By Lynne Nolan
The recent boom in sales in the Middle East's ubiquitous toiletries sector has been spurred by increased consumer education and unwavering innovation. Lynne Nolan reports.
The personal care category remains one of massive untapped potential for the retail industry, yet its leading players have now stepped up with initiatives to chase its areas of growth.
"In the Middle East, home and personal care is estimated to worth more than US $1 billion (AED3.7 billion) as a category," says Iain Potter, VP marketing, home & personal care, North Africa & Middle East, Unilever.
"Personal care is by the far the biggest sector, such as soaps, shampoos, skincare products and toothpaste and we hold a 30% share in that market. The sector is definitely growing, but the good news is that Unilever is growing ahead of that category."
The proliferation of western media has influenced our local consumers, especially women to become more independent, expressing their identities in their purchasing habits.
The company's recent grand feat was the global launch of its anti-dandruff shampoo in 10 countries, a substantial vehicle for growth in the sector as one in two people have dandruff.
"This is a fascinating sector as 50% of these people don't use any products, so technically it's unbeatable and our market share is growing ahead of target."
The company's brand portfolio includes Sunsilk, Fair & Lovely and Vaseline, however its line of skin cleansing, shampoos and conditioners, and hand and body products from Dove have emerged as the biggest, with Lux swiftly gathering ground.
"Dove's triumph is owed to the fact it straddles across several categories, while Lux is our single biggest piece of business for soaps, it is moving into becoming a beauty brand and it is encouraging women to play with beauty in its advertising campaigns."
Pantene and Head and Shoulders rank as the leading brands in the company's hair care category, while Sensodyne triumphs in the oral care category, and Nivea comes out on the top for skincare and hand and body.
Potter says the company's achievements in recent years have partly been owed to its ability to offer a portfolio of brands for consumers of all age groups.
"The right brands are targeted to the right consumer profile, and we believe there is massive potential within this sector. There are high expectations for novelty, so we are always innovating and keeping up with consumer trends.
"The youth nowadays are very much interested in the Internet, movies and fashion, so it is definitely a challenge and an opportunity to maintain sales with your core business, and advertising can be done for local audiences once you have reached an understanding on how far you can go."
Despite its presence in the Gulf for more than 50 years, sales of another huge name in the region, Imperial Leather, were managed from the UK before the opening of PZ Cussons' representative office in Dubai 15 years ago and the expansion to a fully-fledged company operation in 1997, and the onset of Sharjah-based production of the soaps from the following year.
PZ Cussons boasts a portfolio of retail brands including Imperial Leather, Carex, Original Source, Cussons, Charles Worthington and Roberta Abaya. However, its main growth areas currently stem from its hand wash and shower gel categories.
Educating consumers about shifting from soaps to hand washes has proved to be a winning move for the company, according to Huw Morris, general manager, PZ Cussons Middle East and Asia.
"Hand washes are generally more hygienic than soap as different people are using it within a household, so consumers can generally see their benefits. The only constraint among some consumers in the lower socio-economic groups would be a price barrier," Morris says.
"Our research clearly discovers that consumers like to put hand washes in their guest bathrooms as it reflects the right image."
Sales of shower gel have also risen, Morris says, in turn companies should convince new users to upgrade from soap via advertising and promotional activities.
"It is a lengthy process, however when you look at Western markets such as the UK consumers have already made that switch so we are process of going through that in the Middle East," he says.
If moves to tap the huge potential in the liquids category prove successful, it could significantly transform sales with the Middle East currently accounting for 50% of the company's sales.
It is part of a broader plan to progress the Middle East market from its current reluctance to depart from soap use and move into liquids.
Sales of liquids are currently growing at 30% in the UAE, followed by soap at 10%, Morris reveals, and the company has witnessed a 20% growth in the region.
Currently the company's best selling products are Imperial Leather soap, hand wash and shower gel, and Morris says consumers are demanding more liquid additions, prompting its efforts for high visibility through gondola end and floor displays.
The toiletries sector is largely dependent on the growth of hypermarket and supermarket chains to fuel turnover, and Morris says the growth of the company's key accounts are crucially important.
Our research clearly discovers that consumers like to put hand washes in their guest bathrooms as it reflects the right image.
PZ Cussons currently holds a 4% share in supermarkets, according to Morris, and its business down into wholesale at 15%, key accounts at 60% and supermarkets at 25%, totalling 85% in retail business.
Despite the supremacy of branded toiletries in the Middle East, however, the growing need for value offers an important opportunity for retailers to enhance their position in the market through private labels.
"Strategically, retailers worldwide seem to be placing more emphasis on branding and marketing their private labels to match the lifestyles and values of their shoppers,' comments Piyush Mathur, regional managing director, Nielsen Middle East, North Africa and Pakistan.
According to a new report from the marketing information company, 84% of consumers in the UAE are aware of at least one private label, compared to 67% in Saudi Arabia. The ShopperTrends 2006-2007 Study reveals that 57% of the consumers have bought a private label in the last four weeks in the UAE, a figure, which could rocket in this sector in the future.
The cosmetics and toiletries sectors in the UAE have grown with time as new products have found their way to its marketplace, yet just a few years ago they were found only in small shops, and brands such as Dior and Esée Lauder were sold at pharmacies.
The boom in retail has brought great potential for global players in the market, while developments including Dubai's Jebel Ali Free Zone have attracted manufacturers to set up regional operations.
In Saudi Arabia, Dammam-headquartered Colgate Palmolive Arabia & Gulf States has a joint venture with the Olayan group to manufacture products for the 200-year-old company, and is eager to evolve alongside the trends of local consumers.
"The main growth areas in the sector are underdeveloped and untapped, such as shower gels, under arm protection and segments which have historically had very low category penetration among local consumers," says Aejaz Basrai, general manager, Colgate Palmolive Arabia.
Basrai credits a number of factors to the sector's robust growth in recent years, firstly the positive macro-economic environment in the GCC resulting in increased disposable income for consumers, as well as sways from abroad and the development of the industry.
"The proliferation of western media has influenced our local consumers, especially women to become more independent, expressing their identities in their purchasing habits," Basrai says.
"The rapid development of the modern trade is also driving this change," he adds.
In a bid to respond to the evolving consumer mindset, the company has marketed its range of products - including bars of soaps, shower gels, cleansers, bleaches, shaving products, liquid hand soaps and underarm protection from Mennen and Speed Stick - to its desired consumers with "the right product, concept, packaging, pricing, shelving and display and promotions."
According to the report Beiersdorf AG - Cosmetics and toiletries from Euromonitor International, promotions have driven the bulk of the German-based company's sales.
In its traditional distribution outlets, the company launched the Blue Wall, an area featuring only Nivea products grouped together, and connecting with the colour of the brand's packaging, which is believed to have stimulated a 35% increase in sales.
The report states that Beiesdorf should pursue the expansion of its activities in emerging areas such as the Middle East, Asia-Pacific and Latin America, where growth in toiletries sales is expected to outstrip that of global sales.
The rapid growth of the modern trade is "not only critically important but becoming more and more important" to sales, according to Colgate Palmolive's GM Basrai.
"The majority of our business in the region is retail-driven, and although our market share differs between segments we have more than 70% share of the GCC's stick segment with Mennen under arm protection," he says.
Basrai is determined to concentrate on products where it has something to satisfy the buying power of local female customers.
"Women are also the homemakers and the economic managers of households, and studies suggest that that approximately 75% of all decisions related to toiletries are made by women," he adds.