Nutricosmetics Apr08

NUTRICOSMETICS
Decoding the Convergence of Beauty and Healthcare
A Presentation at:
April 16, 2008
www.KlineGroup.com
© 2008 Kline & Company
Contents
Nutricosmetics Defined
Evolution of Nutricosmetics
Market Dynamics
Ingredient Trends
Product Examples
Kline Outlook and Insights

2
Contents
Market Dynamics
Ingredient Trends
Product Examples

3
What are Nutricosmetics?
Ingestible products that are

formulated and marketed
specifically for beauty
purposes
Typical forms: pill, tablet,

liquid, food

4
Nutricosmetics is the intersection between personal care and nutrition
Personal care
Cosmeceuticals
Nutricosmetics
Nutrition Pharmaceuticals
Nutraceuticals

5
Nutricosmetics should not be confused with the other hybrids:
Cosmeceuticals
− Intersection between cosmetics and healthcare
− Topical cosmetic products that claim to have medicinal or drug-
like/pharmaceutical benefits
Nutraceuticals
− Intersection between healthcare and nutrition
− A food or beverage that provides medical or health benefits,
including the prevention and/or treatment of a disease in a fashion
similar to pharmaceutical agents
− Also called “Functional Foods”

6
Contents
Market Dynamics
Ingredient Trends
Product Examples

7
Cosmeceuticals is considered to be the first wave of fusion products
Cosmeceuticals Nutraceuticals Nutricosmetics
Intersection between cosmetics and pharmaceuticals

Concept created in 1961 by Raymond Reed, a founding member of the U.S.
Society of Cosmetic Chemists
Term cosmeceutical coined in 1980 by Dr. Albert Kligman
Products that have drug-like benefits and perform some transformative
change to humans
Examples: anti-aging products, skin whiteners/brighteners, acne aids,
whitening toothpastes, tooth-whitening systems, anti-cellulite, antiperspirants
Kline values the global cosmeceutical market at $55 billion in 2007

8
Examples of cosmeceuticals today

9
Nutraceuticals followed decades later
Term coined in 1989 by Dr. Stephen

DeFelice, founder and chairman of the
Foundation for Innovation in Medicine
Was major focus of food and pharma
companies in 1990s
Examples: cholesterol-lowering,
diabetes management, tartar control,
digestive aid, energizing

10
Examples of nutraceuticals today

11
Nutricosmetics is the last official “wave”
Emerged as a segment of
nutraceuticals
First gained popularity in Japan
and Europe
Now trickling into U.S.
Dominated by beauty firms
− Few pharma and food
entrants

12
Contents
Market Dynamics
Ingredient Trends
Product Examples

13
The global skin care market reached nearly $80 billion at the retail
level in 2007
100
CAGR:
CAGR:+6.2%
+6.2%
75
$ Billion retail
50
25
0
2003 2004 2005 2006 2007

Asia is the largest region for skin care
Asia, 39%
All other, 2%
Latin America, 8%
Europe, 32% North America, 19%

Kline values the nutricosmetics market at $1.5 billion, with Europe as
the largest region
Europe, 55%
United States, 3%
Japan, 41%
Total: $1.5 Billion

16
Nutricosmetics is tiny in comparison to other personal care markets
125
100
$ Billion retail
75
50
25
0
Europe U.S. Japan
Total personal care Skin care Nutricosmetics

But is growing significantly faster
Nutricosmetics
Skin care
Personal care
0 5 10
Change, %, 2007

A variety of factors are driving sales of nutricosmetics
Aging population Shift toward less invasive procedures
Environmental factors GROWTH IN Increasing consumer awareness

NUTRICOSMETICS
Societal factors (multi-tasking) Rise of the Spa Culture

19
Nutricosmetics generally address three specific areas:
Skin Hair Nails
Repair and prevention Retention and growth Strengthening

Sun protection Restoration
Firmness Nourishment
Pigmentation Volumizing
Whitening
Slimming

20
Europe facts
Largely concentrated in France, Italy,

Germany, the UK, and Spain
Driving by anti-aging concerns
Fairly developed and growing nicely
in pharmacy channel
− Pharmacist is trusted
intermediary
Legal framework exists under both
food and medicinal law, but decisions
as to which applies to nutricosmetics
varies by country
Tend to be rather expensive (€20.00-
€40.00 is the norm)

21
Key players in Europe include
L’Oréal + Nestlé Ferrosan A/S Oneobiol

22
Japan facts
Most mature market for nutricosmetics

First country to take them mainstream
Widely accepted among Japanese
consumers
Vast range of innovative and frequently
updated products
Tendency towards holistic treatments
Japanese constantly in search of
innovative and novel products
Generally focus on skin care, or to support
“total beauty” with no specific claim
Much less expensive that European
brands (¥100-¥300)

23
Key players in Japan include
Shiseido Lion Kracie (formerly

Kanebo Products)

24
U.S. facts
Nutricosmetics still in infancy

Unique set of challenges
Americans more skeptical of the “beauty-
from-within” concept
Cultural emphasis on scientific
investigation
Americans want instant results, which
nutricosmetics don’t provide
No channels make a great fit
Olay and Avon both exited
nutricosmetics business

25
Key players in the U.S. include
N.V. Perricone Murad Borba

26
Contents
Market Dynamics
Ingredient Trends
Product Examples

27
Nutricosmetic ingredients . . .
Are safe, ingestible
Are often derived from food
Generally offer at least one the following

functions:
− Antioxidant
− Anti-inflammatory
− Slimming agent

Artichoke leaf (Cynara scolymus)
What: Long, deeply serrated basal leaves of

the artichoke plant that have a high
concentration of biologically active compounds
Contains: Active compounds (flavonoids,

caffeoylquinic acids), polyphenols, chlorogenic
acid, cynarin, luteolin, scolymoside,
cynaroside
Function: Antioxidant, cardio protectant,

detoxifying agent

Collagen
What: A fibrous protein that makes up

connective tissue
Contains: Protein
Function: Provides strength and

resilience to skin

Coffee bean (coffia arabica)
What: An xanthine alkaloid obtained from

coffee beans (also called guarine, mateine,
and theine when found in different items)
Contains: Caffeine (xanthine alkaloid)
Function: Slimming agent. Caffeine acts as a

metabolic stimulant and ergogenic acide;
generates feelings of alertness and wellbeing

Tumeric (Curcuma longa)
What: Modified stem of a South Asian herb
Contains: Transcription factor modifier that

possesses curcumin and
tetrahydrocurcuminoids
Function: Photo-protectant (sunblock and

skin lightener), antioxidant, anti-inflammatory,
cardio-protectant, prevents wrinkles and signs
of aging, reduces internal inflammation

Grapes (Vitis vinifera)
What: Fibrous component of the fruit
Contains: Oligomeric proanthocyanidins

(OPCs) are made of 2-3 monomer units called
flavanols
Function: Antioxidant, cardio protectant,

detoxifying agent

Contents
Market Dynamics
Ingredient Trends
Product Examples

34
Shiseido Collagen Update
Brand: Shiseido Collagen Update

Company: Shiseido
Geography: Japan
Key benefit: Eases stress; provides a
youthful appearance
Form: Liquid
Description: For those who feel stressed,
lack sleep and wants to be
young looking
Key Low molecular mass fish
Ingredients: collagen, Chinese herbal
extract, Korean ginseng,
Japanese tochu leaf extract,
hyaluronic acid, ceramide,
royal jelly, vitamin C
Packaging: Glass bottle, 50 ml

35
Fuwarinka – “Fragrance from within”
Brand: Fuwarinka
Company: Kracie (formerly Kanebo
Products)
Geography: Japan
Form: Candies
Description: Fragrances your body with
soft candy (rose and lemon
varieties)
Key Contains hyaluronic acid,
Ingredients: vitamin C, hikatsu extract
Packaging: Plastic pouch containing

candies 32g each
Price: JPY 207 per package

36
Jintan no Kaoru Bitoku – “Fragrance from within”
Brand: Jintan no Kaoru Bitoku

Company: Morishita Jintan
Geography: Japan
Key benefit: Fragrance
Form: Capsules
Description: Two-layer capsule dissolves
during digestion to emit a rose
fragrance
Key Edible oil and fats, gelatin,
Ingredients: flavoring, sorbitol, emulsifier,
glycerin, thickener (pectin),
food coloring
Packaging: Clear blister pack
Price: JPY 399

37
Asahi Gyugyutto Shimikomu Collagen Water
Brand: Asahi Gyugyutto Shimikomu

Collagen Water
Company: Asahi
Geography: Japan
Key benefit: Skin supplement
Form: Beverage
Description: Skin care supplement drink
contains approximately 2,000
mg of collagen, which
exceeds the amount broken
down by the body each day
Key Collagen, niacin
Ingredients:
Packaging: Plastic bottle 900 ml

Price: JPY 300

38
Imedeen Time Perfection – “Age minimizer”
Brand: Imedeen
Company: Ferrosan A/S
Geography: More than 70 countries, primarily
in Europe
Key benefit: Reduces fine lines and wrinkles
Form: Capsules
Description: Claims to improve skin elasticity,
hydration, and texture
Key Ingredients: Proteins; polysaccharides isolated

from a deep-sea fish; complex
based on natural lycopene, grape
seed extract, and vitamin C
Price: £38.50
for 60 tablets (one month supply)

39
Shiseido Pure White – “For People Who Want Pure Whiteness”
Brand: Shiseido Pure White

Company: Shiseido
Geography: Japan
Form: Liquid
Description: “For people who want pure
whiteness”
Key Vitamins B12, B6, C, E

Ingredients:
Packaging: 30 ml glass bottle

40
Fracora Collagen Bar
Brand: Fracora
Company: Kyowa Group
Geography: Japan
Form: Solid bar (also comes in
liquid)
Description: Supplement including
collagen
Key Fish collagen, silk peptides,

Ingredients: star fruit leaf extract
Packaging: Foil wrapper

Price: JPY 180

41
Hanami Green Tea Collagen
Brand: Hanami Green Tea Collagen

Company: Hanami
Geography: Japan
Form: Powder
Description: “For Health and Beauty”
Key 70% collagen (animal

Ingredients: sourced) and 30% organic
green tea
Packaging: Plastic box containing foil
wrapped tea pouches, 1.5 g
each
Price: JPY 1050 for 30 doses

42
Doctor.Gi – “Total Beauty Support”
Brand: Doctor.Gi
Company: Atlas
Geography: Japan
Form: Liquid
Description: “Total beauty support” Vitamin
B6 creates energy from
protein to maintain healthy
skin and eyes
Key Hyaluronic acid, vitamin C,
Ingredients: collagen, coenzyme Q10,
hikatsu extract
Packaging: Glass bottle of 30 ml

43
“Belly Reducing Midnight Yogurt”
Brand: Midnight Yogurt

Company: Nippon Luna
Geography: Japan
Form: Yogurt
Description: For “good sleep and beauty
support”; sold only at night
at convenient stores
Key Collagen (750 mg) and
Ingredients: theanine (50 mg)
Packaging: Plastic carton with foil lid

Price: JPY 105

44
Collagen Marshmallow
Brand: Ex Marshmallow
Company: Cranes Child
Geography: Japan
Form: Marshmallow!
Description: Marshmallow with collagen
Key Black sesame polyphenol +

Ingredients: Collagen 4500mg
Packaging: Box containing individually

wrapped marshmallows
Price: JPY 500

45
Kyupurun – for “soft and supple skin”
Brand: Kyupurun
Company: Lion
Geography: Japan
Form: Liquid
Description: “A beauty drink for soft and
supple skin” (grape flavor)
Key Collagen peptide, hyaluronic

Ingredients: acid, glucosamine, vitamins
C, B2, and B6, elastin,
flavangenol
Packaging: Glass bottle
Price: JPY 260

46
Medish – “for oral health”
Brand: Medish
Company: Lion
Geography: Japan
Form: Tablets
Description: Supports the maintenance of
a healthy oral environment
Key Multifunctional protein

Ingredients: “lactoferrin”; xylitol
Packaging: Plastic bottle

47
Innēov – “Hair energizer”
Brand: Innēov Hair Mass

Company: L’Oréal + Nestlé
Geography: Europe
Form: Tablets
Description: Said to be the first nutritional
supplement designed to
“energize” hair
Key Taurine, zinc and catechins
Ingredients:
Packaging: Box containing bubble pack

tablets
Price: EUR 30.00

48
Contents
Market Dynamics
Ingredient Trends
Product Examples

49
Kline projects that the nutricosmetics market will reach $2.5 billion
by 2012
3
CAGR:
CAGR:+11.2%
+11.2%
$ Billion retail
0
2007 2012

The nutricosmetics market has developed as three independent silos
and must be tackled differently
Differing cultures
Different legislation
Different commercial climates
Europe Japan U.S.

Most common form: Tablets Liquids Tablets
Prices: High Low Medium
Channels: Pharmacies Mass mainstream Specialty
Brands: Unique to Europe Unique to Japan Unique to U.S.
Key benefits: Skin, hair Beauty support, skin Skin
Product claims: Specific Vague Between specific and
vague

51
It will be very difficult for the U.S. market to reach the same level of
penetration as Japan and Europe
Top brands, Olay and Avon, have already

attempted and exited after minimal success
Could be a nice add on for professional skin

care brands, but is predicted to remain a
niche opportunity
American consumers are less patient, and

generally less health conscience than their
European and Japanese counterparts
Lacks good channel fit

− Pharmacies do not have same influence
in U.S. as they do in Europe

Validation is key (at least in Europe and U.S.)
Clearly documented and independent

scientific research findings should be
publicized
− Feature on product literature and/or
packaging
“Before” and “after” photos could also

help as well
Helps to win consumer confidence
Awards
Testimonials (especially by celebrities)

53
Innovation is critical for success
True novelty
− E.g., Imedeen Time Perfection
contains a powerful antioxidant
Active ingredients
− E.g., Lacto-lycopene in Innēov
Fermeté
Delivery systems
− E.g., Lipocap employed in Imedeen
Tan Optimizer offers optimum
encapsulation and protection of the
active ingredients

Simplicity is important
Products that do not require an extra step

− Changing consumer habits too much of a hurdle
− Fit in with existing behavior
Water Æ Beauty water
Typical supplements Æ multivitamin that

includes beauty benefits

Nutricosmetics offer an opportunity for food, beverage, and
supplement manufacturers (more so than cosmetic firms)
Many consumers don’t want to buy

ingestible products from cosmetics
brands, especially in the U.S.
Companies that have established
credibility in nutritional products
could be successful
Danone’s Essensis could be a good
example
Danone experienced tremendous
success with Activa, which was
backed with clinical trial validation

56
Other firms will try to tackle the market
L’Oréal and CocaCola have partnered to

launch a health-and-beauty beverage in
2008
Currently called Lumaé
Trademarked as a tea-based ready-to-

drink beverage by Coca-Cola's
Beverage Partners Worldwide division
Expected to address skin care needs

CHALLENGES OPPORTUNITIES
Small market High growth

Geographic silos Untapped geographies
Consumer skepticism Food and pharma companies
Results take too long Innovation

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companies find a clear path to success. The firm has served
the management consulting and market research needs of
organizations in the chemicals, materials, energy, life Asia Pacific
sciences, and consumer products industries for nearly 50 ___________
years. For more information, visit www.KlineGroup.com.
If you require additional information about the contents of this document or the Europe
services that Kline provides, please contact: ___________
Carrie Mellage
Director, Consumer Products
Middle East
Phone: +1-973-435-3412
E-mail: [email protected]
Kline Global Headquarters
Kline & Company, Inc.

Overlook at Great Notch
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What is nutricosmetics?

What is nutricosmetics?

What are the different types of fusion products discussed?

What are the different types of fusion products discussed?

NUTRICOSMETICS

Decoding the Convergence of Beauty and Healthcare

April 16, 2008

Kline Outlook and Insights

© 2008 Kline & Company

Kline Outlook and Insights

© 2008 Kline & Company

 Ingestible products that are

 Typical forms: pill, tablet,

© 2008 Kline & Company

© 2008 Kline & Company

© 2008 Kline & Company

Kline Outlook and Insights

© 2008 Kline & Company

Cosmeceuticals Nutraceuticals Nutricosmetics

 Intersection between cosmetics and pharmaceuticals

© 2008 Kline & Company

© 2008 Kline & Company

Cosmeceuticals Nutraceuticals Nutricosmetics

 Term coined in 1989 by Dr. Stephen

© 2008 Kline & Company

© 2008 Kline & Company

Cosmeceuticals Nutraceuticals Nutricosmetics

© 2008 Kline & Company

Kline Outlook and Insights

© 2008 Kline & Company

© 2008 Kline & Company

Europe, 32% North America, 19%

© 2008 Kline & Company

Total: $1.5 Billion

© 2008 Kline & Company

Total personal care Skin care Nutricosmetics

© 2008 Kline & Company

© 2008 Kline & Company

Aging population Shift toward less invasive procedures

Environmental factors GROWTH IN Increasing consumer awareness

Societal factors (multi-tasking) Rise of the Spa Culture

© 2008 Kline & Company

Skin Hair Nails

 Repair and prevention  Retention and growth  Strengthening

© 2008 Kline & Company

 Largely concentrated in France, Italy,

© 2008 Kline & Company

L’Oréal + Nestlé Ferrosan A/S Oneobiol

© 2008 Kline & Company

 Most mature market for nutricosmetics

© 2008 Kline & Company

Shiseido Lion Kracie (formerly

© 2008 Kline & Company

 Nutricosmetics still in infancy

© 2008 Kline & Company

N.V. Perricone Murad Borba

© 2008 Kline & Company

Kline Outlook and Insights

Ingestible products that are

Typical forms: pill, tablet,

Intersection between cosmetics and pharmaceuticals

Term coined in 1989 by Dr. Stephen

Repair and prevention Retention and growth Strengthening

Largely concentrated in France, Italy,

Most mature market for nutricosmetics

Nutricosmetics still in infancy

Are safe, ingestible

Are often derived from food

Generally offer at least one the following

What: Long, deeply serrated basal leaves of

Contains: Active compounds (flavonoids,

Function: Antioxidant, cardio protectant,

What: A fibrous protein that makes up

Function: Provides strength and

What: An xanthine alkaloid obtained from

Contains: Caffeine (xanthine alkaloid)

Function: Slimming agent. Caffeine acts as a

What: Modified stem of a South Asian herb

Contains: Transcription factor modifier that

Function: Photo-protectant (sunblock and

What: Fibrous component of the fruit

Contains: Oligomeric proanthocyanidins

Function: Antioxidant, cardio protectant,

Top brands, Olay and Avon, have already

Could be a nice add on for professional skin

American consumers are less patient, and

Lacks good channel fit