Henkel goes vegan to revive beauty business

(Adds comments from news conference, analyst)

DUESSELDORF, Germany, Feb 21 (Reuters) - German consumer goods company Henkel (LSE: 0IZ8.L - news) announced new hair care formulations and brands on Thursday, seeking to tap into consumer demand for more natural ingredients as it tries to revive sluggish growth in its beauty business.

Henkel will relaunch its European shampoo brand Schauma with a "vegan" formula, roll out to more markets its Nature Box line of hair and body care products made from cold-pressed oils and launch a new "free-from" hair dye line called OnlyLove.

It will also launch a premium vegan brand for professional hair salons called Authentic Beauty Concept and expand its Pro Nature range of cleaning products to include detergents.

The move comes as shoppers become more wary of processed chemical ingredients and seek out natural alternatives.

Chief Executive Hans van Bylen told a news conference the products certified as vegan will initially address a niche market, but he sees strong potential and said the move will eventually help the company adjust all of its formulations.

"The increasing shift towards a green lifestyle and the strong increase in the number of vegans has driven the growing demand for plant-derived ingredients in beauty products," said Magda Starula, analyst at market data firm Euromonitor.

The world’s biggest cosmetics manufacturer L'Oreal bought vegan beauty product firm Logocos Naturkosmetik last year and it has launched its own vegan range, Botanea, sourced from plants found in India.

Unilever (NYSE: UL - news) has also launched a fast-growing hair and body brand called Love Beauty and Planet, that is certified as vegan and cruelty-free.

Henkel said the Schauma brand's vegan formula will not contain silicones or parabens, while the Authentic Beauty Concept line will include "pure" ingredients.

Henkel, the maker of Schwarzkopf shampoo and Persil detergent, made the announcement after warning in January that earnings would fall this year as it steps up investment in brands and digital technology to try to revive growth.

The company has underperformed rivals like Procter & Gamble (Swiss: PG-USD.SW - news) Co (P&G) and Unilever in recent years, with underlying sales in its beauty care business falling 0.7 percent in 2018 and the laundry unit growing just 1.9 percent.

Henkel's beauty care unit saw organic sales growth recover to 1 percent in the fourth quarter, but it still lagged behind adhesives and laundry, which grew 2.1 percent and 2.8 percent respectively in the period.

Van Bylen said Henkel plans a global relaunch of its Persil brand, with new "four-chamber" detergent pods key to reviving growth in North America, where it is battling P&G for market share.

Henkel shares, which have fallen almost 16 percent in the last year, were up 1.1 percent at 1118 GMT. (Reporting by Emma Thomasson; Editing by Kirsten Donovan)