Firms Comb Hair-Care Market for Growth

July 5 -- Some consumer products companies are working themselves into a lather to rid the world of bad hair days.

Industry giants like Procter & Gamble, Avon Products Inc. and Estee Lauder are trying to tap into higher growth by introducing new premium-priced hair care products into the market this year.

Although hair care is a fiercely competitive business with untold numbers of products on the shelves, companies are appealing to baby boomers’ sense of vanity — and using scientific developments — to charge a little bit more for the promise of beautiful hair.

If successful, the payoffs could be substantial, say analysts.

Companies See ‘Big’ Hair

Sales of mass-market hair care products like shampoos, conditioners and homecoloring kits reached $5.5 billion for the year ended May 21, according to Information Resources Inc.

With premium shampoos often selling for more than twice the $2.75 average price of their mass-market counterparts, the profit margins are much more substantial.

“Companies have realized that hair care is a big area and consumers will pay for different attributes,” says William Steele, consumer products analyst at Banc of America Montgomery in San Francisco.

“The typical shampoo section used to be 6 feet wide. … Today it’s 25 feet,” notes James Parr, vice president of research and founder of Advanced Research Laboratories a Costa Mesa, Calif.-based company that develops beauty and hair-care products such as Citre Shine and Zero Frizz.

“It just amazes me that companies can sell so many products that don’t even have that much of a distinction, but I think that’s what companies are doing: trying to make a distinction,” Parr says.

P&G Works on Its ‘Physique’

P&G, for instance, introduced its Physique hair-care line earlier this year and plans are-launch of its Vidal Sassoon brand this fall.

Although a P&G spokeswoman would not comment on sales figures, the company cited strong sales of premium hair-care initiatives such as Physique as one of the main factors behind a 7 percent sales increase in beauty care products for the January-March quarter.