Posted on May 21, 2014

Personal-Care Firms Uncover New Markets

Peter Evans and Caitlan Reeg, Wall Street Journal, May 20, 2014

Personal-care companies have discovered a hidden market: veiled hair.

German consumer-goods maker Henkel AG is touting its new Gliss Restore & Refresh shampoo as the world’s first hair-care product to address problems caused by the lack of ventilation under a head scarf, including split ends, itchy scalp and unpleasant odor. British-Dutch rival Unilever PLC is also targeting the market with its Sunsilk shampoo. And hair is just the start.

After years of pushing Western-designed shampoos and deodorants in the Middle East, the world’s biggest personal-care companies are changing course and selling products made specifically for local consumers’ tastes.

Procter & Gamble Co.’s Olay line targets Persian Gulf customers with skin-lightening creams. A recent campaign by Beiersdorf AG’s Nivea brand collected love stories from mostly female Middle Eastern writers to market its Sensual Musk body lotion.

Unilever, the world’s second-largest consumer-products company, after P&G, has tweaked best-selling products such as Axe deodorant and Sunsilk shampoo with local woody or sweet fragrances and made some packaging shinier, the company said.

The goal is to woo young Middle Easterners with cash to spare. Consumer spending in developed markets, by contrast, is still rebounding from the financial crisis.

“If you want to go with growth, you want to go with the Muslim market,” said Shelina Janmohamed, vice president at Ogilvy Noor, a London-based Muslim marketing agency owned by WPP PLC.

The global Halal market–products made to be permissible under Islamic law–is valued at $2.1 trillion, according to a 2013 report by the Halal Industry Development Corp., a government-sponsored trade group based in Malaysia. Roughly 9% of that goes to Halal cosmetic products, one of the fastest-growing categories.

Halal cosmetic products are prohibited from containing any pork byproducts such as pig-fat derivatives, which are used in some makeup brands, or the proteins used in some shampoos. They also shouldn’t contain alcohol, which is forbidden under Islamic law.

Marketing by major personal-care companies directly to Muslim consumers is still in its infancy, according to Ogilvy Noor’s Ms. Janmohamed, who likens the situation to the untapped Hispanic market in the U.S. 20 years ago. Still, some campaigns have started to appear, including an ad for Unilever’s Sunsilk shampoo in which no hair was shown.

So far, much of the growth has come from small firms providing specialist products in one or two countries. Now global companies are tapping the booming demand. Since 2008, Henkel’s Middle East and Africa business has grown three times as fast as the company overall. Regional sales increased 17.6% in 2013 from the previous year, and Henkel expects a similar performance this year.