There's no lack of opportunity.(BATH & BEAUTY)

NEW YORK -- Bath products, fragrance and cosmetics all offer mass market retailers significant opportunities, although each category faces unique challenges, as well.

The bath and shower arena, for one, has gradually rebounded after hitting a low point in 2004. The recovery is largely the result of gains in sales of liquid soap.

Another important trend in the category is the transition from bar soap to body washes. The body wash market, which is still in the relatively early stages, will continue to attract new users.

Total sales of soap, bath and shower products in 2007 stood at about $1.7 billion in supermarkets, drug stores and discount stores (excluding Wal-Mart Stores Inc.), according to the market research firm Mintel.

Pricing has helped to revive the bath and shower category. Steep unit price drops of liquid soap in 2004 helped to speed adoption of these items. Sales of liquid body soap grew by 29% between 2002 and 2006, and those gains were accompanied by many product launches.

Average prices in the liquid body soap segment have continued to stay low even as the average price per volume has risen in the liquid hand soap and non-deodorant bar soap segments, according to Mintel.

Supermarkets dominate the bath and shower category, accounting for more than half of all dollars spent on bath products in mass market retail stores, notes Mintel. Yet the trend toward liquid bath soap has not worked to the advantage of supermarkets, which only account for 43% of liquid bath soap sales, according to the market research firm.

The bath and shower arena will become more segmented as additional products are launched. This will put pressure on manufacturers to introduce items that appeal to specific consumer demands.

One growing niche is natural and organic bath products. This year, for example, Watkins Inc. is launching a natural personal care product line called J.R. Watkins Natural Apothecary. It is a comprehensive line of head-to-toe personal care items, including lotions, shea butters, body oils and travel kits. Each product in the line is at least 95% natural.

Another way that suppliers of bath products have tried to differentiate their lines is by offering their products in unique fragrances.

According to Elaine Binder, president and chief executive officer of Spongables LLC, which supplies sponges and scrubbers infused with soap and fragrances, the use of fragrances helps the company offer products that appeal to people of differing tastes.

While no single bath fragrance trend stands out in 2008, Binder says that "gourmands" are interesting. "We've always combined spices, fruits and other edible elements in our blends, but I see this going further with exciting honey and caramel scents, and vanilla and chocolate undertones," she says.

Binder adds that traditional scents are also gaining traction, particularly in such unusual combinations as French lavender with Meyer lemon, which is available in the company's Spongelle body buffer.

Meanwhile, the fragrance category--including cologne, aftershave, body shaves and other fragrances--will be a challenging one for mass market retailers. While sales will continue to rise in the mass market for both men's and women's fragrances, department stores, specialty retailers and Internet vendors have also focused on the category.

Cologne, talc and shaving lotion dominates sales of men's fragrances, accounting for $360 million in sales in 2007 and an 84% market share, according to Mintel. Unisex fragrances have also received interest from men, although this could be a short-lived trend, since many men have distanced themselves from the "metrosexual" label.

In cosmetics personal health is of increasing concern among consumers. Several major suppliers have introduced mineral cosmetic lines aimed at mass retail stores.

Mineral ingredients meet consumer demands on several fronts, according to Lynn Yarnell, president and CEO of Jane & Co., which introduced a line of mineral facial cosmetics about a year ago. Besides being a natural ingredient, minerals actually provide health benefits because they have anti-inflammatory properties, she says.

 Bath Fragrances            DOLLAR SALES      UNIT VOLUME                            $71.6 mil.        23.1m11.                            (-11.5%) *        (-20%) *  For 52 Weeks               Percent Change    Percent Change Ending 1212107                   vs.               vs.                            Prior 12 Months   Prior 12 Months                              Supermarkets      Supermarkets                                 -6.9%            -10.9%                              Drug Stores       Drug Stores                                -17.7%            -28.8%                                 Dollar             Unit Top Brands                    Sales **         Volume ***   1. Mr. Bubble                $6.4 mil.         2.5 mil.  2. Batherapy                  3.9 mil.         1.2 mil.  3. Village Naturals           3.8 mil.         0.9 mil.  4. Calgon                     3.6 mil.         1.2 mil.  5. Sesame Street              2.9 mil.         0.9 mil.  6. Village Naturals Spa       2.3 mil.         0.6 mil.  7. Aura Cacia                 2.0 mil.         0.4 mil.  8. Alpha Keri                 1.7 mil.         0.2 mil.  9. Aveeno                     1.7 mil.         0.3 mil. 10. Vaseline Int. Care         1.4 mil.         0.7 mil.  * Total of supermarkets, drug stores and discount stores excluding Wal-Mart Stores Inc.  ** All private label brands combined total $13 mil.  *** All private label brands combined total 4.5 mil.  Source: Information Resources Inc.