Asia could hold key to future naturals expansion
Europe and the US is leading to increasing opportunities for
Western companies in the Asian market.
Experts believe that, with the more established state of the market in the West, and the fact that Western brands carry greater credence in many Asian markets, this spells significant opportunities that are likely to lead to a more global landscape for the category.
As Tina Gill from Organic Monitor points out, it is likely to only be from investment by major international players that significant expansion plans will be realised.
Gill says that European brand Aveda has been able to build a stronger and more far-reaching international presence thanks to a capital injection from Estee Lauder, and that following its acquisition by L'Oreal, Sanoflore is now gearing up to extend its presence internationally.
Although the US market, followed by the European market, remain by far the most developed for natural and organic personal care products in monetary terms, it will be key Asian markets where these companies will be looking to increase their footprint as a means of securing future growth.
"We are seeing high growth in countries like Japan, Singapore, Taiwan and Hong Kong, as consumers there become more aware of natural and organic cosmetics. Asia is definitely the most prospective market at the moment.," Gill said.
But although big prospects are on the horizon in Asia, Gill points out that it is the US and Europe that are likely to remain the world production centres for natural and organic personal care products.
"Asian consumers value Western brands and are willing to pay premiums for natural and organic cosmetics produced there," Gill said.
However, competition from Asian players might be about to hot up, particularly as leading Japanese company Kao recently announced that it is eyeing potential mergers and acquisition in the category over the coming months.
Kao bought up the cosmetics arm of Kanebo for $3.7bn at the beginning of this year and later bought up the British brand Molton Brown for $334m. The likelihood is that it will be looking at European natural and organic brands, as this is where there are still a few market opportunities.
Beyond the Asian market, but still probably at the far end of the radar screen, is the fast-developing market in Central and Eastern Europe, including Russia, where consumers are also becoming increasingly interested in natural products.
