and to gain favor with retailers, Esoterica provides separate promotional campaigns and advertising campaigns.

"Our point of difference for a small brand," said Al Springer, director of the consumer product group for Phoenix-based Medicis Dermatology Co., "is we buy a lot of ethnic radio -- and what we do with that radio, most brands don't do. We push extremely hard for large venue sampling events and opportunities to sponsor sampling events."

It has also held radio-station remotes at an H.E. Butt Grocery Co. store to target Hispanic women; and at a Kmart in Los Angeles to target African-American women, said Springer.