Aging Face-Off

CHRISTINA VEIDERS

Formulations that work magic by reducing the visible signs of facial aging were thought to be recession proof with fairly robust sales reported last year.

But sales figures from SymphonyIRI Group, Chicago, for the 52-week period ending Aug. 8, 2010, indicate the $1.4 billion anti-aging body and face segment is sagging with consumer resistance to spend on discretionary items.

When looking at the anti-aging segment, facial product sales far dominate with a 97% share of total dollars spent — $1.4 billion in facial vs. $47 million for anti-aging body products.

Surprisingly, the drug channel, known to cater to consumers looking for anti-aging facial products, posted a 2.3% drop in sales for the period with units off nearly 5%. Food stores, meanwhile, picked up the slack with a 2% gain in both dollars and units.

All channels combined, including mass merchants, but not Wal-Mart Stores since SymphonyIRI does not track sales for the retailer, turned in anemic growth, 0.9% in dollars and -0.9% in units.

“No question that the faltering economy has definitely impacted every buying choice the consumer makes today. We used to think lipstick was also ‘recession proof’ and the numbers have shown us otherwise,” said Kathy Steirly, chief executive officer of Kathy Steirly & Associates, Lincolnshire, Ill., a retail consultant.

The effects of the economy played out in the prestige skincare segment as well last year. The NPD Group, Port Washington, N.Y., which tracks prestige beauty sales, reported a 4% decline in prestige skincare to $2.5 billion with a slight rebound in the fourth quarter of 2009.

NPD reported that the key driver in the quarter's results was basic care skincare, specifically dedicated to sensitive skin, which saw positive growth and outperformed anti-aging growth for the first time.

“2009 was indeed a very challenging year for the beauty industry,” said Karen Grant, NPD vice president and global industry analyst, in a press statement. “And now in 2010, the reality is that business will still be challenging. The other absolute reality is that consumers — as many as three in five women — tell NPD they are buying beauty product because ‘they make me feel confident and better about myself’ even in these tough economic times.”

The retail market for anti-aging products also competes with more costly professional procedures and treatments performed in doctors' offices and at spas, noted researcher Mintel Oxygen in a report on the anti-aging skincare segment, published earlier this year. Such procedures include microdermabrasion, Botox injections, cosmetic surgery and chemical peels.

“This is especially threatening because such procedures tend to have more visible results, last longer than over-the-counter product applications, and require only one treatment every few weeks rather than daily application. Some OTC manufacturers are attempting to stave off this competition by producing ‘professional-level’ products such as Olay's Pro-X (Procter & Gamble). And, while data shows that cosmetic surgeries have declined in recent years, the threat is real enough that manufacturers should continue to launch professional-level products to best compete with these alternative procedures,” Mintel stated in its report.

The recession has only deepened consumers' worry lines, which should boost demand for facial rejuvenation products. But with fewer discretionary dollars to spend, shoppers will naturally search out the best price, look for discount offers or trade down.

Steirly said value remains the driving factor to anti-aging product sales today. “That [value] can be defined as price related, benefit related and shoppability related,” she added.

While sales of anti-aging products have fallen in the drug channel, sales zoomed to double digits for drug's private-label lines. In fact, private label came in No. 2 in volume, $32.4 million, and up 33%, behind No. 1, Olay's Regenerist facial anti-aging product, in overall drug store sales.

The drug channel as well as mass merchandisers and warehouse clubs have introduced their own anti-aging products. Examples include Skin Effects, an anti-aging line from Boston dermatologist Dr. Jeffrey Dover, developed for CVS; Skin Essentials from Walgreens; Boots Expert from Target; Signature Borghese from Costco; Lacura from Aldi, and most recently Mirra from Kroger, which includes anti-aging products.

“As discretionary income has declined and consumers' thriftiness has become more top of mind, the risk-benefit trade-off has been reduced,” said Kristin Ebert, vice president of marketing for Vi-Jon, St. Louis, which makes private-label personal care products. “New store-brand offerings are creating a compelling value proposition with up to 50%-70% gap in the national brand and are reinforcing the decision with outstanding performance leading to repeat purchases and a more discerning, savvy shopper,” she said.

However, sluggish overall sales of anti-aging products aren't expected to last when considering the bigger picture.

Jim Wisner, president of Wisner Marketing Group, Libertyville, Ill., cites the segment's vibrant demographics, which includes men and ethnic groups.

Mintel identifies several female consumer groups seeking anti-aging products.

It's no surprise that female Baby Boomers interested in their health and well-being represent the largest consumer group for these products. This is also a group that represents supermarkets' core shopper base.

Mintel noted that while the entire female population is set to grow by 9% between 2005 and 2015 (and women of all adult ages are under constant cultural pressure to appear young), those aged 55-74 will grow far more than any other age group (55-64: 30.9%; 65-74: 36.5%), which positively impacts the anti-aging market.

The researcher also notes that younger and middle-aged women are becoming increasingly important as beauty manufacturers attempt to establish anti-aging routines from a young age, yet younger women do not show nearly as much growth as older women, and the valuable 35-44 market will decrease by 6.3% over the review period.

“What was once identified as a segment to address the signs of aging, it has now expanded to a much broader spectrum with a majority of new item introductions for anti-aging addressing the 20-plus-year-old segment. Preventing or slowing the onset of the signs of aging are equally as important as repairing to today's consumers. We are seeing a shift to a more proactive consumer,” said Ebert.

MEN & ETHNIC

Men also are not averse to halting the ravages of time and sun by investing in anti-aging products. This is evidenced by men-only product lines, such as Nivea for Men (Beiersdorf) and Neutrogena Men (Johnson & Johnson).

Mintel reports that men will grow in number by 10.3% between 2005 and 2015, and Boomer men will grow the most, which suggests that men should become a more valuable demographic for anti-aging marketers.

Fewer Hispanics in 2009 said they have taken no action to combat the signs of aging than in December 2008. These results, coupled with the substantial population growth among Hispanics between 2005 and 2015, indicate that this demographic will become increasingly important to the anti-aging segment in coming years as well.

Mintel also found that blacks reported much less likelihood to use anti-aging moisturizers with sunscreen, despite evidence that they have a lower survival rate of melanoma than whites.

Blacks and Asians are the most likely to not use anti-aging products, indicating that they may perceive sun damage or aging as less harmful to them.

Hispanics are significantly more likely to buy products with a range of anti-aging properties, which means that marketers should target other ethnicities with multi-benefit product, according to Mintel.

Skincare manufacturers, meanwhile, are working hard to make sure their products don't fall into the “discretionary” category. They're playing up the science behind their formulas and marketing the importance of using their products regularly with concerns over synthetic ingredients high.

Mintel reports that the food/drug and mass market (excluding Wal-Mart) for anti-aging products is led by: Procter & Gamble (estimated 2009 FDM sales: $317 million, up 12.2% over 2008), L'Oréal USA ($212 million, up 11.1%), and Johnson & Johnson ($146 million, up 3.6%).

Most of the growth for each of these companies stems from the launch of professional-level products, such as P&G's Olay Pro-X ($35 million in first-year sales in 2009), L'Oréal's Dermo-Expertise ($58 million, a gain of 31.1% in 2009), Garnier Nutrioniste Ultra-Lift Pro ($14 million in first-year sales in 2009), and J&J's Neutrogena Ageless Intensives ($14 million in first-year sales in 2009).

Steirly said an overwhelming number of choices is now on the market, which may be causing some consumer confusion.

“The explanation of benefits, the support of data showing results, and the education for the consumer is critically important for this skincare category,” she said.

New anti-aging facial products reached their highest levels in four years, jumping from 111 stockkeeping units in 2006 to 429 SKUs last year, according Tom Vierhile, director-product launch analytics, Datamonitor, Canandaigua, N.Y.

Vierhile said that new trends in anti-aging facial formulations include: