Men's Grooming - Hong Kong, China

Euromonitor International : Country Sector Briefing

June 2010

Men's Grooming Hong Kong, China

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List of Contents and Tables

Headlines ................................................................................................................................................................. 1

Trends ...................................................................................................................................................................... 1

Competitive Landscape .......................................................................................................................................... 1

Prospects .................................................................................................................................................................. 2

Category Data ......................................................................................................................................................... 2 Table 1 Sales of Men's Grooming Products by Subsector: Value 2004-2009 ................................ 2 Table 2 Sales of Men's Grooming Products by Subsector: % Value Growth 2004-

2009................................................................................................................................... 3 Table 3 Sales of Men's Razors and Blades by Type: % Value Breakdown 2005-2009 .................. 3 Table 4 Men's Grooming Products Company Shares 2005-2009 ................................................... 3 Table 5 Men's Grooming Products Brand Shares by GBN 2006-2009........................................... 4 Table 6 Men's Razors and Blades Brand Shares by GBN 2006-2009 ............................................ 4 Table 7 Forecast Sales of Men's Grooming Products by Subsector: Value 2009-2014 .................. 5 Table 8 Forecast Sales of Men's Grooming Products by Subsector: % Value Growth

2009-2014.......................................................................................................................... 5

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MEN'S GROOMING IN HONG KONG, CHINA

HEADLINES Mens grooming generates 4% current value growth in 2009 to reach HK$339 million

Growth boosted by rising beauty consciousness among males

Mens deodorants most dynamic with growth approaching 9% in 2009

Deodorant unit prices increase in 2009

Procter & Gamble HK Ltd leads with near 27% value share

Mens grooming expected to see 0.6% constant value CAGR over forecast period

TRENDS With increasing beauty consciousness an increasing number of males are taking better care of their

appearance. No longer is the notion of using beauty products considered particularly feminine or unmanly. Moreover, with male celebrities endorsing both female and male skin care products (such as Takeshi Kaneshiro for Biotherm), this has helped drive value sales for mens skin care, which logged the second highest growth of 7% in 2009.

Growth in 2009 was down marginally compared with 2008, mainly due to more price promotions being implemented to drive consumer spending during the recession.

Mens deodorants continued to perform the best in current value terms in 2009, as these are used on a daily basis, sometimes even applied multiple times per day for those who lead an active life. In addition, premium mens fragrances also saw good growth within fragrances an indication that consumers are not trading one for the other.

Unit prices increased as a result of new launches targeting specific areas, as well as trading up to premium variants.

Mass brands dominate mens grooming, although the proportion of premium products tends to be greater within mens skin care compared with other categories. The top three premium brands are Aramis Lab Series (Este Lauder HK Ltd), Clinique Skin Supplies for Men (Este Lauder HK Ltd) and Biotherm Homme (LOral HK Ltd). These achieved value shares of 3-4% each in 2009.

Innovation in mens skin care tends to focus on combining functionality with convenience. For instance, functions of a toner and an after-shave product are combined into one, while eye serums or gels often come in a roller tube so that the product can be applied directly to the users eye area. Hydration and a refreshing feeling are still dominant attributes heavily emphasized during most marketing campaigns. Nonetheless, there has been an increase in products with whitening and anti-ageing functions that cater to a niche consumer group.

Mens razors and blades face increasing competition from electric shavers which offer a cleaner shave and a longer usage lifespan. This resulted in relatively stagnant growth for mens razors and blades over the review period. Within mens razors and blades, system sales account for the majority, holding 98% of sales value in 2009, with the remaining share attributed to disposables. Disposables fail to gain share as they tend to be less effective when compared to systems. Efficiency is an important attribute for most males who shave on a daily basis.

COMPETITIVE LANDSCAPE Procter & Gamble HK Ltd led at the end of the review period with a value share of approaching 27% in

2009. The company derives most of its value from mens shaving, where its Gillette brand dominates with a 48% value share in 2009. Additionally, its Gillette Series line led mens deodorants with a 47% value share in 2009.

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Water Oasis Co Ltd saw the greatest decline in 2009, dropping three percentage points. This was due to the company pulling out of mens toiletries to focus on promoting its female toiletries range and expansion in Mainland China.

International brands dominate as these have been well-established in Hong Kong for many years and are supported by strong branding, marketing campaigns and distribution channels.

Key new launches include Nivea for Men Silver Protect (Beiersdorf Hong Kong Ltd) a deodorant that uses silver molecules claimed to efficiently remove body odour. Another product was the Aquapower Absolute Gel from Biotherm (LOral HK Ltd) a moisturising gel marketed to moisturise and sooth skin at the same time by reducing the temperature of the skin by three degrees Celsius.

In terms of marketing, television advertising is popular for mens shaving, while magazines and blog posts are more common for mens toiletries. On the other hand, brands such as the Lab Series For Men (Este Lauder HK Ltd) rely on successful word-of-mouth recommendations.

Private label products are present only in disposable razors and blades. However, these saw a decline in value share towards the end of the review period, attributable to strong branding established by branded products that are perceived to be of higher quality.

PROSPECTS Mens toiletries will drive growth of mens grooming over the forecast period as an increasing number of

consumers see the benefits of purchasing male-specific products. For instance, males tend to have thicker skin than their female counterparts and consumers require different skin care products. Meanwhile, mens shaving is expected to post a marginal decline in constant value CAGR due to heightened competition from electric shavers, which are gaining popularity due to their efficiency and convenience.

Mens skin care will record the best performance over the forecast period, benefiting from heightened awareness in terms of grooming. With overall development of mens skin care, the consumer group will enlarge, while existing consumers are likely to trade up to premium products that offer more advanced benefits such as anti-ageing.

Potential threats to growth include the rise of electric shavers, and also male-only beauty parlours that not only offer beauty services such as the treatment of acne, but also sell in-house skin care products that are not included in the scope of this report.

Companies are likely to continue implementing marketing campaigns to educate male consumers on the benefits of using male-specific products. In terms of new launches, products focusing on anti-ageing functions are likely to gain greater penetration among the masses in coming years.

CATEGORY DATA

Table 1 Sales of Men's Grooming Products by Subsect or: Value 2004-2009

HK$ million 2004 2005 2006 2007 2008 2009 Men's Shaving 151.4 154.5 157.8 161.2 164.9 168.2 - Men's Post-Shave 28.5 29.5 30.5 31.5 32.5 33.3 - Men's Pre-Shave 49.3 51.1 52.8 54.7 56.4 57.8 - Men's Razors and Blades 73.6 73.9 74.5 74.9 76.0 77.1 Men's Toiletries 135.3 140.7 146.7 153.7 162.5 171.1 - Men's Bath and Shower 13.9 14.4 15.0 15.6 16.3 17.0 - Men's Deodorants 14.1 14.7 15.3 16.0 17.5 19.0 - Men's Hair Care 55.9 58.1 60.2 62.6 64.7 66.7 - Men's Skin Care 51.4 53.6 56.2 59.6 64.0 68.5 Men's Grooming 286.7 295.2 304.4 314.9 327.4 339.3 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International

estimates

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Table 2 Sales of Men's Grooming Products by Subsect or: % Value Growth 2004-2009

% current value growth 2008/09 2004-09 CAGR 2004/09 TOTAL Men's Shaving 2.0 2.1 11.1 - Men's Post-Shave 2.5 3.1 16.7 - Men's Pre-Shave 2.5 3.2 17.2 - Men's Razors and Blades 1.4 0.9 4.8 Men's Toiletries 5.3 4.8 26.5 - Men's Bath and Shower 4.0 4.1 22.4 - Men's Deodorants 8.5 6.1 34.2 - Men's Hair Care 3.0 3.6 19.2 - Men's Skin Care 7.0 5.9 33.3 Men's Grooming 3.6 3.4 18.3 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International

estimates

Table 3 Sales of Men's Razors and Blades by Type: % Value Breakdown 2005-2009

% retail value rsp 2005 2006 2007 2008 2009 Disposables 3.0 3.0 2.5 2.3 2.0 Systems 97.0 97.0 97.5 97.7 98.0 Systems - Razors 36.0 36.0 36.0 36.0 36.5 Systems - Refill Blades 61.0 61.0 61.5 61.7 61.5 Other Razors and Blades - - - - - Total 100.0 100.0 100.0 100.0 100.0 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International

estimates

Table 4 Men's Grooming Products Company Shares 2005 -2009

% retail value rsp Company 2005 2006 2007 2008 2009 Procter & Gamble HK Ltd 28.6 27.5 27.1 26.9 26.6 Sunwa Marketing Co Ltd 11.0 11.9 13.2 12.8 12.7 Schick Asia Ltd 11.4 11.4 11.4 11.4 11.4 Este Lauder HK Ltd 7.9 7.3 7.7 7.8 8.2 Kao (Hong Kong) Ltd 3.0 3.1 3.0 3.1 3.4 Beiersdorf Hong Kong Ltd 2.5 2.7 2.8 2.8 3.1 L'Oral HK Ltd 1.6 1.8 2.1 2.2 2.6 Nu Skin Enterprises HK 1.9 2.0 1.9 1.7 1.6 Inc Unza Cathay Ltd 1.2 1.2 1.2 1.2 1.1 Amway Hong Kong Ltd 1.3 1.2 1.2 1.1 1.0 Clarins HK Ltd 0.9 0.9 0.9 0.8 0.7 Body Shop Worldwide 5.2 4.8 4.9 3.1 0.6 Ltd, The Unilever Hong Kong Ltd 0.2 0.3 0.3 0.3 0.4 Water Oasis Co Ltd 4.9 5.1 5.0 3.2 0.3 Fantastic Natural 0.3 0.3 0.3 0.3 0.3 Cosmetics Ltd Sara Lee Hong Kong Ltd 0.2 0.2 0.2 0.2 0.2 Calvin Klein Cosmetics Co 0.0 0.0 0.1 0.1 0.1 Yves Rocher SA 0.2 0.2 0.2 0.1 0.1 Gillette Hong Kong Ltd - - - - - Warner-Lambert HK Ltd - - - - - Private Label 1.4 1.4 1.2 1.0 0.9

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Others 16.1 16.7 15.4 19.8 24.8 Total 100.0 100.0 100.0 100.0 100.0 Source: Trade associations, trade press, company research, trade interviews, Euromonitor International estimates

Table 5 Men's Grooming Products Brand Shares by GBN 2006-2009

% retail value rsp Brand Company 2006 2007 2008 2009 Gatsby Sunwa Marketing Co Ltd 11.9 13.2 12.8 12.7 Gillette Series Procter & Gamble HK Ltd 12.6 12.6 12.7 12.7 Schick Schick Asia Ltd 11.4 11.4 11.4 11.4 Gillette Sensor Excel Procter & Gamble HK Ltd 8.1 7.1 6.5 6.1 Gillette Mach3 Procter & Gamble HK Ltd 6.8 5.9 5.3 5.0 Aramis Lab Series Este Lauder HK Ltd 2.9 3.2 3.3 3.5 Men's Bior Kao (Hong Kong) Ltd 3.1 3.0 3.1 3.4 Nivea for Men Beiersdorf Hong Kong Ltd 2.7 2.8 2.8 3.1 Clinique Skin Este Lauder HK Ltd 2.7 2.7 2.8 3.0 Supplies for Men Gillette Fusion Procter & Gamble HK Ltd - 1.4 2.3 2.7 Biotherm Homme L'Oral HK Ltd 1.8 2.1 2.2 2.6 Dividends Nu Skin Enterprises HK Inc 2.0 1.9 1.7 1.6 Clinique Happy for Este Lauder HK Ltd 1.4 1.6 1.5 1.5 Men Romano Unza Cathay Ltd 1.2 1.2 1.2 1.1 Tolsom Amway Hong Kong Ltd 1.2 1.2 1.1 1.0 Clarins Men Clarins HK Ltd 0.9 0.9 0.8 0.7 The Body Shop Body Shop Worldwide 4.8 4.9 3.1 0.6 Ltd, The Rexona for Men Unilever Hong Kong Ltd 0.3 0.3 0.3 0.4 Black Ice Water Oasis Co Ltd 0.3 0.3 0.3 0.3 Fancl Fantastic Natural 0.3 0.3 0.3 0.3 Cosmetics Ltd Este Lauder Este Lauder HK Ltd 0.2 0.2 0.2 0.2 Brylcreem Sara Lee Hong Kong Ltd 0.2 0.2 0.2 0.2 Eternity for Men Calvin Klein Cosmetics Co 0.0 0.1 0.1 0.1 Yves Rocher Yves Rocher SA 0.2 0.2 0.1 0.1 H2O+ Water Oasis Co Ltd 4.8 4.7 2.9 - Gillette Mach3 Gillette Hong Kong Ltd - - - - Gillette Sensor Excel Gillette Hong Kong Ltd - - - - Gillette Series Gillette Hong Kong Ltd - - - - Schick Warner-Lambert HK Ltd - - - - Private label Private Label 1.4 1.2 1.0 0.9 Others 16.7 15.4 19.8 24.8 Total 100.0 100.0 100.0 100.0 Source: Trade associations, trade press, company research, trade interviews, Euromonitor International estimates

Table 6 Men's Razors and Blades Brand Shares by GBN 2006-2009

% retail value rsp Brand Company 2006 2007 2008 2009 Schick Schick Asia Ltd 31.0 32.0 32.5 33.0 Gillette Sensor Excel Procter & Gamble HK Ltd 33.0 30.0 28.0 27.0 Gillette Mach3 Procter & Gamble HK Ltd 28.0 25.0 23.0 22.0 Gillette Fusion Procter & Gamble HK Ltd - 6.0 10.0 12.0 Gillette Mach3 Gillette Hong Kong Ltd - - - - Gillette Sensor Excel Gillette Hong Kong Ltd - - - - Schick Warner-Lambert HK Ltd - - - - Private label Private Label 3.0 3.0 2.5 2.2 Others 5.0 4.0 4.0 3.8 Total 100.0 100.0 100.0 100.0

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Source: Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor International estimates

Table 7 Forecast Sales of Men's Grooming Products b y Subsector: Value 2009-2014

HK$ million 2009 2010 2011 2012 2013 2014 Men's Shaving 168.2 169.3 169.2 168.1 165.8 162.7 - Men's Post-Shave 33.3 33.7 33.9 33.8 33.5 33.0 - Men's Pre-Shave 57.8 58.4 58.5 58.2 57.3 56.2 - Men's Razors and Blades 77.1 77.2 76.9 76.1 75.0 73.5 Men's Toiletries 171.1 177.4 182.1 185.5 186.7 186.8 - Men's Bath and Shower 17.0 17.4 17.6 17.8 17.7 17.6 - Men's Deodorants 19.0 19.7 20.3 20.8 20.9 20.7 - Men's Hair Care 66.7 68.4 69.4 69.9 69.5 68.8 - Men's Skin Care 68.5 71.9 74.8 77.0 78.6 79.8 Men's Grooming 339.3 346.7 351.4 353.6 352.5 349.5 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International

estimates

Table 8 Forecast Sales of Men's Grooming Products b y Subsector: % Value Growth 2009-2014

% constant value growth 2009-14 CAGR 2009/14 TOTAL Men's Shaving -0.7 -3.3 - Men's Post-Shave -0.2 -0.8 - Men's Pre-Shave -0.6 -2.8 - Men's Razors and Blades -1.0 -4.7 Men's Toiletries 1.8 9.2 - Men's Bath and Shower 0.7 3.5 - Men's Deodorants 1.8 9.1 - Men's Hair Care 0.6 3.2 - Men's Skin Care 3.1 16.4 Men's Grooming 0.6 3.0 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International

estimates

MEN'S GROOMING IN HONG KONG, CHINAHEADLINESTRENDSCOMPETITIVE LANDSCAPEPROSPECTSCATEGORY DATATable 1Sales of Men's Grooming Products by Subsector: Value 2004-2009Table 2Sales of Men's Grooming Products by Subsector: % Value Growth 2004-2009Table 3Sales of Men's Razors and Blades by Type: % Value Breakdown 2005-2009Table 4Men's Grooming Products Company Shares 2005-2009Table 5Men's Grooming Products Brand Shares by GBN 2006-2009Table 6Men's Razors and Blades Brand Shares by GBN 2006-2009

Table 7Forecast Sales of Men's Grooming Products by Subsector: Value 2009-2014Table 8Forecast Sales of Men's Grooming Products by Subsector: % Value Growth 2009-2014