Cannabis and Alzheimer’s: Use Linked to Greater Connectivirty in the Brain
Cannabis Sativa. A annual herbaceous plant, it is a plant that has been used for centuries. First classified by Carl Linnaeus, cannabis has a long recorded history of use including relgious and spiritual purposes, medicine, recreation, industrial fibre, food, and seed oil.
It first became heavily demonized in the early 1900’s, and totted to have no medicinal value for decades. In recent years, research in cannabis sativa has begun to show a new story. A recent study by the University of Texas suggests that chronic use may be linked with greater connectivity in the brain. This may have great impact for those suffering from Alzheimer’s.
“What’s unique about this work is that it combines three different MRI techniques to evaluate different brain characteristics,” said Dr. Sina Aslan, founder and president of Advance MRI, LLC and adjunct assistant professor at The University of Texas at Dallas. “The results suggest increases in connectivity, both structural and functional that may be compensating for gray matter losses. Eventually, however, the structural connectivity or ‘wiring’ of the brain starts degrading with prolonged marijuana use.”
It is important to note that size and density of grey matter in the brain does not correlate to to lower intelligence or slower decision making processes – one can have a smaller brain and have a higher IQ.
Why is this important to the everyday investor looking at this industry? Cannabis Sativa is currently a schedule I drug, a class reserved for dangerous drugs with no medicinal value. It is research like this that allows legislators and policy makers to make informed descions.
If the status were to change, this would allow for greater access by the public and private sectors for a variety of purposes. Currently with heavily controlled legislation Health Canada expects this industry to grow over $1 billion in the first 5 years. As we learn more about this partially understood plant, who know what doors will open down the line?
Follow MomentumPR for new trends and tips on the Canadian Markets.
- Published in Blog, Medical Marijuana
The Seven Deadly Sins of Investing
All to often we are presented with trading advice for what to do, what to look for, when to jump… here is a different take on what NOT to do. Small cap investing can be a tough game, and avoiding mistakes is as important as making the right desicion.
“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” – Warren Buffett
Without further ado, I present James Boric’s (The Sleuth)
Rules for Small-Cap Investing: Repent Now! Avoid These 7 Deadly Sins
Be honest for a moment. Has something like this ever happened to you?
You are at a cocktail party or neighborhood barbeque. Your neighbor (the one you don’t like very much, but who thinks you are best buds) corners you between the hors d’oeuvres table and the horseshoe pit and starts talking about his recent good fortunes.
It turns out he made a windfall buying some startup biotech stock you’ve never heard of. A friend of a friend told him about the company and said it had a potential cure for breast cancer. It sounded legit, so he invested $10,000. Two months later he had enough money to pay for the brand-new BMW 5 Series sitting in the driveway across from your house.
The whole time your “bud” is telling you the story, you’re thinking, “How in the world can an idiot — whose claim to fame was when he lit his own hair on fire at the annual block party three years ago — make more money in the stock market than me? It makes no sense.”
Fueled by competition and envy, you immediately go home, log on to your computer and buy the same stock. Heck, if this moron can make a fortune, so can you. So you invest $10,000 too.
Rules for Small-Cap Investing:What Happens When You Don’t Follow the Rules
A month later, the company comes out with some breaking news. Its “sure-fire” cancer drug is no longer sure fire. Unexpectedly, it didn’t make it through the first phase of the FDA trials. To your horror, the stock immediately plunges and doesn’t stop until your $10,000 investment is worth a mere $500 (hardly enough to buy a scooter, let alone a new Beamer).
Sound at all familiar?
This is the scenario CFP John Wilkinson presented to 75 people at the Agora Financial Trader’s Conference in Puerto Vallarta, Mexico. He wanted to illustrate the routine mistakes traders and investors make that cost them a fortune — time and time again.
“The difference between professional traders and you,” John said on stage, “is that professional traders don’t fall victim to the seven deadly sins: greed, lust, envy, laziness, gluttony, pride and vengeance.”
The example of buying a stock in order to keep pace with your annoying neighbor is a classic case of envy. Sure, the story was a little over the top. But it happens all the time. And even if you haven’t fallen victim to the sin of envy, chances are you have violated at least one of the other six sins…
Rules for Small-Cap Investing: Deadly Trading Sin #1: Greed
This is where you desire more than you need. In the trading and investing world, greed rears its ugly head when you ignore price, asset allocation and position sizing. You buy too much of a “sure thing,” only to lose your shirt when you are wrong.
Remember, it is important to stay within your means any time you trade or invest. Never put more than 2-5{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} in a single position. Make sure you have a blend of stocks (small cap, large cap, emerging markets, growth, value) and bonds in your portfolio. The idea is to position yourself so you make money in all markets — and not get crushed if one thing doesn’t go your way.
Rules for Small-Cap Investing: Deadly Trading Sin #2: Lust
You hear about a stock that has such a sexy story you just have to own it. All of a sudden, things like fundamentals, balance sheets and cash flow statements don’t matter. You are drawn to the possibility of triple-digit gains. And nothing is going to stop you from investing.
It’s like Ralph Wanger told me last year in his Chicago high-rise…
How many guys go to the same chic bar every weekend looking to “get lucky”? Twenty hot shots scale the bar up and down looking for the hottest woman in the room. Then at the end of the night they all make their move — hoping to take the girl home. Problem is…
As they all make their move, they form a wall of drunk and sexually frustrated men around this one woman. Inevitably, she wants nothing to do with any of them and walks home — alone.
“Wouldn’t it be a lot better to look in the local library to find a woman?” Wanger asked me. “Most men don’t look there. It’s out of the way and not thought of as a sexy hangout. But a guy probably has a better shot of finding someone he could share his whole life with at the library than at a crowded bar with tons of competition.”
The same is true in investing, of course. The best opportunities aren’t the ones everyone is talking about already. The real money will be made by investing in the companies flying below Wall Street’s radar screen — the ones buried away in some library stack.
Rules for Small-Cap Investing: Deadly Trading Sin #3: Envy
This is when you hear a “success” story from a neighbor, family member or co-worker. They tell you about the fortune they made on stock XYZ. Feeling left out of the action, you buy the stock as well. You end up making an emotional decision to buy a stock. That’s almost never a good idea.
The true greats of Wall Street (Buffett, Templeton, Price, Greenblatt and Whitman) spend hours and hours each day understanding the business they are investing in. They make sure the company is fundamentally sound. They base their ideas on cold, hard facts…not emotion. And that’s exactly why they are billionaires and your neighbor isn’t.
Rules for Small-Cap Investing: Deadly Trading Sin #4: Laziness
You buy a stock without doing any due diligence of your own. Maybe you hear about a hot tip from a friend. You read an article in the newspaper about a sure-fire idea. Or you overhear your racquetball buddy talk about an opportunity with his broker. At the end of the day you think to yourself, “I am tired. I don’t have any time to do this research on my own. I trust my friend. So why not?”
Come on! This is your money! You work hard for it. So why not make sure you know how it is being invested? Read a company’s annual report. Look at its balance sheet. Look at some simple ratios. It will take you about two hours and will save you from investing in companies with no future whatsoever.
Rules for Small-Cap Investing: Deadly Trading Sin #5: Gluttony
You have unrealistic goals on a trade or investment. The average person (believe it or not) expects to make 400{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} in three months on a trade!
This is the sin that drives me the most crazy. Let me tell you right now: you will NOT make 400{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} in three months! Forget it! The greatest investors of all time make between 14-30{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} a year. So make sure your expectations are realistic.
Rules for Small-Cap Investing: Deadly Trading Sin #6: Pride
You make a decision to buy a stock and shortly after calling your broker, you realize your reason for making the trade was completely wrong. Instead of admitting your mistake and getting out for a small loss, you stay in the position. Inevitably, what happens? Your small loss turns into a very big one.
Rules for Small-Cap Investing: Deadly Trading Sin #7: Vengeance
After taking a loss on a position, you feel the need to blame someone. Whether it is your broker, your neighbor or your favorite small-cap editor, you spend a lot of time cursing someone else for your bad fortune — instead of learning and trying to understand what went wrong so you can improve moving forward.
At the end of the day, you have responsibility for your own portfolio. You should never invest in anything unless you are comfortable with the decision. Forget everyone else. Do what is right for you.
I recommend you print out this list of common investing mistakes. Read it every time you think about putting your hard-earned money into a stock. Make sure you aren’t falling victim to any of the seven sins. If you aren’t, chances are you will do just fine.
So go now and repent.”
- Published in Blog
Canada’s Newest Exchange – Aequitas NEO Exchange!
“We at Aequitas are on a mission to reverse the trends that currently trouble our markets, to restore confidence and to build a new exchange that puts the interests of investors and issuers first.”
-Jos Schmitt, President and Chief Executive Officer, Aequitas Innovations Inc.
On November 17th, The Ontario Trade Commission has recognized Canada’s newest exchange, the Aequitas Neo Exchange. It is expected to go online March 1, 2015. The last time this happened was the Canadian Securities Exchange in 2004. The ANE aims to limit high frequency trading with higher commissions as well as other bumps. Jos Schmitt, CEO of Aequitas Innovations, hopes to have 20{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} of the market in trade volume in the next 4-5 years, so its reasonable to expect some aggressive campaigns in the coming months for the exchange.
“We are thrilled to receive approval from the OSC to move forward and launch the Aequitas NEO Exchange,” Schmitt said.
“We appreciate the careful review undertaken by the OSC. We are now in a position to help promote confidence and build an exchange of the future using a bold new blueprint that puts investors, companies and their dealers first.”
Aequitas’ founding shareholders include Barclays Corp Ltd., a subsidiary of the well-known British bank; RBC Dominion Securities Inc.,telecommunications giant BCE; mutual fund companies CI Investments Inc. and IGM Financial (Investors Group); OMERS Capital Markets, the investment arm of the OMERS (the Ontario Municipal Employees Retirement System); and ITG Canada, a market maker.
- Published in Blog
Organigram (V.OGI) and the Massive Deal Everyone Missed
Right?
Organigram (TSX:V.OGI, Stock Forum) essentially secured an LOI for an off-take deal with a chain of ‘healing centres’ that would see them moving up to 4500 kilograms of medical marijuana through 2016, with a 20{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} increase each year beyond that for ten years, for use in the treatment of Post-Traumatic Stress Disorder (PTSD) by veterans, the military, and first-responders.
The math on this is simple: Organigram, even if they sell at a conservative $5 per gram, could sell 3 million grams just in 2016 alone, for $15m in revenue.
In 2015? $7.5 million.
This on top of its ongoing business.
Make no mistake, this is a big deal for two reasons.
- It locks in the first seven-digit revenue agreement in Canadian medical marijuana history, at a time when other companies are struggling to do six figures per quarter across the board.
- I’m led to believe this is an INSURANCE BACKED deal. That is, the healing centres are going to be treating the ill with medical marijuana and processing the costs through the patient’s federal insurance.That second point is potentially massive. It locks in ongoing revenues, allows patients to get access to plenty of medicine, and mainstreams the treatment to a point where insurance companies can become quickly conditioned to green-lighting medical marijuana for other conditions.
When insurance becomes part of the MMJ landscape, the profit party begins.
In addition, by moving into this space, Organigram can begin looking south, at a market where PTSD is so prevalent that a large segment of the population is either affected by it, or is close to someone who is.
Also part of the deal: THC will conduct research on medical marijuana and PTSD going forward to help mainstream the treatment.
Organigram, with this deal, graduates, leads and delivers on its promise.
Every other marijuana company out there is looking to grow their patient list, and Organigram just grew theirs by potentially thousands.
Trauma Healing Centers will open 13 centers across Canada as part of their phase one rollout. The first four centers will be in Edmonton, Ottawa, Quebec and the Halifax Region in January, with nine more opening across Canada by June 2015.
Why not open in Vancouver? Because Vancouver has a dispensary on every corner right now, most of which are moving gang-grown product and staffed by guys with neck tattoos and Affliction t-shirts. I’m told there’ll be city wide push to close most of those down in the New Year, which will open the market for real companies that have background checks and follow Health Canada rules to emerge. Good for patients, good for LPs.
I know other companies were talking to Trauma (AKA: THC – did you miss that?) about doing a deal, but Organigram CEO Denis Arsenault told me last week, “They were just treating it like a business opportunity. This is veterans. This is important. We’re going to make money on the deal but we’re not turning the screws, we want the product out there and there’s no greater need than those who’ve served and have PTSD coming home. So we’re working closely with Trauma and we couldn’t be prouder to have got their okay. Every one of us at Organigram considers it an honour to be able to help.”
Not a bad lead-in to Remembrance Day but, oddly, the market pretty much missed the significance of the news.
Organigram stock has been pushing in the green direction for a week or so but, to me, this deal is a company maker. It’s the first nuggets of the gold rush. Yet, the market barely nudged.
Why was that? Well, it’s what wasn’t in the press release: Dollar signs. We don’t know what margin OGI will make on the deal because we don’t have an agreed upon price. In addition, you always have to beware of the words ‘up to’ in any press release.
Organigram’s agreement binds it to supplying ‘up to’ 4500 kilograms through 2016. If THC fails to open its centres, or fails to attracts patients, that ‘up to’ figure could be zero.
Arsenault is convinced that’s not likely. “They’re already hiring, those centres are opening up.”
A casual search would indicate he’s right: Trauma Healing Centres are indeed hiring in Edmonton right now, though there’s no website yet (that I can find anyway). Still, nobody’s taking 3000 kilos of weed for a while yet.
There will be more deals like this, and each one from this point should be fiercely battled for by every licensed producer out there because forging one customer relationship at a time is a fool’s errand. Having reams of new patients handed to you every week is where it’s at.
When I talked to Arsenault, I asked him if this was the tip of the iceberg. He didn’t answer directly, but let’s just say, if you ever get a chance to play poker against him, take that chance.
His poker face is crap.
“We all know it’s going to go recreational legal,” says Arsenault. “When the dust settles, the people with the best product are going to capture a big part of the market.”
Aside from this deal, Organigram’s differentiators are its bilingualism (good for a hard push through the Quebec market, and nearly 30{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} of the country’s population), and it has certified organic status, which no other company can boast. The organic thing could be a big help in getting access to doctors. Other producers claim they’re organic too because Health Canada says no pesticides can be used, but certification matters.
The stock, right now, is undervalued, as are almost all the LPs out there (the exception being Mettrum which has held well from its RTO), and a couple that appear to be near term MMPR candidates; Matica (CSE:C.GRF, Stock forum) and Supreme (CSE:C.SL, Stock Forum), for example.
The Canadian weedco marketplace is starting to become a place where real companies do business and, for mine, the rising tide of Organigram just lifted all boats.
Full disclosure: I invested in the last Organigram financing and still hold that investment. They’re also a Stockhouse marketing client, and I’ve also consulted with them on marketing strategy, so it’s safe to say I like OGI. You should be aware of that and take it into consideration before you make any purchasing decision based on this story, but you should also understand those three things happened because I believe the company is doing all the right things.
Read more at CEO.CA: Licensed organic grower vies for Canada’s pot prize.
–Chris Parry
http://www.twitter.com/chrisparry
Read more at http://www.stockhouse.com/news/newswire/2014/11/12/organigram-v-ogi-and-massive-deal-everyone-missed#IgIXv2cpjmp2ttXr.99
- Published in Blog, Medical Marijuana
Dundee Sustainable Technologies – Making big moves in South America
Dundee Sustainable Technologies (C:DST) is this relatively new company trading on the Canadian Securities Exchange. Over the course of it’s history this small cap company has developed several highly efficient and patented technologies, with efforts being put into licensing out their technologies in exchange for royalties.
On Oct. 31, 2014, Jose Louis Gioja issued a decree in San Juan in view of implementing DST’s proprietary cyanide-free technologies. San Juan Mining has committedto raising an estimated $100 million in order to set up a processing plant with a capacity of 200 tons of concentrate (6000 tons of ore) a day. In turn, DST would receive a 3{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} Net Smelter Return (“NSR”) on all precious and base metals thus produced. This is a major step forward for DST – this will be the 3rd plant for processing, and the second country to endorse their technologies.
Argentina (among other countries) has had many issues in the past over cyanide heap extraction. With blanket issues over heap leaching and the effects that these tailing ponds have on the environment, several provinces have banned the use of cyanide in mining. Without a viable extraction method, many projects in Argentina have simply stagnated. This is where DST comes in, with their new chlorination method.
Chlorination extraction has several distinct advantages over traditional methods. With high yields (90{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}+), low contact time (avg. Several hours vs. Several days) and lower capital costs of about 10-15{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}, this method is economically competitive. The most distinctive aspect though, is in it’s tailings – It only leaves behind Salt and Potash. No mecury. No cyanide.
Between the plant being set up in January and this, DST is looking about a provisional $60 Million in revenue stream. Considering they have been trading since April, they have made some great strides. And just think – this is simply one technology.
We might be seeing the tipping point on Dundee Sustainable Technologies.
Shanghai/Hong Kong Connect set to launch November 17th!
November 17th is going to be an exciting day for Canadian investors – The Shanghai/Hong Kong Connect is set to launch! This will integrate two previously unconnected exchanges. This is no paltry moment- here is the creation of potentially the second largest exchange in the world, with a combined market capitalization of US $7 trillion dollars and an annual turnover of US $9 trillion. International investors will be able to invest in 568 companies on the Shanghai Stock Exchange.
First thing to note though, is there are 3 types of shares on the SSE – A-shares, H-shares and B-shares. B-shares listed on mainland Chinese exchanges in foreign currencies, and are often less important. He important ones to note are A-shares, which are domestically traded shares in Shenzhen and Shanghai, and H-shares, which are Chinese companies listed in Hong Kong. Many companies have more then one kind of share. It is important to note, that it is common to see shares trading at different prices. For example, airlines H-shares are about 25{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} lower.
Historically A-shares were known for their discounts, but no longer. Since the announcement of the Stock Connect April10, the Shanghai market has gone up 15{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}, and the Hong Kong about 5{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}. Shenzhen’s market has gone up by about 20{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}, though they are set to join later.
Having been known for censorship and inaccessible internationally, this will open new opportunities and investment for short and long traders alike.
- Published in Blog
Organigram (TSXV:OGI) has entered into a binding letter of intent with Trauma Healing Centers!
Organigram (TSXV:OGI) Has continued to show its innovation in the marketplace with its latest expansion.
Today, November 11th, Organigram entered into a binding LOI with Trauma Healing Centers. By June 2015 Organigram will cater to 13 new locations, including Edmonton, Ottawa, Quebec and Halifax. Medical marijuana has long been known to aid PTSD users, and this is a major step in bringing it to the public. This collaboration will bring about new research into PTSD and the use of marijuana as treatment. Organigram’s dedication the highest level of quality can easily be seen in its recent internationally recognized organic certifcation.
The current medical marijuana space has seen many turns. The recent changes in Oregon, Alaska and DC joining the legalized world of marijuana shows how new this industry is, and how quickly things are changing. We are only at the beginning of this North American emerging market! With over 1000 applications to Health Canada for licenses, Organigram’s early acceptance will allow them a strong foothold on the growing marketplace.
- Published in Blog
Upcoming Montreal Event – IIROC’s “Tips for Traders Montreal”
MomentumPR strives to provide you the best tools to tackle Canadian small caps today. In this investing environment, staying ahead of the curve is the only way to increase your portfolio. Need to brush up the latest compliance issues? Come check out Investment Industry Regulatory Organization of Canada (IIROC)’s “Tips for Traders Montreal”! Attending will also provide you with 1.5 hours of IIROC Continuing Education Compliance Credits.
The event will cover a variety of subjects, mostly in English. Some topics include
-
electronic Trading Rules
-
Overview
-
TCC Observations
-
-
Third-Party Electronic Access
-
Odd-Lot Order Rulings
-
Single-Stock Circuit Breakers
-
Marketplace Thresholds
-
Debt Reporting Update
-
Best Execution
-
Identification of Trading Groups
Day? Thursday, November 13, 2014
Time? 4:30-6:00pm
Where? Centre Mont-Royal, “Cartier 1”, 3rd Floor, 2200, rue Mansfield, Montreal
Organigram (TSXV:OGI) Supporting Five-city Cross-Canada Program to Provide Cannabinoid Education
OTTAWA, Nov. 4, 2014 /CNW/ – The Board of Directors of the Canadian Medical Cannabis Industry Association (CMCIA) today announced a partnership with the Canadian Consortium for the Investigation of Cannabinoids (CCIC) to support, through an unrestricted grant, a 5-City Continuing Medical Education (CME) program to be held in February-March 2015.
This educational initiative aims to provide balanced and evidence based cannabinoid education to Canadian healthcare practitioners (physicians and nurse practitioners). The program builds on the portfolio of successful and respected educational sessions led by the CCIC since 2007. The program objectives and contents are developed by a national steering committee and are totally independent from funding sources.
Regulatory changes by Health Canada’s Marihuana for Medical Purposes Regulations (MMPR) that took effect last April made physicians directly responsible for deciding who should legally have access to marijuana for medical purposes.
“As physicians our number one priority is to help patients. It is imperative that physicians have sufficient knowledge about cannabis and cannabinoids in order to engage in informed discussions with patients about the therapeutic use of these drugs” said Dr. Mark Ware, Executive Director of the CCIC. “The CMCIA sponsored education program will build greater awareness of the risks and benefits of cannabinoids among Canadian physicians. We are encouraged to see the industry supporting this important work. We hope this is the beginning of an important partnership between physicians, researchers and the medical cannabis industry” Ware continued.
As the national association representing the majority of licensed producers regulated by Health Canada under the MMPR, the CMCIA is pleased to support unbiased independent research presented directly to physicians by physicians.
“A key area of focus for the CMCIA is to address the identified need for physician education on both the therapeutic risks and benefits of medical marijuana” said Marc Wayne, Chair of CMCIA.
“The time has come to address these gaps head on and work collectively to support members of the medical community so they can provide the best treatment for their patients. I am very pleased to see members of our industry leading this effort and working collaboratively to support these important initiatives. This program will help to reduce the stigma associated with the use of medical cannabis.”
The 5-city tour is expected to travel to Halifax, Montreal, Ottawa, Calgary and Vancouver.
The CMCIA would like to thank the following members who are supporting this important CME Education tour:
ABcann, Agrima, Bedrocan Canada, CannMedica Pharma, MedCannAccess, MedReleaf, Mettrum, OrganiGram, and Tweed.
About the CMCIA
The Canadian Medical Cannabis Industry Association (CMCIA) is Canada’s leading member-driven association for Licensed Producers (LPs) of medical cannabis. We represent the majority of producers currently licensed under the Health Canada’s Marijuana for Medical Purposes Regulations (MMPR), in force as of June 19, 2013.
The CMCIA’s mission is to promote national standards and best practices by supporting the development, growth and integrity of the medical cannabis industry. The association acts as a national voice for our members, and serves as a credible and trusted resource on issues related to medical cannabis industry.
The group shares a philosophy of patient-centered care and improved public health, and is committed to product safety and quality, secure and reliable access for qualified patients, and promotion of the safe and effective use of cannabis for medical purposes.
About the CCIC
The CCIC is a federally registered Canadian nonprofit organization of basic and clinical researchers and health care professionals established to promote evidence-based research and education concerning the endocannabinoid system and therapeutic applications of endocannabinoid and cannabinoid agents.
- Published in Blog
Skin Care and Cosmetics Industries: Asia/Pacific Locked in sight.
The Skin Care Industry is an ever-improving, competitive and very technological environment ruled by well-established giants such as Avon, L’Oreal andProcter & Gamble’s Olay. They are not, however the only players around. There is always room for technology-focused companies to improve existing products and introduce ground-breaking innovations to the market; in fact this is an industry that attracts brilliant minds, as pointed out by Sabine Louët.
Market opportunity? Trend?
The U.S. represents $54.89 Billion in sales, but it is not considered the fastest growing market, or the biggest. Brandon Gaille presents a visual report titled 26 Cosmetic Industry Statistics and Trend, in which Asia/Pacific holds the 1st spot for “Top regions in global beauty sales” while China holds the 2nd spot for “Growing prestige beauty markets.” Gaille also mentions how active the industry is, in 2011 there were 35 strategic acquisitions in the beauty industry, 13 of them from the Skin Care Industry. It is not surprising to see large companies buying their way into these attractive and growing eastern markets. These industries seem to be able to survive even the worst of crisis.
But why have the Skin Care and Cosmetic industries carried on practically unscathed after the latest Global Economic crisis? By 2011 in the U.S., sales on “Total Beauty” products reached $9.5 Billion, a growth of over 11{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} from 2010. This may be the direct cause of the “Emotional Attachment” experienced by the users. In Gaille’s report, it is stated that 82{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} of surveyed women believe that wearing make-up boosts their self-confidence, while 86{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} of women find that wearing make-up improves their image. This result represent a mentality shared by most consumes, and it is reflected on the numbers: on average, women spend $144 a year on beauty products. In Brazil, consumers spend $240 a year on the same products, while in Britain, a woman will spend around $13,000 on similar products in her lifetime.
But as discussed above, Asia/Pacific has the fastest growing market for these products, and many believe this is only the beginning. Heng Shao is only one of the many analysts to cover the Chinese “Second Generation Rich” phenomena. In an article for Forbes, she gives an example of an average Chinese over-seas student that talks about the ‘new purchasing power’ of their generation. The numbers are considerable. So what other trends should we be monitoring?
Other Trends
TechNavio (a leading technology research and advisory company) analyzed a report from Market and Research’s “Global Skin Care Market 2010 – 2014” and one of the key findings reported was that there is a “Demand for whitening products globally.” This comes to no surprise as this particular trend continues its steady growth in popularity and acceptance throughout the eastern hemisphere. As mentioned by Andrew McDougall, “Skin lightening has long been a trend in Asia and is set to continue to boost the global market in the next five years, according to Global Industry Analysts.” The report also mentions how this specific market alone could reach an estimated value of $19.8 Billion by 2018. This trend is cultural and social, fueled by the idea that lighter skin represents beauty and wealth. The images of western models are synonyms of “beauty,” and this idea encourages young consumers to look for products that can help them achieve the “perfect look.” This trend can be seen no only in China, but in India and other Asian countries as well.
Ecological responsibility seems to be a growing factor in the Chinese/Asian consumer’s mind. A study conducted by Dr. Chan in 2001 revealed that the average Chinese consumer has positive feelings for Eco-friendly products and organization, scoring on average 5.28 in a 1 – 7 point base system (1 being negative and 7 being positive). Their actions however show that they only actively purchase green products when they can, scoring 2.04 on frequency and 1.89 on amount of money spent on these green products. The current situation is likely to change, since environmental issues are becoming a pressing matter in the eyes of both the Chinese government and the world. An article by Beina Xu for the Council on Foreign Relations shows how both the Chinese public and their government have started moving towards more environmentally friendly methods and industries. This is mentality is sure to spread and become a cultural characteristic of not only the Chinese people, but of the world.
- Published in Blog