Nude and Care skincare case study CSCM0207 / Published 10/2008

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DATAMONITOR VIEW

CATALYST

The organic personal care market is small, lagging behind the popularity of organic food and drinks. However, it is growing

in popularity in line with the overall green movement. Recently, there has been an emergence of high end organic ranges

that have introduced stylishly packaged ethical products to appeal to consumers' senses as well as their ethical

mindedness. This case study looks at two such ranges recently launched in the UK, Nude skincare and Stella McCartney's

Care, showing how they are marketed to appeal to consumers.

SUMMARY The high end organic, ethical skincare range, Nude, was introduced in the UK in 2007 by Bryan Meehan, the

founder of the Fresh & Wild organic food chain. The brand has been well received by reviewers, who have

commended its use of stylish packaging as well as ethical contents. It has also been touted as the first natural

skincare range with visible anti-aging effects. With its celebrity backing (including Bono's wife) and limited

distribution in premium retailers, the brand has the right credentials to become a hit with consumers.

With the release of Care, Stella McCartney has been touted as the first luxury fashion label to enter the organic

skincare market. Like Nude, the line has a strong sense of style as well as good ethical grounding, which fits in

well with McCartney's background. However, Care has been criticized for not being ethical enough, using non-

organic ingredients and too much packaging. As organic is a minority figure in the luxury skincare market, the

brand could be forgiven for its shortcomings, showing that style and ethics are hard to merge and please

everyone.

CASE STUDIES

Nude and Care skincare case study Creating high end organic skincare for mainstream markets

Reference Code: CSCM0207

Publication Date: October 2008

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ANALYSIS

Organic personal care has grown at a slower pace than its food and drink counterparts

Organic personal care is a growing market both in the UK and globally, although it has developed at a slower rate than

organic food and beverages. According to Datamonitor's report, The Next Step in the Ethical Consumerism Revolution

(BFCM0233), only 4.5% of new personal care products released in the US and Europe were tagged as organic in 2002,

compared to 7.3% of food and 10.5% of beverages (see Table 1). Moving to 2007, the situation is much the same, with

personal care organic launches dragging behind their food and drink counterparts. In this year, 7.2% of personal care

products were tagged as organic, compared to 15.1% of food and 16.6% of drinks.

A key reason for the slower growth could be that consumers are hesitant to purchase organic beauty products when there

is little written about their effectiveness, and there are highly praised chemical-based alternatives that combat key areas

such as anti-aging. This has meant organic personal care has remained a niche sector until now, confined to non-

mainstream stores.

Table 1: The percentage of new product launches in the US and Europe tagged as organic, by product

200207

Beverages Food Personal care

2002 10.5% 7.3% 4.5%

2003 11.0% 9.8% 3.9%

2004 11.8% 7.7% 3.5%

2005 10.5% 9.9% 5.1%

2006 12.4% 12.0% 7.6%

2007 16.6% 15.1% 7.2%

Source: : Datamonitor's report: The Next Step in the Ethical Consumerism Revolution (BFCM0233) D A T A M O N I T O R

However, organic personal care is growing increasingly popular

Despite the slow start, organic personal care is forecast to grow at a healthy rate over the next five years, as more products

become available and consumers begin to perceive it as being as crucial to ethical living as its organic food and drinks

counterparts. As Table 2 shows, the US organic personal care market is forecast to grow at the highest rate of the regions

which are considered in this report, growing by a compound annual growth rate (CAGR) of 8.7% during 2007 to 2012,

reaching $427.1 million. The UK is also forecast to grow strongly by 5.7% in the period, to reach $23.0 million by 2012.

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Table 2: Organic personal care market value ($ millions) by country, 2002, 2007, 2012

2002 2007 2012 CAGR 200207 CAGR 200712

UK 12.8 17.4 23.0 6.3% 5.7%

Total Europe 90.5 122.1 163.5 6.2% 6.0%

US 187.4 281.0 427.1 8.4% 8.7%

Japan 60.6 85.2 114.3 7.0% 6.1%

Australia 10.7 16.1 23.4 8.5% 7.8%

Source: : Datamonitor's report: The Next Step in the Ethical Consumerism Revolution

(BFCM0233) D A T A M O N I T O R

Ultra premium ranges have entered the market, claiming superior benefits, with good-looking packaging and ethical ingredients

Helping the organic personal care market to grow is the emergence of high end organic ranges that have introduced

stylishly packaged ethical ranges to appeal to consumers' senses as well as their ethical mindedness. This case study

looks at two such ranges recently launched in the UK, Nude skincare and Stella McCartney's Care, showing how they are

marketed to appeal to consumers.

Nude skincare was founded on the principle that ethical products need not be unstylish

The high end organic, ethical skincare range, Nude, was introduced in the UK in 2007 by Bryan Meehan, the founder of the

Fresh & Wild organic food chain. Meehan sold the chain to Whole Foods Market in 2004 for $38 million, so he had a

background in creating successful organic products. Although no sales data is available, Nude has had some positive

reviews from leading women's magazines and could therefore succeed in its aims of becoming a successful mainstream

organic brand.

"Nude Cleansing Facial Oil: Rich in natural oils, this stunning cleanser is the best I've used" Harpers Bazaar, 2007

"Nude's Miracle Mask: 'this botanicals and clay blend felt refreshing on my sensitive skin' Glamour Magazine, 2008

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Table 3: Nude skincare encompasses a range of skincare products

Cleansers Waters Moisturizers Daily Treatments Weekly Treatments Body Supplements

cleansing milk hydrating water age defence moisturiser

advanced smoothing complex

facial scrub smoothing body refiner advanced multivitamin

cleansing facial oil clarifying water age defence intense moisturiser replenishing night oil miracle mask hibiscus monoi hydrate

cleansing facial wash moisture balance

advanced eye complex

intense moisture mask

moisturising body cream

age defence supplements

Source: nudeskincare.com D A T A M O N I T O R

Nude aims to make organic skincare as appealing as organic food

Nude is designed to offer a new, modern approach to organic skincare, so that consumers do not have to compromise on

style or quality with their ethical choices. Lack of style or quality has hindered organic skincare growth in the past, Meehan

believes, commenting that most organic skincare is old fashioned looking and, because of this, has lacked the appeal of

organic food and drink:

"All the natural skincare brands that are around now look the same as they did 10 years ago. They are the equivalent of the

bruised apple you used to find in organic food stores, so buying a natural skincare brand is a compromisethe packaging

is archaic, it feels oily, it uses lots of alcohol. I became aware that there are a whole group of women who would maybe

shop at Fresh & Wild, go to the gym, but wouldn't use natural skincare. They'd rush down to Space.NK or wherever

because the glossy magazines said this stuff worked. They think they need it because they don't want to age quicker than

their friends." The Independent, 2007

Nude is therefore designed to appeal to mainstream consumers, being more approachable for people who demand more

from a product than it solely being ethical. This is an important point, as most consumers assess products in the context of

a collection of benefits that they buy into. Although shoppers are becoming more knowledgeable about ethics and are

increasingly prepared to pay a premium for an ethical product, they may still tend to prioritize other benefits such as

availability, efficacy, health or sensory benefits (see Datamonitor's The Next Step in the Ethical Consumerism Revolution

[BFCM0233]).

The range boosts natural qualities

Central to Nude's sales proposition is its natural qualities, aimed at being kinder to both the user and the planet. Nude

products claim to be free of chemicals "you would rather your body didnt absorb", using organic ingredients "wherever

possible". The company says it chooses ingredients which are not irritating to the skin or potentially harmful to the body,

while minimizing the use of preservatives by using airless packaging. This includes being free from parabens, chemical

emulsifiers, mineral oil and GM products. In addition, it uses fair trade and community trade sourced ingredients where

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possible to help disadvantaged communities. By making such claims, the company can target the growing number of

consumers who actively seek ethical products.

Nude has been called the first natural skincare range with visible anti-aging effects

In order to target mainstream consumers who may not be loyal to organic or natural ranges, the company has been careful

to ensure its products work as efficiently as more conventional, non-natural based brands. Moreover, the company claims

that some of its products are as effective as chemical-based creams in combating signs of aging. This has been backed up

by the beauty editor for Harpers Bazaar UK, who believes Nude is the first natural skincare range with visible anti-aging

effects.

This is a significant boast, as it is natural ranges' lack of anti-aging properties has put many people off buying them, as

Meehan explained: "We had over 40,000 people shopping at Fresh & Wild each week but although women were buying

their organic food from us, they then went down the road to SNK to buy their skincare. When I asked them why, they just

said, 'Your stuff just isn't going to get rid of my wrinkles'" (Harpers Bazaar, 2007).

Nude has sought to target the Fresh & Wild shopper by researching into natural alternatives to chemical-heavy creams,

working with an (unnamed) chemist that makes skincare for the large French brands. With this chemist, the company has

developed skincare that uses pre- and probiotics to help keep the skin's micro flora healthy and balanced, forming a barrier

to protect against pollutants and keep in moisture. In addition, its anti-wrinkle creams contain bioactive milk peptides to

reduce wrinkle depth and antioxidant buriti oil and argan extract to protect against the signs of aging. Such ingredients help

to boost the brand's natural credentials, while providing it with potentially effective skincare solutions.

Nude's minimalist packaging won a Benchmarks award for style

Nude's ethical credentials also cover its packaging as well as ingredients. The range uses biodegradable sleeves, 50%

post industrial recycled polypropylene bottles and is 100% recyclable. However, it is its stylistic qualities that make the

brand stand out from other natural ranges. Meehan claims the company spent a lot of time over its packaging choice, in

order to make it both stylish and ethical: "We could have done it cheaper, but it had to be distinctive" (The Telegraph,

2008).

This paid off when Nude won a Benchmarks award for style in 2007, in the toiletries and cosmetics category. The awards

noted that Nude's packaging communicated, "simplicity and purity with a pared-down, minimal look and feel".

The packaging is soft grey and purple in color, while the logotype uses a simple U-shape four times to spell out nude.

Benchmarks noted that the color palette has "a muted, earthy feel"; this helps convey its ethical standpoint in a minimalist

way, appealing to consumers' sensory as well as ethical demands.

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Figure 1: Nude products are presented in minimalist style packaging which is eco-friendly

Source: Nudeskincare.com D A T A M O N I T O R

The range boosts celebrity endorsements that help enhance its consumer appeal

Also helping boost the appeal of Nude against its rivals is the fact it has celebrity backing. U2 frontman Bono's wife, Ali

Hewson, is a partner in the business; Meehan calls her his "muse and inspiration" for the brand. She suggested the name,

Nude, for the brand, and according to Meerhan, "has been instrumental in designing and testing the range and pushing us

to ensure our packaging and environmental impact were as responsible as possible" (Nude website).

In addition, the supermodels Christy Turlington and Helena Christensen reportedly helped to test and informally advise on

the range.

Datamonitor's report, The Cult of Celebrity (DMCM4607), lists four ways in which celebrity endorsement can aid a brand:

It can help position and gain significant PR exposure for new brand launches.

It helps marketers to position and re-position existing brands.

Celebrity image association can sustain a brands aura.

It can revive and revitalize brands that have become staid or stagnant.

As the Nude brand has carried out little marketing of its own, it has relied on magazine and newspaper articles to positively

review its products. Celebrity endorsements have helped gain the interest of these publications, which may otherwise have

written the brand off as a run-of-the-mill organic range.

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Nude has a limited distribution in high end shops, which helps provide it with exclusivity

The Nude skincare range is sold in a selection of high end retailers in the UK and US and an increasing number of other

markets. In the UK, these include Whole Foods, Harvey Nichols and Space NK, while in the US it is sold in Barney's

department stores. This provides it with a sense of exclusivity, enhancing its premium positioning. However, as these

stores are found in many locations, it makes Nude accessible to mainstream shoppers, showing that Nude aims for big

market presence in the future.

Stella McCartney became the first luxury fashion label to introduce organic skincare

The fashion designer Stella McCartney launched an organic skincare brand in 2007 called Care, becoming the first luxury

fashion label to enter the organic skincare market. Like the Nude range, Care focuses on maintaining both strong ethical

credentials and sensory appeal, through stylish bottle designs and use of ethical ingredients.

Table 4: Stella McCartney's Care skincare line is composed of seven products

Product name

Gentle Cleansing Milk

Toning Floral Water

5 Benefits Moisturising Cream

5 Benefits Moisturising Fluid

Calming+Soothing Elixir

Nourishing Elixir

Radiance+Youth Elixir

Source: sephora.com D A T A M O N I T O R

Care aims to be both ethical and stylish

According to Stella McCartney, the Care range is "for people who want to take responsibility", being designed for people

who want to maintain ethical values while still embracing luxury. McCartney states: "Why shouldn't it be possible to adopt a

more natural organic lifestyle without foregoing luxury?" (The Times, 2008). The line is Ecocert-certified, an internationally

recognized certification program that takes into account the composition and the origin of the product's ingredients, and the

development process, from conception to packaging. This provides the Care line with a guarantee that it is trustworthy and

authentic, assuring consumers of both its quality and sincerity.

The brand's bottles are refillable and recyclable, while its natural ingredient content is said to be 100% organic, with no

petrochemicals or silicones. With most products priced at over 40 ($71), the range also maintains a luxury positioning on a

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par with other high end skincare brands. Helping it maintain this positioning, the line is sold in high end stores, such as

John Lewis in the UK, thereby providing it with good distribution but in a setting among other premium skincare brands.

Figure 2: Stella McCartney's Care range includes well designed ethical products

Source: Stellamccartneycare.com/uk D A T A M O N I T O R

The brand continues McCartney's ethical crusade highlighted in her clothing lines

Stella McCartney is well known for her vegetarian and green beliefs, following on from the work of her late mother, Linda

McCartney, who produced a vegetarian frozen meal range. The fashion designer produces both couture clothing collections

and capsule ranges for department stores that use no leather, fur or feathers, preferring instead to use cotton and

manmade fabrics, such as satin, canvas and vinyl. The ethical skincare range is therefore a natural progression for the

designer, and fits in well with the ethos behind her fashion collections.

Care's celebrity owner could enhance the brand's appeal

Just as Nude skincare has famous supporters, so does Care, in the form of Stella McCartney herself. Her success as a

fashion designer, as well as her famous parentage and celebrity friends, has led to her featuring heavily in celebrity-loving

magazines. This high-profile face to the brand could make her skincare range more appealing to consumers.

As a designer, however, McCartney could be perceived as having more credence than other celebrities that have entered

the personal care market, such as Paris Hilton and Kate Moss. The fact that the range is organic also provides it with

differentiation, providing added incentive to purchase the brand.

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Datamonitor's report, The Cult of Celebrity (DMCM4607), also notes that while celebrity associations with branded

consumer products have become commonplace, consumers may perceive varying levels of credibility in these

associations, typically being less persuaded overall by paid relationships. However, possibly the most credible brands are

those that have been created by a celebrity, whether they carry the celebritys name or not.

The report list three things that could make a celebrity-created brand more credible:

Authenticity, both of the product and the person behind them.

Faithful to the personality of the individual and how they are perceived by consumers.

Brand strength and longevity of the celebritys career.

As McCartney is well known for her ethical believes, Care can be said to be faithful to her personality, while being authentic

in its organic, ethical aims. She has also been in the limelight for a number of years, bringing strong branding to the range.

There has been controversy in the true ethical nature of the line

While making strong ethical claims, some people have criticized the Care range for not being ethical enough.

A lawsuit claims Care and a number of other brands are not truly organic

The US soap maker Dr. Bronner's Magic Soaps filed a lawsuit against various personal care companies in 2008, including

Stella McCartney's Care, alleging their products were falsely labeled organic as they contained petrochemicals and non-

organic plant material. The small family-owned company (which itself claims to produce only 100% organic products) filed a

suit in the California Superior Court "to force them to stop making misleading organic labeling claims".

According to Dr. Bronner's, "organic integrity in body care means an organic product is composed of certified organic

ingredients produced with minimal processing in compliance with the National Organic Program (NOP), which ensures the

integrity of organic foods as well. Real organic personal care does not utilize synthetic preservatives that can irritate skin.

Natural unrefined oils and waxes are used as emollients and moisturizers, instead of hydrogenated oils and synthetic

silicones." The lawsuit highlights the uncertainty that exists with regards to what constitutes natural personal care, when

there are few guidelines in the US.

A number of websites have also criticized the organic claims of the Care range. A review on the Bella Sugar website of

Care products criticized the range for claiming to be 100% organic, when only two of its products were actually 100%

organic (Nourishing Elixir and Toning Floral Water). The reviewer found that all of the other products in the line contained

5060% organic ingredients; the Radiance & Youth Elixir, for example, contains 50.8%. The brand's website lists the

organic content of its products, noting that 100% of their "natural origin" ingredients are organic, while the total formula may

not be.

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However, it is perhaps unfair to expect a personal care product to be 100% organic when some ingredients, such as

alcohol or glycerin, do not come in an organic form. As another reviewer on Bella Sugar said: "a lot of the top ingredients

that make up the bulk of the product cannot be categorized as organicThe actual percentage is based on the available

organic ingredients that make up the product and doesn't necessarily mean that the company is being misleading."

The range has been criticized for using too much packaging

Stella McCartney's Care brand has also been criticized for using too much packaging. The products are presented in plastic

packaging held with cardboard containers, which are then wrapped in cellophane. A reviewer on the Whippie Chicks

website commented about the range: "Cut back on the packaging and practice what you preach."

However, the products are recyclable and the company offers its own recycle service in some US locations. Nonetheless,

the excess packaging argument highlights how sensory measures can sometimes clash with ethical considerations in the

world of personal care.

Will organic skincare appeal to mainstream consumers?

The launch of both the Nude and Care range of skincare products highlights how more companies, including those that

specialize in premium brands, are entering the organic natural skincare market, aiming to capitalize on the growing

consumer interest in natural personal care and make it a more mainstream-friendly market.

However, there are a number of aspects to natural personal care lines that could prevent them becoming as successful as

conventional brands. These mainly involve their non-chemical formulas, which have a number of disadvantages, including

the fact that they have no sun protection factor (SPF) content (due to the chemicals involved in producing this) and have

potentially less effective anti-aging properties, which could dissuade consumers.

The luxury positioning of the Nude and Care brands, however, could encourage sales, given that the sensory appeal of the

products have been as much thought out as their ethical make up. Most consumers, after all, make purchases based on a

variety of factors, not merely an ethical one.

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APPENDIX

Case study series

This report forms part of Datamonitor's case studies series, which explores business practices across a variety of

disciplines and business sectors. The series covers a range of markets including food and drink, retail, banking and

insurance, pharmaceuticals and software.

Each case study provides a concise evaluation of a company that stands out in some area of its strategic operations,

highlighting the ways in which the company has become one of the best in its field or how it deals with different problems

encountered within that sector.

Methodology

A variety of secondary research was carried out for this case study. This included researching the organic personal care

market on Datamonitor's Interactive Consumer Database and the Productscan Online Database of new products, alongside

an extensive review of secondary literature and other in-house sources of information.

Secondary sources

Looking good; Luxury without tears; The Times (June 2008)

Ali Hewson: ethics girl; The Daily Telegraph (May 2008)

Nude Awakening; Harpers Bazaar (June 2007)

The eco-capitalist bringing ultra-natural skincare to the masses; The Independent (May 2007))

Further reading

Datamonitor (2008) On-Trend Innovation & Marketing Concepts: The Sensory Mega-Trend, May 2008,

DMCM4626

Datamonitor, (2008) The Cult of Celebrity, May 2008, DMCM4607

Datamonitor, (2008) The Next Step in the Ethical Consumerism Revolution, February 2008, BFCM0233

Ask the analyst

The Consumer Knowledge Center Writing team askcm@datamonitor.com

Datamonitor consulting

We hope that the data and analysis in this brief will help you make informed and imaginative business decisions. If you

have further requirements, Datamonitors consulting team may be able to help you. For more information about

Datamonitors consulting capabilities, please contact us directly at consulting@datamonitor.com.

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