By no means immune to the economic and consumer trends affecting nearly all consumer-packaged-goods segments, players in the bath and body care segment have experienced the need to act quickly to stay on top in the marketplace. Many brand owners are winning through multiple tiers of products and new, solution-oriented products, and they have recognized the need to focus on production efficiencies and packaging philosophies in order to combat economic and social pressures. Encompassing soaps in bar and liquid form, body washes, lotions, scrubs and other specialized products for skin and body, the bath and body care segment has felt the impact of many of today’s market’s leading trends.

Demographics Driving Development

For years now, marketers have reaped the benefits of the baby boomer mentality. Having worked hard for decades and seen tremendous fluctuation in the economy, today baby boomers are fighting to stay and look young, while enjoying their empty nests and relatively flush bank accounts. The baby boomer demographic has indicated it has money to spend, and will spend it on products that make its members feel and look younger.

“The soap and personal care industry is being driven to a large extent by the changing age composition of the population, specifically by the bulge of the baby boom,” says Basim Shami, chief executive officer of Beauty Elite Group, Houston, Texas. Baby boomers, Shami says, want cosmeceuticals (products aimed at correcting or improving the physiological condition of skin). Considering that an American turns 50 at the rate of one every seven seconds, Shami says, these consumers that “are entering their peak earning years” will positively impact the makers of soap and other personal care products.

This attitude toward personal care products has positively impacted the bath and body segment, allowing manufacturers and marketers to build programs with high-end products, and high-end price tags, to boot.

“Baby boomers are the focus of many personal care product manufacturers,” Shami adds. “They have led the broad personal care sector of the economy to focus on the potential in aging consumers and their expanding pocketbooks. Growth is occurring in a variety of age-sensitive product markets from soaps and skin creams to massagers and body fat analysis machines.”

“A big trend is ‘actives,’” says Duncan Coopland, vice president of sales and business development at KDC — Knowlton Development Corp., Knowlton, Quebec. “People want products that do something for them. And they want it to do it quickly. People want to put something on, and they want instant results — whiter teeth, tanned skins, no wrinkles.”

Similarly, another demographic specifically impacting the bath and body care segment is men. According to the Natural Marketing Institute, men’s personal care is the fastest-growing segment in the bath and body care industry. Like the baby boomers, many of today’s men are driven to stay looking and feeling young, and they’ll spend money on products that help them do that. Men’s grooming has become more socially acceptable with the expanding number of “metrosexuals” (heterosexual males that prioritize grooming and appearance), and according to KDC Market Intelligence and Datamonitor, the men’s premium fragrances segment, for one, is expected to grow 7.8 percent from 2006 to 2011.

Major brand owners have launched entire product lines focusing on the male demographic, and products such as body sprays, body washes and after-shave items have extended their reach from teenage males to baby boomers. KDC reports that “connecting product to consumer” through customized products has driven brands, even in mass channels. Targeted marketing of the Dove and Axe brands, the company says, pushed Unilever to the top position in bath and shower in North America, according to Datamonitor. Unilever owns 20.7 percent share of the soap market (bars and liquids) and 25.8 percent of bath and shower products.

New product development in personal care will continue to focus on specific consumer needs and highly functional, specialized products, industry experts say. “You need a point of differentiation – something that is better and is what consumers are looking for,” says Paul M. Lieber, chief executive officer and founder of Royal Labs Natural Cosmetics Inc., Charleston, S.C., pointing to products such as soaps, body washes, lotions and butters as only the basic building blocks of a brand.

Organically Growing a Brand

The natural and organic ingredient trend is not exclusive to foods and beverages in the grocery store. As consumers pay closer and closer attention to what they put in their bodies, what goes on their skin is getting equal concern. Brand owners and manufacturers building new items in bath and body care would be remiss not to address the growing interest in natural and organic, industry experts say.

“Organic/natural ingredients are driving decisions,” says Kevin Sweeney, national sales director at Access Business Group (ABG), Ada, Mich. “Consumers are looking for and demanding these types of claims.”

According to Nutrition Business Journal, U.S. retail sales of natural and organic personal care products reached $7.5 billion in 2005, with global sales topping $21 billion. At the end of 2007, this market was approaching $9 billion in sales, representing more than 15 percent of the total market.

“There is a lot of interest in naturals,” Coopland says. “Less is more in terms of ingredients – out with the bad and in with the good.”

“Organic is pushing and driving a lot of what’s going on right now,” Lieber says. “Though they need to clear up what’s organic and what’s not. When launching a brand, you have to do the homework. There are a lot of ingredients that aren’t allowed.

“There’s no magic bullet or magic ingredient,” he adds, “the main thing is to develop a product that takes out the traditional chemicals and do it right.”

Where the personal care industry is similar to the food and beverage industry in this arena is the concern about limited ingredient supplies. Using many of the same ingredients and requiring them to come from organic farms and organic processing facilities, consumer-packaged-goods companies across the industry face the challenges associated with a finite supply of organic ingredients and a lengthy re-growth cycle.

“Availability and rising costs of organic raw materials [is one of the biggest issues affecting the segment],” says Katie Kaalberg, director of marketing at Raining Rose Inc., Cedar Rapids, Iowa. “A lot of the large food manufacturers are eating up the organic oils.”

Rising Costs

Whether organic or not, ingredient costs are rising across the board and affecting every player in the process from production through retail.

“We’re seeing significant inflation on raw materials, there’s no doubt about it,” says Geoff Ladue, vice president of customer relationship management for KIK Custom Products Inc., Concord, Ontario, pointing to every element from chemicals and packaging resins to propellants for aerosols and basic raw ingredients. “A lot of this is driven by the energy crisis.”

And, experts agree, the ultimate result means increased cost to consumers. “There’s always price issues we have to work through with our customers,” Ladue adds. “And it’s going to get passed through at some point, and consumers will have to pay more. You can’t avoid having raw material costs not affect the price consumers pay.”

Where things get even messier is the slippery slope once there is a price increase anywhere in the supply chain – the chain reaction means costs rise and continue to compound until they ultimately affect consumer pocketbooks.

“[The rising cost of raw materials] has been huge,” says Chris Bouma, ABG’s chief financial analyst. “First, the price of oil has affected raws/components transportation, plus increasing costs for anything that is oil based. Anything corn based is also going through the roof as developing countries are buying more corn, and U.S. farmers are selling more corn to E-85 producing plants. Increases are significant -- many double digits or even triple digits, and these will eventually have to be passed onto the consumer.”

“There was a time when a lot of brand owners, contract manufacturers and suppliers were trying to absorb these increases and take lower margins,” says Natasha Lebel, KDC’s vice president of innovation and marketing. “But in environments like Wal-Mart and Target, customers expect tremendous value for their purchase, despite what is happening with raw material and transportation costs. Everyone has absorbed increases along the way, but this is no longer possible. Prices will have to be downloaded to customers and then consumers.”

Socially Correct Packaging

Though consumers won’t necessarily give up many of the conveniences that modern-day packaging provides, a much-needed effort to make “greener” products that are gentler on our environment has impacted the bath and body segment.

For one, like most manufacturers, bath and body care processors are assessing their “carbon footprint” and making efforts at sustainability through the reduction of waste, chemical handling and recyclability improvements. And many of their brand owner customers are looking to work together to make brand propositions greener, for both economic and social reasons.

However, sometimes that task is financially daunting and chemically not quite possible. “Sometimes it’s a conflict of industry,” Coopland says. “There’s price and being competitive, and sustainability -- sometimes the two don’t match.”

“A lot of materials are not ready for our industry,” Lebel adds. “If you talk about naturals, there are a lot of essential oils that can eat through the softer plastics. You have to have thicker-walled plastics, which plays against what you were trying to do. And, of course, the harder plastics are more expensive. The challenge is to achieve a balance on what’s in the bottle and what it’s made of.”

And even though brand owners want to show they are making efforts at being green, consumers still respond to intriguing packaging by making purchasing decisions at the shelf based on visual cues and a product’s physical appearance.

“Uniquely packaged products with new claims or scents are impacting this segment,” says Brad Meier, ABG’s technical manager, adding that he has noticed an interest in continuous-spray foaming wash products and personal care soaps that foam in the hand.

Ladue says, “I don’t see a revolution in packaging, more of an evolution.” For example, consumers have shifted from aerosols in deodorant products to solids and gels, he says, but in suncare products there has been a huge shift into aerosols for ease of application. Pricing a product appropriately is a first priority, Ladue adds, though the right packaging application is second. “You have to do research on what the consumer wants,” he says. “It’s an established and highly competitive category, and the major players are going to fight to keep market share because they have the resources to do so.”