By Betsy Cummings

If a recession is indeed in the offing, then consumers are prepared to get through it looking and smelling their best. Health and beauty has been relatively immune to fluctuations in the economy. "For the last 10 years, makeup and skincare show positive growth, despite any recessions," said Karen Grant, vp and senior beauty industry analyst at NPD Group, Port Washington, N.Y.

That said, some consumers may save some pennies by switching to, say, a private label shampoo. In an April conference with analysts, Procter & Gamble CFO Clayton Daley noted that the company has seen a slowdown in the rate of growth "across several beauty categories" and that private label had been growing in a few of those.

P&G is undeterred, however, that its beauty business isn't growing as fast as, say, its fabric care lines. In March, the company bought luxe haircare brand Frederic Fekai for an undisclosed sum. Despite some slowness at retail, P&G plans to keep spending on its beauty brands.

"Yes, beauty is a competitive business right now, and we are making sure that our marketing and our spending with retailers is competitive during this period," Daley told analysts.

Hot New Demographic: The Wrinkly
P&G is no doubt buoyed by its success with Oil of Olay, which has continued strong growth over the past few years. But Olay's not the only brand profiting by America's increasingly saggy flesh: Mintel predicts the market for skincare products will grow 33.5% from 2008 to 2012.

Anti-aging products totaled $1.6 billion in 2007, up 63% from 2002. In the prestige market, dollar volume for anti-aging products has risen 28% since 2003, per the Chicago-based firm.

The segment's best-seller, Olay's Definity, had sales of $41 million last year. Others did nearly as well. L'Oréal's Dermo-Expertise Age Perfect has sales of $32 million, up 43% since 2005, while Johnson & Johnson's Neutragena Healthy Skin grew 43.6% from 2005 to 2007.

At the same time, one of the hottest demographics resides on the other end of the age spectrum. A recent NPD study of various younger age groups revealed that more than 50% of tweens are using beauty products today, with girls as young as 10 entering the market as regular consumers.

Brands are aware of the trend, Grant said, but are unsure of exactly how to approach such a young market without seeming perhaps too predatory or enabling a demographic to grow up too fast.

Big Trend: Fake Tanning
One salve for aging boomers is tanning, which generally makes one look healthier and younger. But as many have discovered, it can also cause cancer and wrinkling. Marketers have stepped into the fray to address this with sunless tanning solutions like Jergens Natural Glow, Dove Energy Glow and J&J's Aveeno Continuous Radiance Moisturizing Lotion, among others. Sunless tanner sales increased 92% from 2005 to 2006, according to Mintel research.

"That's off the charts" compared to normal segment growth, said Kat Fay, senior consumer analyst at Mintel. Ultima's Glowtion, which was bought, hoarded, then sold on eBay, Fay said, speaks volumes about the power of the self-tanning category.

"What that speaks to is a really high level of initial interest, but the category is now suffering from lapsed users," said Fay. Early-to-market products flew off shelves, but left streaks, mismatched skin tones or otherwise didn't perform as expected. "You want to look like you came back from Palm Beach, not Kabuki theater." That means leader Jergens has reason to glance back over its shoulder in the coming year as rivals nip at its heels.

Industry research shows that "a large consumer pool is poised for retrial," Fay said.

Swiss Army Toothpaste
Fay describes categories like toothpaste and soap as "grudge purchases." That is, they are products that aren't much fun to buy, but you have to pick them up anyway. Mouthwash, for instance, is a grudge purchase, and Fay thinks the Scopes of this world are on increasingly thin ice. "If you're not tied to a particular mouthwash, the CVS brand not only imitates the label, bottle and design, but has the same ingredients and is a dollar or two less," she said.

The typical way to battle the private label threat is via innovation. In toothpaste, that has meant in recent years tartar control, gingivitis defense, plaque-fighting ability, whitening and breath freshening. At this point, the battle in toothpaste is over who can provide all these in one package, sort of like a Swiss Army toothpaste. "Everything has whitening now, including gum," said Fay. "If they could put it in a deodorant, they would."

The outcome has been dour for the category. Mintel reports that the market for oral-care items was $3.9 billion in 2007, the same in constant dollars as in 2006. "Mass indifference may stem in part from a dizzying array of products and claims at retail. Successful product launches may also be cannibalizing older-product sales, rather than expanding the market," the Mintel report concludes.

Potential Game-Changer: Sephora Fay's vision of brands falling prey to comparison shopping on store shelves depends on the continued domination of CVS and supermarkets for health and beauty items, but the idea of the specialized retail beauty store could challenge that.

"Consumers tell us that they find stores like Sephora are a candy store for makeup," said Grant. Within them there is an "element of play and experimentation" that department stores, with their locked cases of makeup, don't offer. The national chain of boutiques has spawned a series of copycats where shoppers can "get consultative advice without being tied to a brand." It's about what's best for the shopper, Grant said, not what's best for various brands.

With 250 prestige brands in skincare, cosmetics and fragrance, and 177 stores in the U.S. and growing, Sephora's business model continues to change the way products are presented and sought out in the marketplace. So much so that department stores like J.C.Penney, which opened 72 Sephora branches within its stores over the past year and a half, are considering how they can adopt similar models, Grant said. Additional department stores are expanding and opening more displays to make them more accessible to shoppers, rather than asking the white-coated brand representative to unlock case after case of beauty products.

Bright Color: Green
As marketers have learned in recent years, marketing need not be limited by product attributes. After Unilever turned buying Dove soap into an act of defiance against the beauty industry—though this posture was somewhat weakened after it was pointed out that the company was trying to have things both ways with its sexist Axe ads—Aveda tied its makeup to green issues, namely wind power, by pointing out that it uses that form of energy to produce its makeup. The Estée Lauder brand wasn't the only one to tie looking good to doing good: Paul Mitchell also launched ads touting its philanthropy and support for the environment. Whether this do-good approach will do well with consumers remains to be seen.

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