Men’s Grooming in the United Arab Emirates-Questionnaire Project Report

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HEADLINES

• Men’s grooming products generated sales of AED181 million, representing 12% current value growth

• The low consumer confidence prevented the penetration of men’s grooming products into low-income brackets

• Men’s razors and blades achieved the highest current value growth rate of 13% in 2009

• Unit price movement was held back due to the government’s price fixing and the economic downturn

• Procter & Gamble Gulf FZE led men’s grooming products with a 34% retail value share, thanks to Gillette

• Men’s grooming products is expected to post a constant value CAGR of 6% during the forecast period

TRENDS

• The key story is the premiumisation trend within men’s grooming products especially men’s skin care, as the low consumer confidence has further dented the penetration of these products into middle- and low-income brackets. Historically, the term “men’s grooming products” usually referred to shaving-related products covering men’s shaving, men’s pre-shave, men’s razors and blades and men’s post-shave. However, the category showed remarkable developments during the review period, which culminated in healthy growth for emerging product areas like men’s skin care, men’s toiletries and men’s bath and shower. With the exception of a few standard lines like L’Oréal Men Expert, Gillette and adidas, men’s grooming is mostly premium and has welcomed some key launches in 2009 like Guerlain Homme, Acqua di Parma and Korres, to name a few.

• Men’s grooming products generated sales of AED181 million in 2009, a 12% current value increase over 2008. It managed to post double-digit growth on account of the predominant demand for shaving-related products and deodorants as well as the product novelty of men’s skin care and hair care products. However, demand for men’s skin care products mostly emanates from high-income earners, especially as lower-income groups would consider most of these products non-essential.

• Given its importance, men’s razors and blades was the most dynamic category in 2009 and also achieved the highest sales. Men’s razors and blades grew by 13% in current value terms in 2009 as sales reached AED97 million, which in turn accounted for 54% of total sales of men’s grooming products.

• Men’s pre-shave was the second fastest-growing area with a current value growth of 11%. In a year of low consumer spending, most consumers focussed on essential products like men’s pre-shave rather than luxury products like men’s skin care, the product novelty of which has also started fading.

• Men have an increasing need for products – men’s grooming has been present for some time in the United Arab Emirates, with hair salons offering a variety of services like shaving, haircuts, pedicures and massages. In addition, the spa concept is making its way to male consumers, especially with Dubai evolving as a regional tourist destination. However, men are generally reluctant and embarrassed to be seen seeking out products in skin care areas.

• Amid the slowdown, manufacturers and retailers launched a series of promotional offers by the end of the year in an effort to revive demand and return to the earlier growth rates.

• Men’s grooming products mostly comprises mass brands, which is in line with men’s lesser propensity to spend on cosmetics and toiletries compared to women. The only areas in which men might consume premium brands are men’s pre-shave, men’s post-shave and men’s deodorants, as some high-income earners purchase extensions to favourite fragrances available in these formats. These extensions are widely available at major department stores – Debenhams and Harvey Nichols – and specialist beauty retailers – Paris Gallery, Areej and Faces. In addition to fragrance extensions, there is a number of popular premium ranges in the market like Clarins Men, Biotherm Homme, Lancôme Men, Clinique Skin Supplies for Men, and Lab Series Skincare for Men.

COMPETITIVE LANDSCAPE

• Procter & Gamble Gulf FZE led men’s grooming products with a 34% retail value share, thanks to Gillette’s customer loyalty and product innovation. As for the latter, 2009 was the first full year for Fusion Phenom, which was launched in October 2008. Fusion Phenom was supported by generous marketing budgets that covered media advertising, in-store promotions, point-of-sale displays and direct mail.

• Beiersdorf Middle East was in second place held an 11% retail value share, as the Nivea brand benefited from its large advertising expenditure and consumer demand for value-for-money products. Consumer perception of the Nivea brand was better positioned following the opening of Nivea Haus in November 2008 in Dubai Mall, marking the opening of the second Nivea Haus after the initiative in Hamburg.

• Men’s grooming products are mostly international brands. Out of the share of 30% held by “others”, a sixth or around 5% of total retail sales can be allocated to domestic brands, including extensions to existing fragrances by Rasasi, Ajmal and similar domestic players/brands. These extensions are usually men’s post-shave products and men’s deodorants.

• In spite of the low consumer spending, the year 2009 witnessed a wave of premium launches. These launches included Acqua di Parma, which launched the Collezione Barbiere line of Delicate Exfoliating Gel and Soft Shaving Cream. After the opening of its first United Arab Emirates outlet in early 2009, Molton Brown launched its Cassia Energy Sport line. Guerlain Homme was also active during the year with a number of launches like Deodorant, Hair and Body Wash, and Soothing After-Shave Gel.

• In a bid to increase its sales share, Beiersdorf Middle East participated as a support sponsor in the Dubai Shopping Festival (DSF) 2009, the country’s premier shopping season that runs from 15 January to 15 February. As part of the festival’s events, Beiersdorf offered all shoppers at five of Dubai’s main shopping malls a free promotional pack of Nivea for Men Energy Shaving Foam 50ml and After Shave Cooling Balm 30ml, all under Nivea’s “What Men Want” campaign. Nivea in-mall activities included a promotional booth placed at Mall of the Emirates and Deira City Centre during the period 15-28 January 2009, another booth at Dubai Festival City and Lamcy Plaza from 29 January to 11 February 2009 and, most importantly, a booth at the Nivea Haus in Dubai Mall throughout the festival’s duration.

• Men’s grooming products – in both men’s shaving and men’s toiletries – is dominated by mass brands. In men’s toiletries, there is demand for all brand categories – premium, standard and economy – depending on the socioeconomic class, price and promotions. Competition is heating up, especially in skin care, with standard brands vying for a greater share at the expense of premium products. Since the start of the review period, skin care has been flooded with premium offerings like Clinique Supplies for Men, Lab Series, Biotherm Homme and others, all catering to high-income earners. With the arrival of L’Oréal Men Expert and similar standard brands, the new launches started overtaking share from premium brands.

• Given the growing demand for private label products, especially among low- and middle-income earners, retailers are pouncing on this opportunity with continuous additions to their product portfolios, and men’s grooming products were not missed out. Carrefour, Spinneys, Géant, Union Cooperative Society and Abu Dhabi Cooperative Society are present in men’s deodorants and men’s bath and shower.

PROSPECTS

• In addition to the healthy growth of men’s shaving, men’s toiletries is expected to flourish during the forecast period, especially men’s skin care. Demand will grow as the effects of stress and ageing become more evident and also perhaps as the results in women’s products begin to show, producing a knock-on effect in men’s grooming products. Also, the arrival of skin care ranges from standard brands like L’Oréal Men Expert has unleashed the true potential of the market, which was previously mostly flooded with premium ranges from Clinique, Clarins, Biotherm and others.

• Forecast data is being significantly restated versus last year’s forecasts. Although in the last forecast the impact of the global financial crisis on volume and value sales was factored in, it was expected that the economy would recover in 2010. However, the Dubai Debt Crisis that erupted in November 2009 has kept the local economy mired in recession, and the forecasts have accordingly been revised with relatively slow growth in 2010 as well now on the basis that the economy will only recover in 2011.

• Men’s grooming products are expected to post a constant value CAGR of 6% during the forecast period, lower than the review period CAGR of 7%. Growth rates which slowed in 2009 will continue to do so over the first few years of the forecast period as newer categories of Men’s Grooming such as toiletries and skin care will have difficulty finding new consumers in times of financial instability expect over the first year of two of the forecast period.

• In line with the past trends, shaving products will drive this growth as they will continue to dominate men’s grooming with a value share of almost 80% in 2014. Leading player Procter & Gamble is expected to fully support the Gillette brand with sustained and aggressive marketing across all demographics.

• It can be assumed that more Muslim men are likely to prefer to keep a beard due to religious reasons, which will pose a threat to growth of men’s shaving. Such a trend is already common among the local population, and it is hardly expected to gain popularity among other Muslim expatriates, given that the beard-keeping trend has been historically common only among GCC nationals. In addition, even if men prefer to keep a beard, this does not rule out the option of purchasing shaving-related products, as they still do. The point here is that they might resort to electric shavers instead of disposable ones.

• Men’s razors and blades will remain the mainstay category within men’s grooming achieving the highest constant value CAGR over the forecast period of 7%. These products will be consumed by men of all ages and income groups whereas sales of products such as men’s skin care will remain limited to higher income groups and mostly to Western expatriates.

• L'Oréal’s penetration with the Men Expert range has paved the way for rivals to launch similar products, yet it still benefits from the first-mover-advantage. Although L’Oréal Men Expert was launched back in 2006, it has only gradually established brand awareness in the United Arab Emirates. L’Oréal’s new range has been instrumental in the development of men’s skin care, creating a niche market for consumers who cannot afford premium ranges from the likes of Clinique and Clarins, but are keen on skin care products.Accordingly, similar launches from standard brand owners are expected during the forecast period, which is anticipated to emerge from the likes of Procter & Gamble, Unilever and others among the main mass-market players. Potential for new products in an area where consumers are entering the market for the first time is more likely to be at the premium end, where the needs are fast emerging due to environmental and lifestyle factors.(Source-Euromonitor- Men’s Grooming in the United Arab Emirates, Category Briefing | 23 Jul 2010).

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