THE BACKGROUND
Women may be considering a change of hair colour to go with this autumn's fashion looks. Indeed, nearly four in ten British women now use hair colorants, according to TGI. But ever-changing trends in types and colour of dye are keeping brand owners on their toes, and designer names are making inroads into a developing market. FMCG companies must also decide whether to target the high-street shelves or focus on hair salons.
For many young women, changing hair colour has become just another weapon in their fashion armoury. Although research suggests that those who can afford it prefer to go to salons for professional colouring, the home hair dye market has grown as consumers have gained confidence and knowledge of how to apply the products.
This trend helped to boost the hair colorants market to 拢185m in 2003, according to Mintel. Colorants now make up 20% of value in the 拢939m haircare sector and sales are growing quickly: 2003 value was up 6.9% from 2001 and 23% from 1998. By contrast, sales of shampoo, the biggest haircare category, rose just 3.3% between 2001 and 2003.
The hair dye market includes permanents, semi-permanents, tone-on-tone and temporary colorants. Permanents (colours that don't wash out) is the biggest sector, accounting for 62% of sales in 2003, with semi-permanents (where the colour fades over several washes) making up just 6%.
The types of colorants available in the category have changed in recent years. As manufacturers have developed the technology to achieve a multi-tonal look at home, one-colour offerings have lost ground to highlighting products. L'Oreal pioneered multi-tonal colorants - where colour is applied in two stages to achieve a more natural look - with its Couleur Experte brand, launched in 2003.
Major players
Two companies dominate the hair colorants market: L'Oreal with its L'Oreal Paris and Garnier brands, and Procter & Gamble with Clairol and Wella.
Competing with these are Schwarzkopf & Henkel and a number of smaller brands, including designer haircare labels Charles Worthington, Nicky Clarke and Umberto Giannini.
Smaller brands are making serious inroads. According to Mintel, their sales increased 111% to 拢19m between 2001 and 2003, taking their share of the colorants market to 10%. Most of the big players also saw their shares increase, but Wella and the own-label sector experienced declines.
P&G bought Wella in March 2003 for 拢2.2bn and has rationalised its portfolio, axing the permanent and semi-permanent Viva range.
P&G's Clairol Nice 'n' Easy brand is the leading hair colorant, with a 13% share, according to Euromonitor. Below this are L'Oreal Paris permanent ranges Excellence and Preference. Excellence has a slightly older positioning, being aimed at those wishing to cover grey hair, as is Belle Color, Garnier's biggest brand. Preference, meanwhile, offers both fashion and natural colours.
Schwarzkopf & Henkel targets the 11- to 24-year-old market with its Live Unlimited range of intense shade colorants. Last year it introduced Live Catwalk Color Collection, a range of three permanent colours based on the shades seen at fashion shows.
Indeed, the hair colours sported by celebrities or seen on the catwalk and in the media are an influence on sales in this sector. According to Schwarzkopf senior brand manager Anastasia Prokudina, the market is highly fashion-led. 'This year it's multi-tonal, next year it will be even colour,' she explains.
More women are using hair colorants - 38.3% in 2003, according to TGI - and the frequency of use is rising. Prokudina says that on average women buy home colorants four times a year and are largely brand-loyal. 'It's a complicated process. If it doesn't achieve the results they're after, consumers won't be happy. But if they find what they want, they tend to stick to it,' she says.
Research from Mintel, however, shows that many women who dye their hair at home because it is cheaper would go to a salon if income permitted.
A rise in disposable incomes might see a reduction in home dyeing, but could produce an opportunity for a brand to position itself as a follow-up to a salon visit or as an interim dye between visits.
Another opportunity is the older market. Recently launched fashion-led colorants such as Garnier 100% Color are aimed at younger consumers. As a result, there are few brands aimed at over-45s who want to get rid of grey hairs with fashionable colours. With this demographic on the increase, there is a clear growing market for manufacturers to target.
Male opportunity
The growth of male grooming - a market worth 拢827m in 2003, according to Mintel - means there is also potential in dyes aimed at men. Among younger men, hair-blonding products remain popular. For older men, there is a more limited choice, with products such as Combe's Just for Men focusing on covering grey hair. L'Oreal introduced Feria for Men in the 90s, but this is no longer marketed.
Overall, the sector's prospects look healthy. Mintel predicts 11% growth in real terms over the next five years, suggesting that consumers will move to higher-priced products. As long as the public craves youthful looks, hair colorants will continue to benefit.
MANUFACTURER SALES AND SHARES OF UK HAIR COLORANT MARKET
2003 (est) 2001 2001-2003
pounds m % pounds m % % chng
1 L'Oreal Paris 57 31 56 32 1.8
2 Clairol 50 27 48 28 4.2
3 Laboratoires Garnier 33 18 31 18 6.5
4 Wella 9 5 12 7 -25.0
5 Schwarzkopf & Henkel 8 4 5 3 60.0
6 Other brands 19 10 9 5 111.1
7 Own-label 9 5 12 7 -25.0
Total 185 100 173 100 6.9
Source: Mintel
RETAIL VALUE SHARES OF BRANDS IN UK HAIR COLORANT MARKET (%)
Brand Company 2003 2002 2001
1 Clairol Nice 'n' Easy Procter & Gamble 13.1 13.0 12.8
2 Excellence L'Oreal 8.6 8.4 7.9
3 Preference L'Oreal 8.3 8.1 8.0
4 Belle Color Laboratoires Garnier 6.6 6.3 6.6
5 Feria Color L'Oreal 6.0 4.4 4.0
6 Clairol Hydrience Procter & Gamble 5.8 6.0 5.9
7 Alberto VO5 Alberto-Culver 5.5 5.6 5.7
8 Clairol Loving Care Procter & Gamble 5.3 5.5 5.5
9 Casting L'Oreal 4.1 4.0 4.2
10 Movida Laboratoires Garnier 4.0 4.8 5.2
11 Viva Color Wella 4.0 4.2 4.3
12 Garnier Nutrisse Laboratoires Garnier 3.8 4.0 n/a
13 Clairol Lasting Colour Procter & Gamble 3.7 3.6 3.9
14 Just For Men Combe International 3.7 3.9 3.7
15 Shaders & Toners Wella 2.1 2.6 2.7
16 Clairol Herbal Essences Procter & Gamble 2.1 1.9 1.0
17 Live Colors Schwarzkopf & Henkel 2.0 1.9 2.0
18 Garnier Blonding Laboratoires Garnier 1.2 1.0 0.8
19 Lumia Laboratoires Garnier 1.0 1.5 2.0
20 Couleur Experte L'Oreal 1.0 n/a n/a
21 Open Color L'Oreal 1.0 2.0 n/a
22 Grecian 2000 Combe International 0.7 0.8 0.8
23 Perfect Blonde L'Oreal 0.7 0.7 0.5
24 Clairol Born Blonde Procter & Gamble 0.4 0.5 0.3
25 Natea Laboratoires Garnier n/a n/a 3.8
26 Own-label/others n/a 5.3 5.3 8.4
Source: Euromonitor
ANALYST COMMENT - JOHN BAND, Research manager, consumer markets, Datamonitor
It's a boom time for hair colouring in the UK. Datamonitor's latest report, 'Haircare in the UK to 2008', estimated that consumers spent 拢203m on colorants for home use last year, up by 30% since 1998. The increase reflects both a rise in use of colorants and a switch toward more expensive treatments.
But while the home colouring market has grown, the growth seen in hair salons has been even greater still. UK consumers bought 拢334m of colorants in salons last year (measured at wholesale prices), up by 50% over the past five years.
It's not surprising that salon sales are growing so fast. Rising incomes mean more consumers can opt for the subtler, less artificial-looking colourings salons offer. Even people who are reluctant to pay salon prices are moving toward premium products: the average price for a home treatment (measured in 2003 prices) rose from 拢7.80 in 1998 to 拢8.60 last year, and bleachers have lost market share to natural-looking permanent colorants.
Not surprisingly, there is still a major income-based split between home kits and salon treatments. The poorest 20% of the population are the biggest spenders on home kits, while the richest 20% spend the most at salons.
But hair colouring itself is remarkably classless, with total product use similar across all income groups.
Over the next five years, spending and usage will both continue to grow.
The switch toward premium products is set to become even more entrenched, as home-kit prices continue to rise and more people choose to visit salons.
Datamonitor forecasts that the overall market will be worth 拢736m in 2008, and that salon products will account for 64% of this total, up from 62% today.
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