HEALTH, BEAUTY LINES BLUR, SAYS P&G 2004-07-19 (1)

Dan Alaimo

CINCINNATI -- Procter & Gamble predicts a further blurring of the lines between health and beauty products, company executives said during a recent media briefing here.

"We have developed a core appreciation for the inner relationship between health and beauty," said Scott Mautz, associate director, health care, North American market strategy and planning. One example is skin care products that integrate health and beauty components. Another is oral care products, such as whitening toothpastes, he said.

Several years ago, "toothpaste was toothpaste -- it was about healthy teeth. That has all changed now," Mautz said.

"We have products in skin care now that not only regenerate dead skin cells but help return the glow to your face and make you beautiful again. Nutraceuticals have exploded, and depending on the particular brand and what the nutraceutical does, they also straddle the line between health and beauty," he said. Nutraceuticals can be either pills or pharmaceutical products with nutritional value, or a food with nutritional value enhanced by pharmaceuticals.

Consumers believe that being at their best now means looking good and feeling good, Mautz said. "We hear time and time again in research with consumers that there is this constant struggle to find an inner and outer balance, to blend these elements into a healthy lifestyle. We honestly believe that the retailer who can figure that out and crack that code in partnership with the right manufacturer is going to be positioned to really win. The products offered in today's marketplace are blurring the lines between health and beauty and accelerating that trend."

Health and beauty products have become a clear focus at Procter & Gamble and now represent 41% of the company's sales, a company spokeswoman told SN. As a result, the company "has arrived" as a player in the HBC business, Mautz said.

Meanwhile, the P&G executives applauded retailers that are taking advantage of HBC's potential. For example, some chains -- like Giant Eagle, Hy-Vee, H.E. Butt Grocery Co. and others -- are starting to put such products into a merchandising environment that emphasizes the integration of health and beauty. "That's a huge opportunity," said Jim Flannery, director, global customer development.

"I'm seeing lots of conventional grocery retailers starting to redefine themselves in the health and beauty care category. Much like over the last several years, they've turned perimeter departments like produce, meat and bakery into something very special. They are starting to do the same thing with health and beauty care," Flannery said.

Reuben Carranza, director, beauty and feminine care, North American market strategy and planning, noted that shoppers of traditional supermarkets are already stocking up in these categories, but probably doing it in other channels. "It's fantastic that our supermarket retailers are focusing on this," as it puts more items in the shopping baskets, taking advantage of the "real estate capital intensive environment" that most supermarkets are in, he said.

Consumers want what P&G calls "integrated health and beauty care shopping," Mautz said. "They are looking for solutions in products that help them to weave their needs together very easily and help them enjoy the shopping experience."

Additionally, consumers are "incredibly empowered" today. Because of the Internet, shoppers are coming into retail outlets armed with information about the health and beauty care category, he said.

"This is a tremendous change from even 10 years ago and it is changing the dynamics of what retailers need to provide and deliver on to win at health and beauty care," Mautz said.