Currently the market is valued at $4.7 billion and in 2004 grew by 9.7 per cent, according to the latest market report by Euromonitor. But the mature state of the market means that many manufacturers are having to stretch themselves in order to remain competitive.
As well as the size and maturity of the market, the report authors also point out that high penetration has continued to drive down prices, making conditions even tougher. As a consequence manufacturers have had to be extremely proactive, which has led to a constant stream of increasingly sophisticated product launches.
In Europe, where the retail market has been greatly slowed by challenging conditions in two of the largest economies - France and Germany - the picture has been contrasted by a rosier economic climate in the UK and Spain.
The resulting increased spending power in these two countries has helped to boost sales of hair care products considerably, encouraging people to spend far more on their outward appearance.
In the UK the fastest growing subsector in 2004 was salon hair care, which, was not even subject to any heavy discounting. In Spain this was matched by a plethora of new launches with value-added benefits, such as conditioners to fight sun damage.
In Brazil, Euromonitor points out that a greater stratification of the hair care category has encouraged greater growth. This has led to a series of products aimed at key demographic groups - namely men, women and children - or else key hair types such as Afro or chemically treated and specific hair treatments.
In Russia salon hair care has been a key driver of growth - a category that was until recently negligible in size. This has been driven by the increasing number of upmarket hair salons cropping up in key urban regions.
But it has not all been such a rosy story for the industry. The world's largest market for haircare, the US, has undergone a prolonged period of uncertainty. This has been exacerbated by intense competition and low levels of brand loyalty, leading manufacturers to lower prices, thus cutting margins.
The Japanese market has also been suffering from fierce competition, although Euromonitor points out that there has been a slight recovery in hair sales during 2004. Here hair care sales greatly benefited from a proliferation of value products coupled with an economic recovery.
Moving on to individual hair care categories, not surprisingly it is shampoo that remains the most valuable. Valued at $13.2 billion, growth in this category has been held back due to high levels of penetration world-wide. Tough competition in this category means that innovation is key to survival.
Sales of colourants, the second most valuable area, reached $9 billion, boosted by the development of less harsh formulation. In the UK and Australia, sales were said to be boosted by a continuing interest in youth orientated product launches.
Growth in styling agents slowed significantly, registering a 2 per cent increase. With fashion dictating an increasingly natural look and shampoos containing formulas that aim to give styling characteristics, Euromonitor believes that the future of this category looks bleak.
Meanwhile conditioner sales have been boosted by 2-in-1 products in developing markets, though this effect is said to be ebbing off now due to consumer awareness over the effectiveness of such products. This has been further boosted by significant marketing campaigns by all the major players to boost conditioner sales by informing consumers of product benefits.
With products in this category growing ever-more diverse, Euromonitor believes that the hair care category could be in danger over segmenting itself. Already the US market - probably the most mature - is suffering from a lack of brand loyalty. More choice could make this problem all the greater world-wide.