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Promises of diminished lines, a smoother, younger looking healthful glow and a clearer complexion are paying off big for the skin care market. Driven by aging baby boomers and other market segments, it racked up an expected $5.8 billion in sales in 2006, according to Skincare Products in the U.S., a 2006 year end market research study from Packaged Facts.

Another survey by management consulting and market research firm, Kline & Co., shows that there is a shift taking place in the U.S. professional skin care market. The shift benefits traditional retailers by providing them with more and more expensive products.

The Packaged Facts study projects that sales of moisturizers, cleansers, hand and body lotions, and anti aging skin products will top $7 billion by 2010. They are led by anti aging products, which are expected to retain double digit growth rates over the next several years.

Packaged Facts projects the compound annual growth rate of anti aging products to be at 11.3 percent through 2010. All other skin care segments are expected to see similar healthy growth, with the exception of facial cleansers, which should remain relatively flat, according to the report.

While prestige products have suffered fallout from department store mergers and closings, sales are expected to recover. Additionally, higher priced, higher quality mass market products, often referred to as, "masstige," and increased mass market distribution of prestige products, will continue to stimulate market growth.

Procter & Gamble's recent acquisition of a dermatology skin care line is one example of the trend toward at home treatments that promise the same results once available only through surgical procedures or high end clinical products, according to Carrie Mellage, industry manager for the consumer products practice of Kline's research division. She refers to P&G's recent acquisition of the DDF line from private equity firm, North Castle Partners.

The DDF line, which targets such skin concerns as anti aging, acne, hyperpigmentation and sun protection, currently is sold in specialty retail, department stores and select spas throughout the U.S., and in several other countries. "A large company with deep pockets like P&G is definitely capable of providing the support that doctors and spas are looking for, and this in itself should give the smaller brands a good reason to listen to their retailing partners," Mellage says.

While creating a shift in distribution, this trend is also boosting overall sales. Today, physicians and spa professionals face stiff competition from retail channels, including drug stores and mass merchandisers, the Kline study shows. As evidence of this growing competition, in 2005, CVS teamed up with Dr. Jeffrey Dover, a practicing dermatologist for more than 20 years, to create the first anti aging line developed by a dermatologist for the mass market.

The collection, known as Skin Effects, bolstered CVS' exclusive offerings and helped strengthen its position as a leader in beauty. Given the tough retail competition, many physicians and spas are seeking more support from product marketers in an effort to hold their share of the booming market.

According to Kline's Professional Skin Care 2006 report, U.S. sales in the so-called, "professional," component of the skin care market totaled $870 million in 2006. That represented more than five straight years of double digit growth. "It was nearly unanimous that physicians and spas wanted to see more in the way of providing product samples, training and educational materials to help them sell the products," says Mellage. The Kline study also noted a decline in the number of cosmetic procedures performed by physicians.

"Clearly the physicians are seeing a shift in their business, from providing procedural services to offering consultation and product recommendations to their patients," Mellage adds. Highly functional product promises, such as protection, prevention, deep cleansing, or regeneration, combined with natural and organic ingredients are also ideally poised to fuel dollar growth, according to both studies.

"Marketers and retailers have done an excellent job of repositioning products based on need and catering to a wider audience including teens, twenty somethings, and men," says Don Montuori, publisher of Packaged Facts.

"Rebranding has paid off in several instances, and positioning products in a more cosmeceutical fashion has fueled market growth and will continue to do so in the next several years, as consumers buy into the promise of better looking skin," he concludes.

Article ID: 131