Business

<< Previous   of   Next >> (click to enlarge) Selling strong: Sales natural personal care products grew by 12.5 percent in 2007. Shown above: Kiss My Face brand organic soap. (click to enlarge) Affordable luxury: Most people can't afford a BMW, but they can spring for a $10 tube of Weleda body wash. (click to enlarge) Buy 'em out: Profitable natural care products have attracted corporate America's interest. Burt's Bees was acquired by Clorox Co. for $925 million. Associated Press  (click to enlarge) IIdo Leffler (left) and Lance Kalish founded Yes to Carrots, which sells organic products in more than 17 countries. (click to enlarge) In this undated photo provided by Target showing cosmetic bags made of recycled materials for consumers who care about the environment. (AP Photo/Target)**NO SALES   ADVERTISEMENT   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Sunday, September 7, 2008 Here's a booming business: eco-friendly care products Associated Press NEW YORK -- One whiff of a "bath bomb" and Latoya Bembry was hooked. Friends introduced her to Lush, the company that makes the quirky natural product in options including Sex Bomb and Big Blue. Bembry, who describes herself as "obsessed" with the items, now also uses the company's body cream to withstand the dry Las Vegas climate. With more Americans discovering eco-friendly products, sales are on the rise -- but at $22.55 for an 8.4-ounce jar of Lush's "Dream Cream," they aren't for budget shoppers. Bembry, a 27-year-old account executive, admits she's spent hundreds of dollars on these products in recent weeks. Still, she says it's worth it. "The most telling thing about organic products is that they deliver results right away," she says. Sales of natural personal care products are growing strongly, despite a softer U.S. economy. Even with high prices for food and energy crimping people's splurges, analysts say the boom isn't going to end anytime soon. Last year, U.S. sales of such items rose 12.5 percent, when adjusted for inflation, to $465 million, according to a report from research firm Mintel. The Chicago-based group estimates the inflation-adjusted figure will rise to $513 million this year, even given the tough U.S. economy. The Natural Products Association estimates the natural personal care industry is growing five times faster than regular personal care products. The interest is twofold, said Daniel Fabricant, a spokesman for the trade group -- concern about the environment and a desire among consumers for healthy products free of synthetic ingredients. Interest in natural personal care products can be traced back to natural-grocery retailers who helped initially popularize the organic food movement. The Organic Trade Association estimates that U.S. sales of organic food and drinks will reach nearly $23 billion this year, up from $20 billion in 2007 and just $1 billion in 1990, the trade group said. While about three-quarters of sales last year came from natural grocery stores, drug stores and mass merchandise chains have noticed the opportunity in personal care products and are clearing out shelf space to add more natural products to their lineups, the group found in a 2007 survey. Despite their economic worries, Americans need to buy necessities such as lotion and shampoo, and are looking for little indulgences. Natural items fit the bill and are the "poster child for consumers trading up," said Scott Potter, managing partner of private equity firm San Francisco Equity Partners, which led a $14 million investment in the Yes To Carrots brand. The Israel-based company, which makes hair and skin products that contain beta-carotene, has seen its sales double since it debuted in the U.S. last year. Consumers "can't afford the vacation or BMW," Potter said, "but can spend a couple more bucks to buy something to make them feel good." With a growing awareness of health and environmental concerns, the industry is still trying to devise guidelines for exactly what makes a product natural. Earlier this year, the Natural Products Association created a certification program allowing some products to carry a seal of approval if certain criteria are met. As the organic movement picked up momentum, big companies snapped up organic brands, while other retailers began offering smaller brands in places consumers typically shop. Walgreen Co., one of the nation's largest drugstore chains, teamed up with Yes To Carrots to be the sole retailer at the products' launch. Target now also carries the brand. The funding infusion in Yes To Carrots is intended to boost product distribution in North America and support the launch of more products, including Yes To Cucumbers, which contain aloe, green tea and minerals from the Dead Sea. "It's no secret that the organic, natural space is becoming huge and raising awareness with consumers," Potter says. Burt's Bees, a niche company known for its beeswax lip balm, went mainstream when consumer products giant Clorox Co. bought the company for $925 million in 2007. Colgate-Palmolive Co. paid $100 million in cash for toothpaste maker Tom's of Maine, while cosmetics maker L'Oreal acquired Britain's Body Shop International in 2006. Analysts agree the industry is still ripe with prospects as consumers gravitate toward organic products. Stifel Nicolaus analyst David Schick also credits the sheer size of the aging baby boomer population for boosting demand for the items seen as more natural. "Whether we're in a recession or not, baby boomers are turning 60," he says. Schick also says good retailers are constantly looking in every category at what consumers want more and less of. "Once people get interested in it, sometimes products have a life of their own," Schick says. READER COMMENTS Be the first to comment. You must be a registered user and verify your e-mail address to post comments to blogs or articles on HeraldNet. To register, click here. To read other terms and conditions, click here. Log out

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