How toiletries firms can capitalise on the natural trend

Demand for toiletries largely made with natural ingredients and free from substances that some deem harmful has risen in recent years, and looks set to continue increasing. Manufacturers that have not yet entered this segment may do well to consider it. Read on to find out why.

Market growth

Figures from the European Commission suggest that the market for toiletries seen as natural is currently growing by 20 per cent each year – a significant figure that has not gone unnoticed by smaller firms in particular, which are increasingly launching natural products in a bid to provide a viable alternative to the goods marketed by the large multinationals.

Less quantitative evidence of this trend is also clear to see, such as the explosion in specialist ecommerce websites offering organic/natural products and the rising number of products with natural or ‘free from’ labels being stocked by major pharmacies and retailers.

This hasn’t gone unnoticed by the major players in the toiletries industry; L’Oreal launched a line of haircare products under the EverPure, EverSleek and EverStrong names that are free from sulphates last year, while Unilever’s Timotei range now includes the Pure line of shampoos and conditioners, which don’t contain silicones, parabens or colorants.

Some of the smaller specialist brands that have established themselves in the market are REN, Good Things, Balance Me, Weleda, Jason and Lavera, although the extent of their organic/natural claims does vary from company to company.

Joining the market

There are several ways for your own toiletries firm to take advantage of this trend. You could set up a brand specifically for natural products, increase the proportion of organic ingredients in existing products while reducing or eliminating synthetic ones with negative connotations, or even make a complete switch to the market by focusing entirely on these kinds of products.

Whichever route you decide on, you’ll need to first gauge whether there is demand for what you want to offer among your existing customers (as it’s clear from the above that there is at least some demand among new ones). You will also have to conduct extensive testing to be sure the quality of your products isn’t compromised by the use of ingredients unfamiliar to you; while the organic sector has come a long way on this front, there’s still room for improvement.

One starting point could be the Cosmos standards that have been drawn up by the Soil Association and other organisations in Europe to provide a set of requirements for companies looking to manufacture natural cosmetics and toiletries. Approved products will bear a label saying they have been certified by the Soil Association, giving consumers something to look for when they go shopping.

Related to this last point, setting out a clear marketing strategy is a must. Many consumers are wary of companies that claim to be more eco-friendly or natural than they actually are, and it’s all too easy for shoppers to voice their discontent with brands on social networks and blogs.

So, make it absolutely clear on both the packaging and your promotional literature/website exactly what is natural or organic in your range. It may also be worth telling customers anything they need to know about the manufacturing process, e.g. if you use separate filling machines or the same ones for your natural and ‘standard’ product lines.

An open and upfront approach is much more likely to win over customers and potentially entice them away from your competitors – as long as you’ve got the product right, too!

French government mulls investment in car group Peugeot

France’s government could participate in a capital hike at PSA Peugeot Citroen SA (EPA:UG) if needed, in an effort to help the carmaker limit its increasing losses, daily Liberation cited on Friday an unnamed government source as saying.

A state move to take a stake in Peugeot would be made only as a last resort plan, in case Peugeot could find no other way of dealing with the losses, the source told the paper, without giving any details.

The carmaker on Thursday cut the book value of its plants and other assets by 28%, adding EUR4.13bn (USD5.5bn) to its net loss for 2012.

The government said in October 2012 it was willing to provide state loan guarantees in the amount of EUR7bn to Peugeot’s financial unit Banque PSA Finance.

Peugeot did not wish to comment when contacted by Reuters.

Warner Music agrees £487m deal to acquire UMG’s Parlophone

US recording companies Universal Music Group Inc (UMG) and Warner Music Group have signed a definitive agreement that will see the latter pay GBP487m (USD765m/EUR571m) for Parlophone Label Group (PLG).

In September 2012, UMG was cleared by the European Commission to acquire EMI Recorded Music. However, approval was granted on condition that UMG parent Vivendi SA (EPA:VIV) dispose of various music assets, PLG included. PLG owns the Parlophone and Chrysalis labels and also covers EMI’s recorded music business in Belgium, the Czech Republic, Denmark, France, Norway, Portugal, Spain, Slovakia and Sweden.

UMG said it expected to finalise the divestment later in the year. Closure is subject to securing approval from various regulators and consultations with employees in a number of jurisdictions.

Commenting on the deal, UMG chairman and chief executive Lucian Grainge said he was pleased to have Warner Music as the new home for PLG artists. The deal will allow UMG to pursue its global reinvestment programme, which includes restoring the strength of EMI and helping the company realise its full potential, Grainge added.

Goldman Sachs Group Inc (NYSE:GS) and Bank of America Merrill Lynch acted as financial advisers to UMG and Vivendi, while SJ Berwin LLP, Shearman & Sterling LLP and Smiths Law LLP dealth with legal issues on the vendors’ behalf.