POST RECESSION CONSUMER DYNAMICS - Global Wellness … · Antioxidants CoQ10 Ginkgo biloba Ginseng Guarana Lecithin Omega-3 (DHA) St John's wort ... market will double by 2015, to

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1

POST RECESSION CONSUMER DYNAMICS

PREPARED FOR THE 2011 GLOBAL SPA SUMMITMAY 18-19, 2011, BALI, INDONESIA


2

MACROVIEW

CONSUMERS IN 2011 AND BEYOND

STAYING WELL

BEAUTY AND YOUTH

BRANDS AND CONNECTIVITY


3A FRAGILE RECOVERY IS UNDERWAYMACRO VIEW

-8

-6

-4

-2

0

2

4

6

8

10

% g

row

th

Real GDP Growth by Region: 2009-2011

2009 2010 2011

2009: 892010: 17

Number of countries which

saw negative real GDP growth in

2009 & 2010


4UNEMPLOYMENT SEEN AS THIRD WAVE OF CRISIS

-4-20246810121416

0

5

10

15

20

25

30

% c

hang

e

Une

mpl

oym

ent r

ate

-% E

AP

Unemployment Rate in World’s Worst Affected Countries 2010

Unemployment rate 2010 Change since 2007

MACRO VIEW

14Number of countries

with an unemployment rate above 10% in

2007

25Number of countries

with an unemployment rate above 10% in

2010


5HOW WILL THE ECONOMY PERFORM?

Near term outlook remains uncertain

Growth to be driven by emerging markets – especially in Asia

Unemployment to remain high

Consumer spending still under pressure

Government debt to remain a key area of concern

Shift in global power to emerging markets will continue

MACRO VIEW


6NEW CONSUMER EMERGING

Looking for value: Manufacturers are grappling with a profound shift in consumer buying habits. Consumers are reacting to recession by searching for value for money and reassessing what is important to them. They trade down on brands and shop across channels in search of bargain prices. They look out for vouchers, coupons and promotions in order to save money.

Making things last/swapping/buying second-hand: Consumers are saving by cutting down on superfluous purchases, making things last, reusing and re-purchasing second-hand products through specialised sites such as eBay. Thrift is becoming acceptable socially.

Focus on experience over purchase: A greater focus is now put on the experience, not the purchase and the product itself. For example, there has been sustained interest in spas; a luxury treat as a substitute for a more expensive holiday.

Switching channels/buying online: Discounters, supermarkets and the internet have benefited most, as consumers search for better prices while trying to maintain more balanced budgets but still hoping to enjoy the products they are accustomed to.


Consumer spending squeezed and is not expected to recover

in short term

Stagnant income growth - the outcome of high

unemployment. Incomes are not expected to return to 2007 levels

until 2012

Unemployment - the International Labour

Organization does not expect employment to return to pre-recession

levels until 2015

Wealth destruction - declining house values in some countries have been

equivalent to the loss of a whole year’s disposable income

High debt - both personal and

government debt mean that credit-

fuelled consumption is a thing of the past

Increased savings -saving rates are rising

sharply in some countries, with an

inevitable impact on consumer spending


7THE CONSUMER IN 2011 AND BEYOND

Value-seeking

Digital and connected

Staying ahead

and well

Experience-focused

Nuanced luxury


The post-recession consumer


8CHANGING DEMOGRAPHICS AND CULTURAL ATTITUDES

Ageing consumers

Younger consumers staying single/childless longer

Rising disposable incomes in emerging markets

Increasingly urban populations

Busy lifestyle and longer working hours



9POPULATION BREAKDOWN 2005/2010/2015

0 5 10 15 20 25

0-7s

8-19s (current Gen Z)

20-30s (current Gen Y)

31-45s (current Gen X)

46-64s (current Baby Boomers)

Age 65+ (current SwingGeneration)

200520102015


% total population

Source: Euromonitor International


10RISE OF THE EMERGING MIDDLE CLASS

Emerging middle class makes US$5,000 annually in disposable income

Emerging countries expected to grow faster than developed countries


0

5

10

15

20

25

% g

row

th

Annual Disposable Income % Growth by Key Country 2004-2015

2005-10 CAGR % 2010-15 CAGR %


11GOOD HEALTH AND WELLNESS ARE CENTRE STAGE

Consumers are clearer on the empowering link between health and wellness and fuller, happier lifestyles:

Beauty and youth

Self-treating

Staying well

STAYING WELL


12EMERGING MARKETS TO LEAD GROWTHSTAYING WELL


13

Digestive Health

Fibre

Probiotics

Prebiotics

Immune Support

Antioxidant

Colostrum

Echinacea

Elderberry extract

Probiotics

Selenium

Vitamin C

Vitamin D

Weight Control

CLA

Fibre for satiety

Green tea extract

KonjacMannan

L’Carnitine

Pectins for satiety

Probiotics?

Sweeteners

Oral Health

Calcium

Cranberries

Fluoride

Herbal extracts

Probiotics

Vitamin D

Xylitol

Heart HealthBeta glucans

CoQ10

Plant sterols/stanols

Omega-3

Pectins

Peptides

Probiotics?

Soluble fibre

Vitamin D

Beauty From Within

Aloe vera

Collagen

CoQ10

Grape seed

L-cysteine

Lutein

Lycopene

Probiotics

Selenium

Vitamin B2

Vitamin B3

Vitamin B7

Zinc

Brain health

Antioxidants

CoQ10

Ginkgo biloba

Ginseng

Guarana

Lecithin

Omega-3 (DHA)

St John's wort

Vitamin B1

Vitamin B7

NUTRACEUTICALS – LEADING HEALTH TRENDS AND INGREDIENTS 2010

STAYING WELL

Prevention driven by “instant” gratification A promise of a long-term health benefit


14

Value Efficacy

Personal touch Experience

CONSUMER NEEDS BECOMING MORE DIVERSE STAYING WELL


15RE-CREATING THE SPA EXPERIENCE

Health and wellness factor to driveinterest in spas

New consumer targets

Innovative retail concepts

Mobile beauty becomes prominent

Key Spa Tourism Markets, absolute growth 2010-15 (million)

USA US$ 1,660Japan US$ 1,350China US$ 1,030France US$ 856Israel US$ 362India US$ 363Austria US$ 266Vietnam US$ 221

BEAUTY AND YOUTH


16PREMIUM COSMETICS ON THE REBOUND

1%1%

11%11%

12%12%

1%1%

9%9%

2%2%1%1%

BEAUTY AND YOUTH


17MASS COSMETICS TO DRIVE FUTURE GROWTH

0

10

20

30

40

50

60

70

80

90

100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

% v

alue

(US$

)

Global Premium Cosmetics Global Mass Cosmetics

72%

24%

76%

28%

BEAUTY AND YOUTH


182XChina’s premium cosmetics market will double by 2015, to reach $7billion

80%of Latin America’s industry value will be accounted for by mass products in 2015

$83 Latin America industry value in 2015, third largest regionglobally

BILLION


19INCREASING IMPORTANCE IN BEAUTY RETAILING

26 27 26.9

13.1 13.4 13.4

10.6 9.7 9.5

12.4 12.9 12.8

14 15.3 16.1

0

10

20

30

40

50

60

70

80

2005 2006 2007 2008 2009 2010

% v

alue

sha

re

Global Beauty Channel Breakdown

Super/Hypermarkets Beauty Specialists Department Stores

Drugstores Non-Store Retailing

BEAUTY AND YOUTH


20VARIED PENETRATION ACROSS KEY MARKETS

0

1

2

3

4

5

6

7

8

9

S.Korea France USA UK Japan

% s

hare

of

tota

l ret

ail s

ales

Beauty Internet Retailing – Top Five Markets

BEAUTY AND YOUTH


21INTERNET CONTINUES TO RESHAPE THE WORLD

0

10

20

30

40

50

2000 2010 2020% o

f wor

ld p

opul

atio

n

More than 40% of the world’s population will be on the

Internet in 2020


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2010 2020

% o

f wor

ld’s

Inte

rnet

use

rs

Half of all Internet users will be in Asia

Asia Rest of world

711 millionChinese Internet users in 2020

281 millionUS Internet users in 2020


22NEW WAYS OF ENGAGING WITH BEAUTY CONSUMERS

Social Media

New In-store

ExperienceMobile

Technology



23THE POWER OF THE SMARTPHONE APP

Key success factors:

PersonalisedAdded value

Interactive experienceReal-time updates



24• Facebook users500 million500 million

• Pieces of content per month30 billion30 billion

• Minutes of log-in time per month 700 billion 700 billion

• Average friends per user 130 130

• Of users between the age of 18-3462% 62%

• Users of Facebookare female50%50%

• Registered tweets per day55 million55 million



25ONLINE PRESENCE AND SOCIAL MEDIA NOT TO BE IGNORED

Key players increasing online presence

Opportunities for smaller brands

Social commerce still limited

Blogging/’vlogging’ offer new experience

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POST RECESSION CONSUMER DYNAMICS - Global Wellness … · Antioxidants CoQ10 Ginkgo biloba Ginseng Guarana Lecithin Omega-3 (DHA) St John's wort ... market will double by 2015, to