Natural cosmetics remains driver of the German industry

In the Corona year, natural cosmetics again recorded strong growth and were able to attract many new buyers. However, not all forms of distribution are benefiting equally.

Natural cosmetics developed extremely positively in the German-speaking region last year: “Compared to the previous year, it recorded sales growth of 5.7 per cent,” said Mirja Eckert at the presentation of the Natural Cosmetics Industry Monitor 2020. By comparison, the near-natural sector also developed positively with growth of 0.4 per cent, “but not with the dynamic to which we are otherwise accustomed,” said the managing director of the agency for strategic future issues The New and owner of the market research tool Naturkosmetik Konzepte. Conventional cosmetics were 2020 for the first time in a long time even slightly declining. According to the Cosmetics and Detergents Industry Association (IKW), sales fell by 0.1 per cent here.

1.3 million new buyers

Natural cosmetics therefore continue to be the driver of the industry. This is underpinned by another figure: “In the growth segment of natural cosmetics, we gained 1.3 million people last year who switched from conventional to natural cosmetics,” says Mirja Eckert. Meanwhile, the near-natural and natural cosmetics segments together account for almost 20 per cent of the market.

However, according to the market researcher, “retail has been completely turned around in 2020.” As examples, Mirja Eckert cites the shifts to e-commerce and the severe dislocations caused by the lockdown closures. To be sure, systemically important formats would have been able to continue selling body and beauty care. In contrast, traditional cosmetics retailers, especially beauty salons and perfumeries, have had to accept long closures. Nevertheless, according to Eckert, there are also clear winners here, namely those “who have been able to implement the omni-channel strategy well and who have also moved online.”

No growth rates near organic food

Cosmetics also developed positively in the organic specialist trade, but nowhere near as strongly as the food sector. “While total sales increased by an average of 14.4 per cent per store according to our figures, it was 0.6 percent in the cosmetics sector,” says Fabian Ganz of Biovista. “That's a great pity, because we had the opportunity to stay open via system relevance,” Eckert said. “But it looks like the target groups are not as accessible to organic specialty retail as a place to buy cosmetics.”

Number of natural cosmetics buyers on the rise

The fact that customers have increasingly turned to natural cosmetics in the past year is also confirmed by Anna Scheepers, Marketing Consult at the consumer research company GfK: “In the consumer panel, we see strong growth of eight per cent despite Corona.” The driver was, on the one hand, the number of natural cosmetics buyers, which increased by seven per cent in 2020. In addition, customers put more products in their shopping carts per purchase. On the other hand, shopping frequency was lower (keyword one-stop shopping) and prices also fell slightly.

Buyer reach at just under 30 per cent

In contrast, the buyer reach could be further increased. According to Scheepers, 29 per cent of people over 18 bought a natural cosmetics product at least once last year (in 2019, the figure was 27%). For conventional cosmetics, the buyer reach is admittedly 92 percent, according to GfK. But that also means the market is exhausted in terms of reach. “Not much is happening there anymore,“ Scheepers said.

The situation is different for natural cosmetics: On average, buyers spent around 30 euros on natural cosmetic products last year. According to Anna Scheepers, this corresponds to a share of around 14 per cent of the total demand for cosmetics: “So we still have a lot of room for improvement here!”

There were major differences between the individual categories in the Corona year: While the “Outer Categories” (e.g. decorative cosmetics) suffered a sharp loss of minus 16 per cent, the “Inner Catogories” grew strongly. Natural cosmetic soap, for example, increased by 55 per cent.

Sustainability issues even more important since pandemic

Do people in the pandemic have other worries and not pay so much attention to what they buy? And are they possibly even opting out of natural cosmetics again because of money worries? GfK investigated these questions in a survey of panel participants. The result: “On the contrary, the importance of climate protection, species conservation and, for example, the issue of plastic have actually become more important for many people,” says Scheepers. Her conclusion: “Even though they may have less money available in the future, they will still pay attention to what they spend it on and possibly buy sustainable and high-quality products all the more.”

Mirja Eckert is therefore certain that “natural cosmetics will continue to be a growth driver”. This is also due to social mega-trends such as health, individualization and sustainability. All of these are "topics that affect people's entire lifestyles," according to the trend researcher. However, it is also clear to her that in a changing market with growing availability of natural cosmetics and changing consumer behavior, it is no longer enough to simply carry on as before. “Everyone has to ask themselves, where are the sales channels in which I want to play a role and what should my product range look like?”