Market Analysis – 53131611 – Shaving creams

Market Analysis Brief: Shaving Creams (UNSPSC 53131611)

1. Executive Summary

The global shaving cream market, a mature segment of the personal care industry, is valued at an estimated $6.8 billion as of 2023. The market is projected to experience modest growth, with a 3-year CAGR of ~2.9%, driven by product premiumization and demand from emerging economies. The primary strategic challenge is the cultural shift towards beards and stubble in Western markets, which constrains volume growth. The most significant opportunity lies in capturing value through products targeting sensitive skin and sustainable packaging, which command higher price points and align with modern consumer preferences.

2. Market Size & Growth

The Total Addressable Market (TAM) for shaving creams is stable, with growth primarily fueled by price increases and expansion in the Asia-Pacific region. North America and Europe remain the largest markets by value but are experiencing slower growth compared to developing regions. The market is forecast to grow at a compound annual growth rate (CAGR) of 2.9% over the next five years.

Largest Geographic Markets: 1. North America (est. 35% share) 2. Europe (est. 30% share) 3. Asia-Pacific (est. 20% share)

3. Key Drivers & Constraints

1. Driver: Male Grooming Awareness: Increased focus on personal appearance and wellness among men globally, particularly in emerging markets, continues to support baseline demand.
2. Driver: Product Premiumization & Specialization: Demand for specialized formulations (e.g., for sensitive skin, organic/natural ingredients, anti-aging) allows brands to capture higher margins.
3. Constraint: Shifting Grooming Habits: The sustained popularity of beards, stubble, and less frequent shaving in key Western markets directly reduces consumption frequency and volume.
4. Constraint: Competition from Alternatives: The rise of high-performance electric shavers and the disruptive influence of Direct-to-Consumer (DTC) subscription models (e.g., Dollar Shave Club, Harry's) are fragmenting the market and pressuring traditional retail channels.
5. Cost Input: Raw Material Volatility: Pricing for key inputs like chemical surfactants, propellants (hydrocarbons), and aluminum packaging is subject to fluctuations in energy and commodity markets.

4. Competitive Landscape

Barriers to entry are moderate-to-high, driven by the immense brand equity, marketing budgets, and extensive distribution networks of incumbents.

⮕ Tier 1 Leaders * Procter & Gamble (P&G): Dominant market leader through its Gillette and The Art of Shaving brands, leveraging massive scale and R&D. * Edgewell Personal Care: Strong #2 position with brands like Edge and Skintimate, focusing on mass-market value and innovation. * Unilever: A major player, significantly strengthened by its acquisition of the disruptive DTC brand Dollar Shave Club. * Beiersdorf AG: Leverages its deep skincare expertise through the Nivea Men brand, often bundling shaving cream with other skincare products.

⮕ Emerging/Niche Players * Harry's Inc.: A leading DTC disruptor that successfully expanded into brick-and-mortar retail, focusing on simple, high-quality branding. * Bulldog Skincare: Focuses on natural ingredients and an ethical, vegan-friendly brand positioning. * Cremo Company: A fast-growing brand known for its highly concentrated "impossibly slick" formula, gaining share in food, drug, and mass channels. * Proraso: An Italian heritage brand that dominates the traditional wet shaving niche with a loyal following.

5. Pricing Mechanics

The price build-up for shaving cream is a composite of raw materials, manufacturing, and significant commercial costs. Raw materials (chemicals, fragrances, propellants) and packaging (aluminum cans, plastic tubes, actuators) typically account for 30-40% of the Cost of Goods Sold (COGS). Manufacturing, overhead, and labor contribute another 10-15%. The largest components of the final price are commercial: marketing & advertising, R&D, supply chain/logistics, and retailer/distributor margins, which can collectively represent 50-60% of the shelf price.

The most volatile cost elements are tied to global commodity markets. Recent price fluctuations have been notable: 1. Hydrocarbon Propellants (Isobutane/Propane): Linked to natural gas prices, these have seen high volatility. (est. +15% over last 12 months) 2. Aluminum (Cans): Subject to LME fluctuations, energy costs, and trade policies. (est. +8% over last 12 months) 3. Glycerin: A key emollient, with prices tied to vegetable oil and biodiesel feedstock markets. (est. -10% over last 12 months)

6. Recent Trends & Innovation

• Sustainable Packaging Push (Ongoing): Major brands are actively transitioning to more sustainable packaging. P&G's Gillette brand announced infinitely recyclable aluminum can options, and niche brands are exploring propellant-free dispensers and post-consumer recycled (PCR) content. [Trend - 2022/2023]
• "Clean" & Natural Formulations (Ongoing): There is a clear market shift towards products free from parabens, sulfates, and artificial dyes. Brands like Bulldog and Cremo are gaining share by marketing formulations with natural extracts (aloe, calendula) and essential oils.
• Regulatory Scrutiny on M&A (Feb 2020): The U.S. Federal Trade Commission (FTC) successfully blocked Edgewell's $1.37 billion acquisition of Harry's, citing concerns it would stifle competition in the wet shaving market. This action preserves the disruptive power of niche players and signals a challenging environment for further consolidation among leaders. [Source - FTC, Feb 2020]

7. Supplier Landscape

8. Regional Focus: North Carolina (USA)

North Carolina presents a favorable sourcing environment for shaving creams. Demand is stable and growing, mirroring the state's strong population and economic growth. Critically, the state offers significant local manufacturing capacity; Procter & Gamble operates a large, multi-product manufacturing facility in Greensboro, NC, which produces a range of personal care items and serves as a major hub for its East Coast distribution network. This local presence can reduce logistics costs and lead times for domestic supply. The state's robust transportation infrastructure, competitive labor market, and generally favorable business tax climate further enhance its attractiveness as a strategic supply point.

9. Risk Outlook

10. Actionable Sourcing Recommendations

1. Implement a dual-source strategy by allocating ~70% of spend to a Tier 1 incumbent to secure supply and scale pricing, while awarding ~30% to a high-growth niche player (e.g., Cremo). This creates competitive tension, provides access to formulation innovation, and can yield an estimated 5-7% cost reduction on the contested volume through strategic negotiation.

2. Mandate ESG compliance in the next RFP cycle. Require that >50% of SKUs sourced by FY2025 utilize sustainable packaging, such as propellant-free formats or cans with >75% PCR aluminum. This mitigates brand risk associated with environmental concerns, aligns with corporate ESG targets, and captures the growing consumer segment willing to pay a premium for sustainable goods.