Should marketers develop ethnic-specific products? How could we explore the Hispanic green trend? These are some of the questions Tony D’Andrea, Director of Planning and Research at The San Jose Group, analyzes in the article about the “Hispanic Haircare Market”.
In times of economic hardship, whereas mainstream consumers turn to cheaper brands, Hispanics stick to their brands of choice, particularly in haircare and skincare products. As recurrently found in CPG market monitors, brand loyalty is higher among Spanish-speaking consumers, often 5 to 15 percentage points above English-speaking Hispanics and general market consumers (verified as recently as February 2011 Mintel Oxygen).
Latinos and other multicultural consumers spend 5 billion dollars on haircare products each year. This includes shampoos, conditioners, haircolor, styling products, relaxers and sprays. Nearly 70% is spent on regular products, and the remainder on ethnic-specific ones. Growing at an average 2.6% each year since the early 2000s, haircare spending is being in part driven by the dramatic growth of the Hispanic population in America. According to the U.S. Census Bureau, Latinos represent 56% of the overall population growth, and now total 50.5 million people with a purchasing power of 1.1 trillion dollars.
With the exception of relaxers and hairsprays, Hispanics index higher in the consumption of all haircare products, and show strong leads in haircolor and depilatories (127 and 150 index points respectively, according to Packaged Facts 2010 report). No, this is not genetics or beauty obsession, but the fact that Latinas treat their hair at home instead of a professional salon: 46% of Latinas against 32% of general market women do so at home (Packaged Facts 2009 DIY Report). In line with the Hispanic growth being projected by the U.S. Census Bureau, CPG market monitors also forecast that the consumption of haircare products will only increase in the coming years.
“While open to general market options, Latinas also have specific preferences in haircare and skincare. These differences are great opportunities for CPG marketers”, as noted by Jim Legg, The San Jose Group’s EVP of Leadership and Innovation. A segment of Hispanics prefer ethnically-designed products, such as relaxers and curly hair conditioners. Likewise, multifunctional products have been grabbing the attention of lower-income Hispanics looking for good-value purchases.
Yet, Hispanic women show great interest in natural and wellness options. Herbal, organic, natural ingredients in haircare products are particularly appealing. According to a Packaged Facts survey, Latinas want environmentally friendly products, as expressed in a whopping 173 index. They are interested in recycling (119), and oppose animal-tested products (115). Although indexing only slightly higher in the consumption of natural products (105), such differences between verbalized interests and manifested consumption actually represent great marketing opportunities.
In fact, the Hispanic green trend has been successfully explored by number one Latin American cosmetic giant Natura. Building its brand around natural, responsible and sustainable themes, Natura is gaining market share in all eight national markets it operates, from Argentina to Mexico. Upon a robust direct sales model, the motto “well being and being well” crowns Natura’s 3 billion dollar annual revenue. Moreover, in order to boost its global quality capabilities, Natura has opened an R&D lab in Paris, while being already mentioned in the sophisticated French market. In Brazil, where it is headquartered, Natura holds a 24% market share, notwithstanding direct competition by L’Oreal, Avon and Unilever.
The rise of innovative, mid-size marketers in tune with multicultural markets is a new challenge for CPG leaders like P&G and Unilever. Not surprisingly, Global CMOs are now in charge of taking best marketing practices culled in Latin America and Asia back to their core markets. In the haircare industry, one strategic decision is whether or not to develop ethnic-specific products. Yet, beyond the interface between Consumer Insights and R&D, marketing strategies must better connect with ethnic consumers by means of culturally relevant conversations.
Tony D’Andrea is Director of Planning and Research atThe San Jose Group, headquartered in Chicago. As a strategic planner and anthropologist, Anthony has over 10 years of consulting experience integrating research insights into effective strategies. He holds a PhD in Anthropology from the University of Chicago, and a BBA in Business from the Federal University of Rio de Janeiro.