NFM Market Overview 2012: What's fueling the natural personal care category?

In 2009, natural and organic personal care didn’t look healthy: Sales increased a mere 1 percent over the previous year, and few categories showed strong numbers or innovation.

By 2011, however, sales had increased 8 percent over 2010, according to initial Nutrition Business Journal estimates. More significantly, the industry finally proved it has the energy and innovation necessary for more serious growth.

“I feel that the downturn in the economy in 2008 had a major impact in regards to putting category and entire industry growth on hold,” says Stacey Egide, who founded personal care companies Avalon Organics and Alba Botanica in the 1990s. “A lot of larger brands scaled back and a lot of smaller brands went away.”

Thanks to a bolstered economy in 2011, Egide introduced skin and hair care company Andalou Naturals, as “retailers started to branch out and look for new and exciting offerings for their [health and beauty aids] departments,” she says.

A growing selection of efficacious products has helped reverse consumers’ negative impressions of past offerings that tended to perform poorly, says Taylor Hamilton, owner of Tunie’s Natural Grocery & Vitamin Supercenter in Coral Springs, Fla., whose HABA sales grew by double digits last year.

Although some consumer skepticism of efficacy remains a barrier to category growth, sales of necessities such as hair care and fragrance saw the greatest growth in 2011, NBJ reports.

And the skin care category, which fell 3.2 percent in 2009, experienced a significant comeback: Sales grew an estimated 6.8 percent last year from 2010, thanks to more efficacious offerings that use research-backed ingredients. For example, plant stem cells, coenzyme Q10 and hyaluronic acid are all finding their way into natural beauty products.

“Facial care is growing,” says Michele Mader, body care category manager at Natural Grocers by Vitamin Cottage, a natural retail chain with stores in 12 states. “There are so many more choices now, and I think this category will be very important in the next few years.”

Plus, customers are willing to spend more on luxury products such as higher-priced facial creams and serums, which they’ve traditionally purchased at higher price points from salons or cosmetic counters.