Salon brands the bright spot

MMR, August 25, 2008

NEW YORK--The hair care category continues to sputter, with most segments generating little or no sales growth. Gains in the category, say observers, are coming mainly from salon brands and new items.

John Petchul, president of Continental Consumer Products, asserts that premium brands are generating double-digit sales growth and deserve prime real estate on the shelf. Continental Consumers' Salon Grafix brand is the fourth-ranked brand in the hair spray/spritz segment with dollar sales up more than 9%, according to data from Information Resources Inc. (IRI) for the 52 weeks ended July 13 (based on sales through food, drug and discount outlets, excluding Wal-Mart Stores Inc.)

Michael Surmeian, senior consultant with TABS Group, concurs, pointing out that salon products generated 13% sales growth in the 52 weeks ended June 15. Since the salon segment accounts for about 15% of total category sales, its contribution is significant. Ethnic hair care items were up 10%, but they account for less than 3% of category sales, while the natural products category, which had the most dramatic growth with a 41% increase, contributes less than 1%.

"Average retail price increases in the salon group are partly responsible for the dollar sales growth," points out Surmeian. "The midrange-priced brands are flat for the most recent quarter."

Without the salon brands, he adds, total hair care sales would have been down 2% in the quarter. Surmeian quantifies the value of the salon products using a measure called sales productivity, or relative dollars per SKU. Salon products, he goes on, deliver 47% more dollars per SKU than the average nonsalon hair care SKU.

Product introductions have also helped buoy the struggling category. Among the brands that have been active in this arena are Alberto-Culver International Inc.'s Tresemme, Maybelline's Garnier Fructis, and Procter & Gamble Co.'s (P&G's)Head & Shoulders and Herbal Essence.

P&G is continuing to enjoy triple-digit sales growth from its Pantene Pro-V collection across several different hair care segments. For example, in the shampoo segment, where sales are basically flat, Pantene Pro-V Always Smooth has vaulted into the No. 2 position, while Pro-V Classic Clean has moved into the No. 4 spot. The Always Smooth collection has become the top-selling conditioner/cream rinse, edging out Helene Curtis Industries Inc.'s Suave Naturals.

Women's hair coloring, the category's third-largest segment behind regular shampoo and conditioners/cream rinses, has continued to underperform although Revlon Inc. has enjoyed double-digit sales growth from its Colorsilk line, the fourth-ranked brand, and from Revlon Colorist, the No. 12 brand in the segment according to IRI.

Interestingly, the men's segment, admittedly a small slice of the $1 billion-plus hair-coloring business, has managed a 2.8% rise in sales, driven in large part by a 4% gain by category leader Just for Men from Combe Inc., which holds a commanding 70% share of the category.

In recent years a number of heritage brands have been acquired by remarketers and restaged in an effort to reclaim lost space on the shelf, on the bet that their brand equity with consumers--particularly baby boomers --could be revived as a growth vehicle.

According to Surmeian, most of these efforts have failed. One player in this arena, Ascendia Brands Inc., has recently filed for bankruptcy protection.

"These organizations failed because of a flawed business model," says Surmeian. "Specifically, not investing adequately in consumer and trade advertising."

Hair Conditioners                 DOLLAR SALES       UNIT VOLUME
                                   $961.6 mil.        243 mil.
                                    ( 0.4%) *         (-3.4%) *

                                 Percent Change    Percent Change
For 52 Weeks                           vs.               vs.
Ending 7/13/08                   Prior 12 Months   Prior 12 Months

                                  Supermarkets       Supermarkets
                                      -1.5%             -4.1%
                                   Drug Stores       Drug Stores
                                       1.2%             -2.6%

                                     Dollar             Unit
Top Brands                          Sales **         Volume ***

 1. Pantene Pro-V Always           $22.7 mil.         6.2 mil.
 2. Suave Naturals                 $22.5 mil.         17.7 mil.
 3. Matrix Biolage                 $19.7 mil.         1.2 mil.
 4. Pantene Pro-V Dly              $19.7 mil.         4.5 mil.
 5. Garnier Fructis Sleek          $18.6 mil.         4.6 mil.
 6. Nexxus Humectress              $16.9 mil.         1.4 mil.
 7. Alberto VO 5                   $16.8 mil.         9.1 mil.
 8. Clairol Herbl Essencs          $16.8 mil.         5.7 mil.
 9. Tresemme                       $15.8 mil.         4.2 mil.
10. Neutrogena Triple              $15.5 mil.         2.5 mil.

* Total of supermarkets, drug stores and discount stores excluding
Wal-Mart Stores Inc.

** All private label brands combined total $174 mil.

*** All private label brands combined total 4.5 mil.

Source: Information Resources Inc.