Natural, organic beauty exploding at mass retailers
Back in the 1970s, “natural” and “organic” conjured up images of love-beaded hippies, homemade soap and rustic bowls filled with hummus and granola. Offered by niche companies and home-based entrepreneurs, products were sold mainly in small health food stores and co-ops.
In the 2000s, the picture dramatically changed. Large natural products supermarket chains, social media and online influencers began educating mainstream consumers about ingredients, sustainability and small, specialty suppliers. Sales of natural and organic foods skyrocketed, with everyone from housewives to stockbrokers embracing healthy options.
Within a few years, grocery, drug and mass retailers had the sales and customer volume needed to enter what was once a limited market. Natural grocery chains even had trained consumers to pay higher prices, alleviating sticker shock when merchandise went mainstream.
Natural and organic health and beauty care now is following in the footsteps of food. Over the past 12 to 18 months, it has been exploding in traditional big-box chains. In a sense, Whole Foods Market, along with Natural Grocers, Sprouts and other natural products chains, have become victims of their own success.
“Ten years ago, you visited a natural grocery store for natural products and a mass retailer for toilet paper,” said Marc De Rosa, director of sales at Dr. Bronner’s Magic Soaps. “Today, you can get everything in one location. There are so many consumers wanting natural products that food, drug and mass have a big enough base. They have good infrastructure, and the power to slim down margins and offer natural brands at slightly lower prices.”
The North American natural and organic HBC market continues to grow, having reached $5.6 billion in 2018, reported Ecovia Intelligence (formerly Organic Monitor). The HBC publication Happi projects it will hit $7.7 billion by 2025.
Hair care has the highest market share at 9.5%. Yet, natural and organic skin care is the strongest sales driver, according to Ecovia. Natural cosmetics are even bigger, with 2018 sales hitting $36 billion, according to Future Market Insights. In 2019, natural cosmetics should grow 4.8%, reaching $54 billion by 2027.
Interest in natural and organic HBC reflects consumers’ growing awareness that what they put into their body is as important as what they put on it.
“This isn’t so much a ‘trend’ as a natural progression,” said Lindsay Peterson, health and beauty category management team lead for the drug channel at Unilever. “Consumers are increasingly interested in minimally processed foods and beverages containing few or no synthetic ingredients. The next logical step are HBC products with similar attributes.”
Unilever and other suppliers are emphasizing plant-derived formulas devoid of aluminum, parabens, sulfates, phthalates and other harmful or irritating substances. Food and Drug Administration studies have linked parabens to breast and skin cancer, said Bryan Williams, vice president at Belli Skincare. He also highlighted consumer concerns over sunscreen ingredient oxybenzone, aluminum salts used in deodorants and sulfates used in shampoos.
The importance of ingredients is continually stressed by online beauty influencers, whose impact, numbers and followings keep rising, Williams said. In a 2017 survey of 2,000 Instagram users conducted by jewelry brand Dana Rebecca Designs, 72% of respondents said they made a beauty, fashion or style purchase after seeing an item on Instagram.
Alexis Tobin-Adams, director of body care innovation at Sundial Brands, which is owned by Unilever, said natural and organic bath and body introductions, in particular, are growing faster than nonnatural formulas, especially those from indie brands with online followings. “Retailers are interested in them because of their high online presence and how they curate consumer content,” she said.
This puts customers in control. “With more information available, shoppers have become drivers, not passengers, with retailers listening to what they want,” said Alyson Fischer, manager at retail consultancy McMillian Doolittle. “Social media is a hot bed for brands and influencers, and lets retailers take consumers’ pulse.”
Indie and Mega Brands
Often sustainably produced and not animal tested, natural and organic HBC is coming from both new and established suppliers. Some have offered natural products for decades and are widely distributed. Others have launched or purchased natural lines. There also are small companies that started in specialty channels or e-commerce and want to enter major chains.
Launched in the 1940s, Dr. Bronner’s Magic Soaps and its quirky, eponymous founder generated a loyal hippie following in the 1960s and 1970s. Over the years, the soap was joined by natural toothpaste, organic hair care and other products. Only a few items were offered in traditional chains.
Two years ago, the scenario began changing. Year over year, Dr. Bronner’s experienced double-digit growth in mainstream channels, De Rosa said. Last year, the brand was featured on Target’s endcaps three times instead of the usual one appearance. “Now, we distribute everywhere,” De Rosa said, adding that more than two dozen private-label knockoffs of Dr. Bronner’s iconic Pure Castile Soap exist.
Founded in 1984, Burt’s Bees entered HBC with lip balm, later branching out into skin care and other areas. In 2007, it was acquired by Clorox. Products contain natural oils, waxes and butters and are now broadly distributed, said Matt King, director of marketing. A year ago, it unveiled its first cosmetics line at CVS Pharmacy, its biggest launch to date. Working with digital marketer Bazaarvoice, it built a portfolio of consumer reviews that drove sales when the line hit other chains.
Burt’s Bees’ other recent introduction, Renewal skin care, brought bakuchiol to the mass market for the first time. The retinol alternative comes from the seeds and leaves of the psoralea plant and does not have harsh side effects. “We’re eager to bring the efficiency of this natural ingredient to consumers at accessible prices,” King said.
Tom’s of Maine introduced the first natural toothpaste to health food stores in 1975. Acquired by Colgate-Palmolive in 2006, its widely available offerings include children’s and adults’ oral care, including alcohol-free mouthwash, deodorant, bath and body, and baby skin care.
Traditional CPG companies also have entered the natural segment. Procter & Gamble purchased Native in 2017, following a loss of market share to digital competitors, largely in men’s shaving. Traditionally a direct-to-consumer brand, Native was launched exclusively at Target last year.
Unilever now has several natural lines. In late 2017, it introduced Love Beauty and Planet. These natural shampoos, conditioners and body washes target millennials. Products use a “fast-rinse conditioner technology” that requires less water to rinse them out of hair.
The introduction followed a Unilever study that found shoppers want sourcing transparency and ingredients that are recognizable, easy to pronounce and plant based. The brand emphasizes these elements where millennials shop. “Due to better prices, millennials are more likely to purchase at mass or drug than specialty,” said McMillian Doolittle’s Fischer.
In July, Unilever bought prestige skin care brand Tatcha, with Asian-influenced products that incorporate green tea, rice and algae. It also introduced Purple Rice Water under its SheaMoisture brand. Also Asian inspired, the hair, body and skin care items contain anthocyanin, or purple rice. Dating back to ancient China, this antioxidant helps skin recover from — and protects against — environmental damage. It also strengthens brittle hair.
SheaMoisture is part of Sundial Brands, which Unilever acquired in late 2017. Operating as a stand-alone unit, Sundial also features Nubian Heritage natural deodorants in scents like Raw Shea Butter with Frankincense and Myrrh, Patchouli and Buriti, and Abyssinian Oil and Chia Seed.
The Newcomers
Many smaller natural HBC companies are new to food, drug and mass, or are trying to enter this space. Fostered by their entrepreneurial spirits and online followings, independent brands have close consumer relationships.
“They are the smallest, most nimble and closest to the customers’ needs because most were created from a customer turned owner,” said Psyche Terry, founder and chief inspiration officer at Urban Hydration, which supplies fruit- and plant-based hair, skin, bath and body products to H-E-B, Target, CVS Pharmacy and Walmart. “This siloed focus on a problem is something larger brands can’t move fast enough on.”
Digital native Dr. Squatch wants to broaden distribution of its vegetarian-based bar soaps. Via Facebook, YouTube and Google, humor and paid advertising have cultivated a strong male following. Soaps are handmade, using a cold process, said Jack Haldrup, founder and CEO.
Nora Pearson Natural Beauty Products’ merchandise is mainly found online, in spas and at farmers’ markets. Its deodorants, cosmetics and skin care merchandise contain magnesium, which relieves nerve pain, as well as sea minerals and antiaging ingredients. Via social media, Pearson has done celebrity gifting at the American Music Awards. Through Instagram, it also has been in subscription boxes. CEO Nora Pearson now is talking to drug chains.
Aromafloria has a Cannafloria collection that includes inhalation pouches, mood mists, bath items, and skin and muscle creams. They contain hemp seed oil, which is rich in vitamins A, E and omega-3, 6 and 9, as well CBD, which is meant to help relieve pain, reduce anxiety and aid in sleep.
Merchandise is available online and at Aromafloria’s Huntington Station, N.Y., store. CEO Sharon Christie wants to enter drug chains. However, CBD’s mixed legal standing has generated resistance on several fronts. It took two years to trademark the name Cannafloria. And when the word posted on Facebook eight months ago, Facebook shut down the page. Christie now is using blogs, newsletters and other formats to educate consumers about the products’ benefits.
How much natural and organic HBC will grow remains to be seen. Yet, if it continues to follow the growth path of what the Organic Trade Organization said is now a $52 billion organic food market, the HBC industry has much to be optimistic about.