By Tony D’Andrea, PhD – SJG Director of Planning and Research
In haircare and skincare, mainstream consumers often turn to cheaper or store brands in times of economic hardship. But, regardless of price and income, Hispanics tend to stick to their brands of choice. As recurrently found by CPG market monitors, brand loyalty is significantly higher among Spanish-speaking consumers, often 5 to 15 percentage points above those of English-speaking Hispanics and general market consumers (verified as recently as February 2011 Mintel Oxygen).
Latinos and other multicultural consumers spend around 5 billion dollars on haircare products each year. This includes shampoos, conditioners, haircolor, styling products, relaxers and sprays. About 70% of all expenditures are made on regular products, whereas the remainder is spent on ethnic-specific products specially designed for African Americans, Hispanics and Asian Americans. Their overall spending has grown an average of 2.6% a year since the mid 2000s, and is being mostly driven by the higher than expected growth of the Hispanic population in America. According to the U.S. Census Bureau, Latinos represent 56% of the overall population growth over the 2000s, and they now total 50.5 million inhabitants with an estimated purchasing power of 1.3 trillion dollars.
Except for relaxers and hairsprays, Hispanics index higher in the consumption of all haircare products, with dramatic leads in haircolor and depilatories (127 and 150 points respectively, according to Packaged Facts 2010 report). No, it is not about genetics or beauty obsession. As the main reason, Latinas attend to their haircare needs at home rather than at a professional salon: 46% of Hispanic women do it at home against 32% of all women (Packaged Facts 2009 DIY Report). It is worth noting that, the handling of haircolor at home, though less expensive, produces more waste per application. More widely, in line with the projected growth of the Hispanic population, Mintel and Package Facts agree that the consumption of haircolor products is expected to increase in the coming years.
“While open to general market options, Latinas also hold specific preferences over haircare and skincare products. These differences provide great yet largely unexplored opportunities for CPG marketers”, as noted by Jim Legg, The San Jose Group’s EVP of Leadership and Innovation. Some Hispanics prefer ethnically-designed products, such as relaxers or curly hair conditioners (almost 4% of Hispanics are African descendant). And multifunctional products have been catching the attention of lower-income Hispanics looking for good-value purchases.
Yet, Hispanic women seem particularly interested in natural and wellness themes when talking about their haircare needs. Organic, natural and herbal ingredients and products are examples that appeal to them. According to a Packaged Facts Survey, Latinas want environmentally friendly products, as measured in a whopping 173 point index against the general population. They are also interested in recycling (119), and oppose animal-tested products (115). Not so dramatically, Hispanics index slightly higher in the consumption of natural personal care products (105). This discrepancy should not be seen as reflecting empty statements by consumers, but rather represents great opportunities for marketers to capitalize on Hispanic interests.
In fact, the number one Latin American cosmetic giant Natura has been successfully building an international brand around natural, socially responsible and sustainable products. Under the motto “well being and being well”, it has been gaining market share in all eight countries it operates, totaling 2.9 billion dollars in annual revenue. Natura has recently opened an R&D lab in Paris, aiming at boosting its global quality capabilities, and, indeed, it gains brand awareness in the sophisticated French market. In Brazil, where it is headquartered, Natura currently holds a 24% market share, notwithstanding direct competition from L’Oreal, Avon and Unilever.
The rise of highly innovative, mid-size marketers in tune with multicultural markets is an emerging trend in the CPG industry. As noted in the business press (Ad Age, Businessweek), P&G and Unilever must now compete with up-and-coming companies that possess a nuanced understanding of regional consumer tastes and distribution channels. Global CMOs are now in charge of bringing best-practices culled in Latin America and Asia back to core markets. This scenario is also reflected in the growth in size and opportunity enabled by multicultural markets in the United States. In the case of haircare, one strategic decision is whether or not to develop or to adapt general market products to ethnic-specific needs, in the interface between R&D and Consumer Insights. More widely, it certainly calls for marketing strategies that connect with multicultural consumers, ultimately aiming at driving market share and revenue.
The San Jose Group is a premier multicultural marketing agency with 30 years of experience in a variety of CPG segments. For more information about the topic discussed in this article, please email firstname.lastname@example.org, or visit us at www.sanjosegroup.com