Ethnic HBC Grows With Multicultural Reach

Ethnic-specific health and beauty care product sales experienced steady growth — even during the worst economic times — with retail sales increasing to $3 billion during the period 2005-2009, according to “Ethnic Hair, Beauty and Cosmetics Products in the U.S.,” by market research publisher Packaged Facts, Rockville, Md.

Yet while some marketers are intimately acquainted with the infrastructure and the quirks of the more specific aspects of the ethnic HBC market, which is mainly comprised of hair care, makeup and skin care products for African Americans and Hispanics, other marketers deem it wise to compete on a larger scale and reach beyond any one ethnic demographic niche by positioning products multiculturally. This strategy exists between the ethnic-specific and general market ends of the spectrum, and yet blurs with them both a little.

Packaged Facts asserts that there is now less advantage for ethnic HBC marketers — particularly for smaller and midrange players — to restrict themselves to niche-positioning, and more advantage in the multicultural approach.

“In 2010, there is a strong trend to position beauty products multiculturally. That is, not only to the three principal minorities consisting of Hispanics, African Americans and Asians, but also to Arabs, Native Americans, South Asians and others,” said Don Montuori, publisher of Packaged Facts. “A strength of using the term ‘multicultural’ is that products carrying the label can be marketed to everybody, including Caucasians.”

The ability to market multicultural HBC products to Caucasians, in addition to consumers of other ethnic backgrounds, is important to marketers based in the United States who increasingly seek lucrative international involvements. The term “ethnic” does not have the same meaning in most of the rest of the world, where billions of people have skin tones that befit the use of ethnic products popular in America and where whites are the minority. Even in the U.S., which is home to more than 100 million persons of color, the term is expected to become antiquated in the coming decades, as the ethnic nation expands to become the majority sometime around 2042.

The total incremental sales growth for the four years was very strong, at almost 38%, or $727 million. The compound annual growth rate for the same period is therefore calculated at more than 8%.

In the wake of the global collapse of financial markets during the fourth quarter of 2008, growth slowed in 2009 to about 4% or 5% in all three ethnic-specific HBC categories, namely hair care, makeup and skin care. However, these increases were still good progress.

The overall market's 2009 increase of 4%, for example, translated into an added $103 million. The incremental 4% contrasts with decreases in overall hair care, makeup and skin care categories.