specialty actives: insights from the mature markets...
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© 2011 Kline & Company
Specialty Actives: Insights from the Mature Markets
Insights from the USA and Europe
Specialty Actives: Insights from the Mature Markets
Insights from the USA and Europe
Day 1, 14th December
© 2011 Kline & Company
Today’s presentation
What is the current situation of the global personal care market?
Which are the most important specialty actives used in personal care?
What are some important trends driving the personal care market?
What is the outlook for specialty actives?
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© 2011 Kline & Company 2
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© 2011 Kline & Company
Today’s presentation
What is the current situation of the global personal care market?
Which are the most important specialty actives used in personal care?
What are some important trends driving the personal care market?
What is the outlook for specialty actives?
3
© 2011 Kline & Company
Post recession, industry sales have rebounded, thanks to rising consumer confidence, aggressive promotional activity, technological advances, and social media
Consumers comfortable spending again
Social networking enables closer communication with customers
Advances in technology
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© 2011 Kline & Company
Europe remains the largest region, but is losing share to developing markets, in particular China and Brazil
0%
25%
50%
75%
100%
2005 2010
Europe AsiaNorth America Latin AmericaOther
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Manufacturers Sales, 2005 - 2010 Regional Growth 2010 - 2015
IndiaChina > 7 %
Latin AmericaC&E Europe
Middle East & Africa 4-5 %
North AmericaJapan
Western Europe< 2 %
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Skin care is the largest and fastest growing product class globally
Skin Care Hair CareToiletries Make UpFragrance Oral Care
0 2 4 6
Fragrances
Toiletries
Make Up
Hair Care
Oral Care
Skin Care
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Global Personal Care Share by Category Global Product Category Growth (2010)
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Development of the European and US Personal Care Market by Category, 2005 to 2010
Volume Growth, %
Skin care also outpaces growth in the USA and Europe
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Skin care in particular is benefiting from strong growth drivers
Growing society pressures and stresses of modern living have made more men and women seek for “Looking good, Feeling good” experiences− Consumers are looking for result-oriented solutions, but at the same time solutions that
are not harmful to the skin
Simultaneously, customers have placed more attention on personal care and on the products they are using− They are willing to spend more money on personal care products− They have become more knowledgeable about their skin, various skin conditions, and on
product ingredients
Development of the professional arena increases awareness for specialty actives− The professional arena provides customers with a place that offers trust and comfort− Customers are provided guidance by skin specialists (e.g. estheticians, dermatologists)− Products are often being perceived as being of higher quality than with products for mass
brands− Professional outlets offer a place of relaxation and calm
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© 2011 Kline & Company
Today’s presentation
What is the current situation of the global personal care market?
Which are the most important specialty actives used in personal care?
What are some important trends driving the personal care market?
What is the outlook for specialty actives?
9
© 2011 Kline & Company 10
Marine Ingredients
Botanicals
Biotechnology Products
Proteins & Peptides
Enzymes & Coenzymes
The market for active ingredients in personal care consists of five major product categories
ActiveIngredients
• Unsubstantiated Extracts• Substantiated Actives
• Hyaluronic Acids• Ceramides• Others
• Substantiated Algae Extracts• Chitosan
• Botanical• Biological • Synthetic peptides
• Coenzyme Q10• Others
© 2011 Kline & Company 11
a- Excludes unsubstantiated extracts
b- Includes synthetic peptides
Market Breakdown by Product Category, 2010
Botanicals are the most important product category in both the USA and Europe, with sales over EUR 100 million in Europe
Europe USA
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Skin whitening/lightening
Anti-aging
Anti-acne
Anti-inflammatory
Slimming
Sun protection
Specialty actives in personal care target a wide variety of performance benefits – although anti-ageing functionality dominates
ActiveIngredients
Anti-cellulite
Skin firming/lifting –Tensors
Moisturizing
Anti-oxidant
Anti-wrinkle
Anti-stress
Energizing
DNA protection
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a- Excludes unsubstantiated extracts
b- Includes synthetic peptides
Market Breakdown by Functionality, 2010
Anti-ageing accounts for around 60% of specialty actives targeted functionality in Europe and the USA
Europe USA
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Anti-ageing functionality focuses on ‘Age Spots, Anti-Wrinkle, Firming, Moisturizing, and Skin Radiance’
Active Type Supplier Trade Name
BOTANICALS SOLIANCE TEPHROLINE
INDENA XILOGEL
SEDERMA MOIST 24
BIOTECHNOLOGY PRODUCTS CPN/CONTIPRO HYACTIVE
MIBELLE PHYTOCELLTEC MALUS DOMESTICA
SILAB STEM-C-GUARD
PROTEINS/PEPTIDES LIPOTEC ADIFYLINE
SEDERMA MATRIXYL SYNTHE’6
ISP VINCIENCES COLLAXYL IS
MARINE INGREDIENTS BIOTECHMARINE ANTILEUKINE 6
CODIF PHYCOJUVENINE
ENZYMES / COENZYMES VARIOUS UBIQUINONE
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© 2011 Kline & Company
Today’s presentation
What is the current situation of the global personal care market?
Which are the most important specialty actives used in personal care?
What are some important trends driving the personal care market?
What is the outlook for specialty actives?
15
© 2011 Kline & Company 16
Specialty active suppliers usually use a combination of direct sales and distributors to reach personal care products marketers
From a market segment to another, the industry structure can be slightly different, however similarities exist
Suppliers of high volume, or pseudo-commodity products such as some protein hydrolyzates, use distributors more often than suppliers of highly specialized products which require more technical support to customers
Most of the leading suppliers of specialty actives are based in Europe
Industry Structure, 2010
Specialty Actives Suppliers
Consumers
Personal Care Products Marketers
Distributors
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Green remains at the forefront of the industry
Companies are moving toward being “green” and shifting focus towards being sustainable and socially responsibility
Areas of focus include:− Raw material sourcing− Packaging− Review of manufacturing processes− Social responsibility
Leaders within sustainability include:
Naturals trend is inherently linked with sustainability
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Manufacturers need to explore other areas for growth
Innovation has slowed in some categories, as the industry waits for the next mega-trend:− Naturals− Home devices− Beauty from within− Men’s grooming
Efforts are directed towards improved product formulations and product packaging to drive sales
DermaPlus’ DermaLastyl-β Concentrated Skin Rejuvenation Formula
Incorporating technology developed for “wound healing on the battlefield”
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What trends are occurring at the brand level?
The majority of focus in the skin care product class is directed towards maintaining a youthful appearance − Anti-aging and acne treatment products continue to be in vogue
EXAMPLE: Kinerase C8 Peptide Intensive Treatment
“Reduces the depth and appearance of wrinkles caused by repetitive facial expressions up to 34.9%”
Contains:− SNAP-8: a neuropeptide− Kinetin: antioxidant− Stabilized vitamin C− Green Tea Eco− Vitamin E− Beta-glucan− Hyaluronic acid
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Example of a skin care product sold through the luxury channel
La Prairie Cellular Cream Platinum Rare
“Skin transforming formula that recharges the skin’s electrical balance with pure Platinum to ensure ageless performance, protects the skin’s DNA, and replenishes moisture continuously for a look of soft splendour”
Contains:− Nano-sized particles of negatively charged platinum
suspended in colloidal platinum water (reportedly serves as an electron donor to maintain a proper electrical balance in the skin)
− Active cocktail (peptides, vitamins, and antioxidants)− Controlled-release nano-sized heseperidin Smart Crystals to
protect DNA in the cell nucleus and act synergistically with Resveratrol for antioxidant protection and improve microcirculation in skin
− Climate-activated Moisture Matrix which adjusts to humidity and temperature
EUR 700 / 1.7 ml
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Example of a skin care product sold through the masstige channel
Lumene’s Excellent Future line of anti-aging skin-care products
“Prevent and delay damage from surfacing, and help prevent the formation of wrinkles and to smooth the appearance of wrinkles that has already formed.”
Contains ApplexcellT an apple extract protecting skin’s stem cells.
EUR 25 / 50 ml
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Example of a skin care product sold through the professional channel
Mary Cohr’s Crème Spécific Rides
“The ultra-comfortable fluid texture is specially designed to plump out wrinkles from the inside and to give the skin new elasticity. The skin is visibly younger.“
Contains:− Apricot Kernel Oil− Hydrolyzed wheat protein− Sodium hyaluronate− Ginkgo Biloba Leaf Extract− Hexapeptide-1
EUR 40 / 50 ml
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Example of a skin care product sold through the direct channel
Oriflame’s Ecollagen 3D+ Anti-Wrinkle Day Cream
“Brings firmness back and re-pumpleswrinkles from within.”
Contains:− Tri-peptide complex− Hyaluronic acid
EUR 20 / 50 ml
© 2011 Kline & Company
Today’s presentation
What is the current situation of the global personal care market?
Which are the most important specialty actives used in personal care?
What are some important trends driving the personal care market?
What is the outlook for specialty actives?
24
© 2011 Kline & Company 25
Ageing of population
Demand for sustainability could represent an issue for some of the products considered such
as botanicals or marine ingredients
Overall growth of the personal care
market
Increased demand for
product activity
Personal care market is reaching maturity in Europe and the USA
Increased demand for
proven product efficacy
Market Drivers and Constraints Influencing the Specialty Actives Market, 2010
Due to an increased demand for activity and efficacy, the specialty actives market is expected to grow faster than the personal care industry
REACH and other regulations may
represent a challenge for innovation
Demand for natural-inspired personal care
products boosts the consumption of suitable actives
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The specialty active market in Europe is expected to grow at an average annual rate of 4.6% per year between 2011 and 2015
Value Growth by Product Category, 2011 to 2015
Value Growth Rate, %
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Sun protection is forecast to develop at the fastest rate, whilst anti-aging actives will continue to take advantage of solid growth drivers
Value Growth by Functionality, 2011 to 2015
Value Growth Rate, %
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Markets adjacent to specialty actives are also benefiting, for example delivery systems
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CAGR (2007-2010)
= 7%
Delivery Systems Market Growth, 2007-2010
Following growth of 7% since 2007, the European market for delivery systems in personal care is valued at Euro 81
0
20
40
60
80
100
2007 2010
Liposomes and Others Microcapsules Millicapsules Others
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Men’s GroomingMen’s Grooming Skin CareSkin Care
NaturalsNaturals
TraditionalIngredients
Specialtyactives
Deliverysystems
Drug developmentDrug development
Synthetic peptides, stem cells, and other actives
FoodFood
Vitamins, antioxidants, actives
Chemical/polymerscience
Chemical/polymerscience
Fixative polymers,delivery systems
Opportunities for specialty actives will continue to come from a variety of sources
© 2011 Kline & Company 30
Today’s Presentation
Thank you for attending today’s presentation
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Personal Care Value Chain
Consumer
Retail Finished Goods
Distributor
Direct
Direct
With over 40 years activity in this industry, our personal care domain expertise covers the whole value chain
AntimicrobialsConditioning polymersEmollientsFilm formersHair fixative polymersRheology control agentsSkin whitening agentsSpecialty activesSpecialty delivery systemsSpecialty and commodityUV absorbers
FragrancesHair careMakeupNail careOral careSkin careToiletries
Department storesDirect sales Drug outletsFood stores Mass merchandisers Pharmacies/perfumeriesSalonsSpas/beauty institutesSpecialty stores
Brand Owner
Direct
Direct
Contract Manufacture
PersonalCare RawMaterial
Distributor
Direct
PersonalCare Raw Material Supplier
Basic Chemical Supplier
© 2011 Kline & Company
Data in this presentation is sourced from:“Specialty Actives in Personal Care 2011”
Reports available in the series:
Specialty Actives in Personal 2011Europe USAJapanChinaBrazil
Data is also accessible via an interactive online database
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