Breaking barriers Ralph Macchio, Coty

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1 anti-aging Below the neck Lift, smooth, de-wrinkle and firm. This is the desired effect of not only facial anti-agers, but also those formulas for the body, as aging women yearn to turn back the hands of time below the neck. The body anti-aging segment may not be as robust as those products designed for the face, but that s not to say that women aren t interested in such offerings. In fact, IRI data revealed that sales of body anti-aging products rose more than 5% during the 52 weeks ended May 18 at U.S. multi-outlets. Helping to fuel the growth of these products is that some women want results but cannot afford a pricey professional option. According to consulting and research firm Kline & Co., the injectibles market continues to drive overall market growth in professional aesthetic products, with body contouring and cellulite reduction being the most dynamic addressed skin concern. Kline noted that injectibles accounted for more than half of total market sales, but body treatment products experienced double-digit growth in 2013, due in part to good alternatives now offered to liposuction. The fascination with anti-aging solutions shows no signs of slowing, and those manufacturers that continue to innovate and deliver effective, cheaper at-home solutions will reap the benefits. Q&A Breaking barriers Ralph Macchio, Coty In late 2013, Coty Inc. moved into a new, state-of-the-art research and development facility in Morris Plains, N.J., bringing together under one roof its researchers and a salon-like consumer testing environment for testing new products in nail, skin and hair. The site was designed by the Coty team from the blueprint stage to break down barriers between product categories and capitalize on synergies in beauty. To learn more, DSN recently talked to Coty s chief scientific officer Ralph Macchio. DSN: Can you tell us about some of the highlights of the new 11,500-sq.- ft. facility? Macchio: We have a much bigger nail lab than we ve had in the past. Clearly, for Coty as a company, nail is a large part of our portfolio, particularly on the color side. So, we have the space, equipment and the lab environment to really generate innovation, and one of those is the Miracle Gel. On that product alone, in the new facility, we have probably tested on [more than] 1,000 people, easily. DSN: What is an example within skin care? Macchio: Recently, we moved the Philosophy R&D team that focused on skin care to the same facility, so we re all together. That has led to some really great developments, which will be coming out. In particular, Time in a Bottle [under the Philosophy brand] is another one of those products that has undergone a lot of testing at the new facility. DSN: I understand that 15% of Coty s portfolio is made up of skin and body care. With the resources of this new R&D facility, can you talk about the projected growth within this segment? Macchio: Skin care we ve been working on now in the Morris Plains facility and, as you know, there s a lot of testing involved with skin care, Continued on page 54 Top 10 body anti-aging products brand Sales* % sales Chg $ share $ share chg unit sales** % unit chg avg price avg price chg Lansinoh $ % 31.2% 0.7% % $10.57 $0.11 Nivea Body Good-Bye Cellulite Private label Medela Tender Care L Oréal RevitaLift 1.3 NA NA NA Estee Lauder Perfectionist Vichy CelluDestock Estee Lauder The First Years Nivea Total $ % 100.0% 0.0% 2, % $11.16 $-0.21 ** In thousands 52 july 14, 2014 drugstorenews.com

2 anti-aging Stopping the clock When it comes to skin care, facial anti-aging potions still reign, as women continue their quest for younger, healthier looking skin. However, the mass market continues to face fierce competition, thanks to the flood of new products and affluent consumers migrating to premium solutions. The economic downturn had prompted some affluent consumers to trade down to more affordable mass-market solutions and lower-income consumers to buy on discount or switch to private label but, with the lift in the economy, the pattern has seemed to shift in recent years. Consumers returned to premium products in 2011 and continued to do so in While advanced anti-aging technology increasingly is incorporated into mass-market products, many consumers believe that premium anti-agers still hold a performance edge over mass-market brands, Mintel stated in its 2013 report, Skin Care in the U.S. That shift is evident in the most recent 52-week sales data provided by IRI, in which sales of facial anti-aging products decreased 2.8% at U.S. multi-outlets. Meanwhile, the NPD Group recently reported that sales of prestige anti-aging products rose 4% to $436 million for the 12 months ended January Looking to remain competitive, massmarket brands continue to step up their game with formulas that tout new active ingredients and multi-functionality. Meanwhile, retailers continue to enhance their beauty departments to better compete with specialty beauty retailers and department stores. For example, Rite Aid s revamped Beverly Hills store, which recently celebrated its grand re-opening, features an expanded beauty department with several new prestige cosmetic and skin care lines. Also new to the store is a Rite Aid Beauty Advisor specially trained to assist shoppers through demonstrations and education. Target also is proving that it s serious about beauty, staffing hundreds of its stores with beauty advisers, revamping the look and feel of its beauty department and now has stepped up its offerings by adding premium skin care products to 749 stores in the United States. The brands include Vichy, La Roche-Posay, MD Complete by Dr. Brian Zelickson, Laneige, 29 by Lydia Mondavi, Own Skin Health and Borghese Age Defying Cellulare Complex. Continued from page 52 Coty R&D salon both internally and externally. So, that s an area that I think is going to grow for us as claims have become a lot more important on skin. We are focused on growing the skin care part [of our business]. That is the smallest part of our portfolio, and we are very focused on growing skin care. DSN: Where do you see the greatest opportunity within skin care? Macchio: In skin care, overall, the trend is still anti-aging. Everyone is looking for the fountain of youth.. Now, what you ve seen recently is that there are multi-purpose products. It could be anti-aging with a moisturizer built-in, plus an SPF, but overall the category of anti-aging still reigns. We have quite a few good entries in there; we have both Miracle Worker and we have now Time in a Bottle two big initiatives in that area. For the full Q&A, visit drugstorenews.com Top 10 facial anti-aging products Olay Regenerist $ % 8.8% -1.6% % $21.49 $-0.67 Olay Regenerist Micro-Sculpting Private label Olay Effects 7-in L Oréal RevitaLift Neutrogena Rapid Wrinkle Repair Olay Age Defying Garnier Skin Renew RoC Retinol Correxion Deep Wrinkle L Oréal RevitaLift Triple Power Total $1, % 100.0% 0.0% % $15.21 $ july 14, 2014 drugstorenews.com

3 facial cleansers Mavens seek free products for youthful skin Benefiting from a heightened focus on healthier, youthful-looking skin and a flawless complexion, sales within the facial cleanser segment are on the upswing. According to data provided by IRI, sales of facial cleansers are up more than 3% for the 52 weeks ended May 18 at U.S. multi-outlets. It is no secret that beauty mavens desire youthful skin and a flawless complexion, and that truly begins with a healthier daily skin care regimen. Washing away dirt and makeup each night before going to bed is critical, and that message seems to be resonating. Also fueling growth within the segment is the fact that many Gen Y women are paying closer attention to their changing skin. This group still has skin care concerns from their youth like oily skin, breakouts and keeping acne at bay. But they also start to shift their focus toward preventing wrinkles and lightening their dark spots caused by sun damage, said Karen Grant, VP and global beauty industry analyst for the NPD Group. According to NPD, women ages 25 years to 34 years represent 18% of all facial skin care users in the United States, and use an average of three facial skin care products daily, with facial cleansers topping the list. When it comes to shopping the category, beauty mavens appear to be most interested in those products designed for sensitive skin. It isn t about what s in the product, but rather what is not. Mintel estimates that sales of sensitive/gentle skin care products are more than $202 million, with the majority of sales coming from the facial cleanser and facial moisturizer segments. Furthermore, Mintel s research revealed that nearly 24% of facial skin care users say they look for products with natural, organic ingredients. Twenty-two percent seek out products that are free from certain ingredients such as parabens or fragrances and 21% are interested in items that are designed specifically for sensitive skin. In line with these findings, IRI data revealed that within the top 10 facial cleanser brands at U.S. multi-outlets, Unilever s Simple is the biggest gainer with a robust 24.5% boost in sales. The U.K. brand launched in the United States in 2012 with 13 products cleansers, moisturizers, eye care products and wipes designed for sensitive skin. Top 10 facial cleansers Lumene ventures into anti-aging NEW YORK Finnish beauty brand Lumene has kicked off 2014 with a bang with revamped packaging and a broadened product portfolio. The evolution continues as the company further extends its Bright Now line into anti-aging. The new Bright Now Visible Repair line, which is infused Lumene s 2-in-1 eye cream and concealer with arctic cloudberry to help battle the signs of aging, launches in July. The collection includes a day cream with SPF 15, night cream and skin tone corrector to help even skin tone. The hero product is a new 2-in-1 eye cream and concealer. Twist off the top cap to use the concealer and twist off the bottom to use the eye cream. To highlight the efficacy of its products and to give the packaging a more clinical look and feel, the beauty brand recently revamped its product packaging. The company also launched a new website that has a modern look and is easier to navigate. It also features an increased level of product information and product reviews. Private label $ % 12.4% -1.1% % $3.90 $-0.03 Olay Cetaphil Simple J&J s Clean & Clear Morning Burst Neutrogena Deep Clean Bioré Ponds Olay Regenerist J&J s Clean & Clear Deep Action Total $4, % 100.0% 0.0% % $5.16 $ july 14, 2014 drugstorenews.com

4 Bath and body Consumers want more, more, more The bath and body segment has benefited from near universal usage as consumers use these products in their daily personal hygiene routine. While the market was not impacted significantly by the economic downturn as consumers still needed to bathe the way in which consumers shop the market has shifted. The recession and subsequent recovery years have had an impact on how consumers are shopping for soap, bath and shower products. Consumers are cost-conscious and careful in scrutinizing their spending, particularly for daily use personal care products that require frequent purchase, Mintel stated in its 2013 report on Soap, Bath and Shower Products in the United States. Price has taken the lead as the most important factor when purchasing, leading consumers to trade down to less expensive brands, product formats and lower-priced label options. Coming in as the second key purchase driver, according to Mintel, is scent type, and third is familiar brand. To attract consumers back to branded, more expensive offerings, manufacturers are increasingly integrating additional benefits, such as anti-aging ingredients, and leveraging current trends playing out in other categories like food. Manufacturers also are positioning their brands as affordable luxuries in hopes that consumers will see the purchase as a cost-effective treat. For example, Dr. Teal s is bringing the benefits of magnesium sulfate and aromatherapy to the shower with its recent launch of Ultra Moisturizing Body Wash, available in Soothe & Sleep with Lavender and Relax & Relief with Eucalyptus Spearmint. While consumers undoubtedly want bath products that moisturize for softer skin and deodorize to help battle body odor, it is interesting to note that antiaging attributes command the greatest consumer interest. When asked what product attributes they would be interested in seeing in their soap, bath and shower products in the future, product purchasers most commonly reported that they were interested in seeing anti-aging attributes, Mintel stated. The bottom line: Consumers have come to expect more from their bath products. Top 10 liquid body washes Dial s Vitamin Boost Body Wash Dial ups body wash game Scottsdale, Ariz. Looking to ride on the coattails of the popularity of vitamins and yogurt in food, Henkel s Dial brand released earlier this year its new Yogurt Body and Vitamin Boost wash. Dial Yogurt Body Wash has two variants: Dial Greek Yogurt, which is enriched with naturally proteinpacked yogurt, and Dial Frozen Yogurt for cooling moisture. Dial Vitamin Boost Body Wash is comprised of lotion-infused Amazing B and oil-infused Super C formula with antioxidants. The body washes have a suggested retail price of $4.99. The new Dial Vitamin Boost and Yogurt Body Washes join a portfolio that includes the 2014 Product of the Year winners Dial Coconut Water Body Wash and Dial Kids Peachy Clean Body & Hair Wash. Private label $ % 6.6% -0.1% % $3.16 $0.13 Axe Suave Naturals Dove Men+Care SoftSoap Dove Deep Moisture Dove Old Spice Old Spice Red Zone Dial All Day Freshness Total $2, % 100.0% 0.0% % $3.76 $0.15 Dial s Frozen Yogurt Body Wash 58 july 14, 2014 drugstorenews.com

5 baby care Brands embrace natural ingredients When it comes to caring for their little bundles of joy, parents are concerned not only with what they feed their children, but also what they put on their skin. Their concerns have given rise to heightened awareness of products that are made with natural ingredients and free of harsh chemicals. The natural personal care market has seen a compound annual growth rate of 11.3% over the last five years and is projected to post an increase of 9.2% to reach $46 billion in 2018, according to Kline & Co. While these numbers factor in personal care products for adults, as well as little ones, there s no doubt that parents seeking safer formulas are helping to fuel the growth. Although growth numbers have settled, many factors, including a focus on new natural ingredients, the opening of new channels of distribution and consumer movement demanding greater transparency in labeling, are stimulating the industry. Moreover, marketers are offering products specifically designed for such specific demographic groups as men and babies, thereby opening up greater opportunities, said Carrie Mellage, who is responsible for the consumer products practice of Kline s market research group worldwide. Manufacturers are heeding the call and are increasingly developing baby care products that promise to be gentle for a baby s sensitive skin. For example, luxe baby care line Noodle & Boo was founded by mom Christine Burger, who was inspired by her children s need for products developed for ultra-sensitive skin. But take note that it doesn t stop with skin care. Tom s of Maine, a natural oral care brand, recently unveiled its new natural Toddler Training Toothpaste for children 3 months to 2 years old. Safe if swallowed and fluoride-free, the formula has no artificial flavors, sweeteners, preservatives or dyes. There s also Happy Teeth, a line of gentle and natural dental products for babies. Top 10 baby lotions SheaMoisture offers natural baby formula Amityville, N.Y. Personal care brand SheaMoisture has broadened its portfolio with new formulas made especially for babies and children with allergies and sensitive skin, including gluten and fragrance intolerance. The new Fragrance-Free, Gluten- Free Baby Extra-Mild Wash and Shampoo and Fragrance-Free, Gluten- Free Baby Healing Lotion are made with natural and certified-organic Johnson s $ % 32.2% -2.4% % $3.74 $-0.07 Aveeno Baby Johnson s Bedtime Lotion Private label Johnson s Baby Aveeno Baby Calming Comfort Baby Magic Burt s Bees Baby Bee SheaMoisture Johnson s Bedtime Total $ % 100.0% 0.0% % $4.39 $0.08 SheaMoisture s baby line ingredients, such as Shea butter sourced from women s coops in Northern Ghana. As a family-run company, we re extremely particular about what products we use on our little ones. Since my grandmother Sofi Tucker started making and selling her Shea butter soaps in Sierra Leone back in 1912, our focus has been creating natural, solution-oriented products for the entire family, said CEO Richelieu Dennis. We ve specifically formulated these products to pamper and protect the delicate, ultra-sensitive skin of the newest member of the family. The products, priced at $9.99 each, are free of parabens, phthalates, paraffin, gluten, propylene glycol, mineral oil, DEA, sulfates, silicones, fragrance and artificial coloring. 60 july 14, 2014 drugstorenews.com