Key Strengths and Weaknesses of Top Global Beauty and Personal Care Companies

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© 2017 Euromonitor International

Key Strengths and Weaknesses of Top Global Beauty and Personal Care Companies

Updated on 19 December 2017

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CONTENTS

1 TOP 30 GLOBAL BEAUTY AND PERSONAL CARE COMPANIES

3 KEY TRENDS AND TAKEAWAYSWhat companies are gaining market share and why?

What companies are decreasing market share and why?

5 BEAUTY AND PERSONAL CARE INDUSTRY PERFORMANCE

North America and Asia boost the Beauty and Personal Care Industry

Skin care dominates the beauty and personal care market

7 INDUSTRY CHALLENGES ON THE HORIZONLocal competition creates challenges for heritage brands

Fast-paced disruptors

Integration of large-scale new assets

Impact from large-scale mergers and acquisitions

Intensifying competition for share in dynamic premium space

10 CONCLUSIONThe shift towards premiumisation

Skin care leads the industry

Large-scale M&As create significant shifts

Smaller brands increasing competition

11 HOW CAN EUROMONITOR INTERNATIONAL HELP?

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TOP 30 GLOBAL BEAUTY AND PERSONAL CARE COMPANIES

The premium segment remains the growth engine of the global beauty industry; it is forecast to generate one third of the US$63 billion absolute global value gain over the 2016–2021 period. Future growth will be driven by a range of interconnected consumer megatrends, such as premiumisation, healthy living and digitalisation.

International players and heritage brands face increasing competition from local companies, alternative business concepts and start-ups. However, these challenging factors also fuel all strategic directions of major companies, including frequent acquisitions, research partnerships and more aggressive internal developments. This white paper presents the current industry landscape, highlighting the top 30 beauty and personal care companies and what they are doing to maintain or improve their position on the leaderboard.

Top 30 Global beauTy and personal Care Companies

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Top 30 Global Beauty and Personal Care Companies, 2013–2016 Company SharesRetail Value RSP, % breakdown

Source: Euromonitor International

Company Name 2016 2015 2014 2013

L’Oréal Groupe 9.8 9.7 9.7 9.4

Procter & Gamble Co, The 8.2 10.2 10.5 10.6

Unilever Group 7.9 8.0 7.9 7.8

Colgate-Palmolive Co 3.6 3.7 3.7 3.8

Coty Inc 3.3 1.7 1.6 1.6

Estée Lauder Cos Inc 3.2 3.1 2.9 2.8

Johnson & Johnson Inc 2.8 2.7 2.7 2.7

Beiersdorf AG 2.6 2.6 2.7 2.8

Shiseido Co Ltd 2.2 1.9 1.9 2.0

Kao Corp 1.6 1.5 1.6 1.7

Avon Products Inc 1.5 1.8 2.1 2.4

Henkel AG & Co KGaA 1.5 1.6 1.6 1.6

LVMH Moët Hennessy Louis Vuitton SA 1.5 1.4 1.4 1.3

AmorePacific Corp 1.1 1.0 0.9 0.8

GlaxoSmithKline Plc 1.0 1.0 1.0 1.0

Natura Cosméticos SA 1.0 1.0 1.2 1.3

Mary Kay Inc 0.9 1.0 0.9 0.9

Revlon Inc 0.9 0.6 0.6 0.6

LG Household & Health Care Ltd 0.8 0.8 0.7 0.6

L Brands Inc 0.8 0.8 0.7 0.7

Chanel SA 0.8 0.8 0.9 0.9

Botica Comercial Farmacêutica Ltda 0.7 0.7 0.9 0.8

Edgewell Personal Care Brands LLC 0.6 0.7 - -

Kosé Corp 0.6 0.5 0.5 0.5

Amway Corp 0.6 0.7 0.7 0.7

Puig SL 0.5 0.5 0.5 0.5

Clarins SA 0.5 0.5 0.5 0.5

Reckitt Benckiser Group Plc (RB) 0.5 0.5 0.5 0.5

Yves Rocher SA 0.4 0.4 0.5 0.5

Oriflame Cosmetics SA 0.4 0.4 0.4 0.5

Pierre Fabre SA, Laboratoires 0.4 0.4 0.4 0.4

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KEY TRENDS AND TAKEAWAYS

What companies are gaining market share and why?Top five companies’ share of the beauty market While the global beauty industry is showing a moderate level of consolidation across all regions, the top five companies combined command 30–45% value share; there is regional diversity in the competitive landscape.

North and Latin America are the most highly consolidated regions, since they are domestic or primary target markets for the largest global industry players, such as Procter & Gamble, Johnson & Johnson, Estée Lauder, L’Oréal and Unilever. These companies focussed on scaling their core businesses and outgrowing the competition through acquisition. For example, Estée Lauder’s recent additions served as the main contributor to their revenue growth, complementing operations in fast-growing market segments and providing access to more extensive retail channels. These additions complemented its operations in fast-growing market segments and provided access to more extensive retail channels.

Expanding brands stay ahead Competition is rife, especially in the middle of the ranking table; Coty’s newly established fifth place might be short-lived, with fast-growing Estée Lauder narrowly behind. Although Estée Lauder’s growth has also been boosted by a series of attainments, the brands it has incorporated are smaller and significantly more dynamic than Coty’s newly enlarged brand stable.

Market Share Growth: Top 5 in 20161. L’Oréal Groupe

2. Coty Inc

3. Estée Lauder Cos Inc.

4.LVMH Moët Hennessy Louis Vuitton SA

5. Revlon Inc.Source: Euromonitor International

Key Trends and TaKeaWays

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Beiersdorf has been closing the gap on Johnson & Johnson with consistently faster growth in recent years, fuelled by a stronger innovation pipeline of its heritage labels but its aversion to acquisitions holds it back from making the jump ahead in the global ranking.

What companies are decreasing market share and why?Avon on the improvement trackIn 2016, Avon disposed of its North American business after struggling for growth between 2011 and 2015, due to increasingly tough competitive conditions in beauty direct selling as well as exposure to more mature markets. The company is now far better positioned to rebuild momentum for Avon, which remains the leading global direct selling beauty brand.

Procter & Gamble falls from first placeIn 2016, the top of the global ranking table was disrupted by the finalisation of Procter & Gamble’s divestment of its selected beauty brands to Coty. As a result, Procter & Gamble lost its long-held global top position to L’Oréal, and Coty became the fifth largest beauty player. Proctor & Gamble’s remaining streamlined beauty operations still posted negative growth for the year caused by Olay and Rejoice’s sales decline.

Market Share Loss: Top 5 in 20161. Procter & Gamble Co, The

2. Avon Products Inc.

3. Natura Cosméticos SA

4. Colgate-Palmolive Co.

5. Johnson & Johnson Inc.Source: Euromonitor International

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BEAUTY AND PERSONAL CARE INDUSTRY PERFORMANCE

Premium beauty continues to outperform the mass segment and total beauty and personal care at nearly 6% value growth. Greater uptake and trading up are boosting the segment, especially in Eastern Europe, the US and China. Over 2016–2021, a third of the global US$16 billion in absolute gain is forecast to come from premium beauty, with the US and China contributing 55%.

north america and asia boost the beauty and personal Care industryNorth America is projected to contribute 25% of the global absolute gains in premium BPC between 2016–2021. Colour cosmetics will be the key growth driver powered by a rising per capita expenditure, providing room for expansion with high-value brands.

Asia Pacific is by far the most significant revenue generator in global BPC, expected to deliver 44% of global absolute gains between 2016-2021. Skin care and colour cosmetics will be the core areas of opportunity.

skin care dominates the beauty and personal care marketSkin care leads major markets due to increased demand for premium products. The healthy living megatrend positively impacts the category, as consumers seek preventative measures to maintain healthy skin. More are willing to spend on high-quality solutions, thus driving premiumisation. Skin care is forecast to deliver 32% of the industry’s absolute gains over 2016–2021, led by Asia Pacific.

US$5.2 bnpremium beauty global absolute gain forecast for 2016–2021

25%premium beauty absolute gain from North America forecast for 2016–2021

beauTy and personal Care indusTry performanCe

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Preventative categories, notably facial moisturisers and masks, are set to be growth drivers. Consumers understand the benefits of maintaining hydrated, nourished and deeply clean skin to avoid future issues, and these categories cater to these demands. Meanwhile, anti-agers are shifting from the ageing “stigma” to skin renewal with a focus on preserving healthy skin whatever the age.

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INDUSTRY CHALLENGES ON THE HORIZON

local competition creates challenges for heritage brandsLocal competition has become the number one challenge for international heritage brands in beauty’s most attractive growth markets. One of the successful comebacks came from L’Oréal, with the worldwide relaunch of Ultra Doux natural shampoo as Garnier Ultra Blends.

Ultra Doux was the first to launch in India and Asia Pacific, and the range is made with natural ingredients to exploit the growing popularity of herbal medicine such as Ayurvedic products in India. The cosmetic products are fortified with natural extracts without using parabens, aimed at targeting different hair problems.

The key to the success of this strategy was the customisation of Garnier Ultra Blends, which enjoys high-quality perception, to local hair types and concerns. In addition, consumers’ familiarity with the natural ingredients puts the global brand in an excellent position to compete with rising local labels, such as Patanjali, Kesh Kanti or Parachute.

The key to the success of this strategy was the customisation of Garnier Ultra Blends, which enjoys high-quality perception, to local hair types and concerns.

indusTry ChallenGes on The horizon

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fast-paced disruptorsIn addition to local players, the rapid rise of new beauty concepts and alternative distribution models have been eroding shares of the major industry players. With easy access to high-tech solutions to take products to market, there has been an eruption of new brands, products and concepts competing for consumers’ attention and wallets. The difficulty of an acquisitive strategy is finding the right target in a crowded market space; a model that fits the organisation’s core values has longevity and scalability in new markets. Collaborations with original and authentic innovators are becoming more frequent and necessary for major players to feed research into innovation of mainstream brands, such as Nuritas and Johnson & Johnson.

integration of large-scale new assetsThe incorporation of new assets is proving to be a significant challenge for Coty, as sluggish growth is reflected in its recent financial figures. Although the company reported a 65% increase in a nine-month revenue excluding the positive contribution from the acquisitions of ghd., Younique and seven months of Brazil attainment, the enlarged company’s net revenue declined 6% on a constant currency basis.

Coty has gained access to new markets, customers and technology, but many of its new, iconic brands struggle for growth. In a call with investors, the company maintained its forecast that it would save on costs as it works new brands into its operations, but stressed that the efforts would not be felt until the second half of FY2018.

impact from large-scale mergers and acquisitions Major beauty players’ 2016 retail sales performance widely fluctuated around the industry growth line of 4.8% due to a wave of intense M&A activities in the year.

Through large-scale acquisition, established brands have enhanced operations in their core categories. However, many still position only modest growth when excluding the impact of integration, especially for new assets that show flat to negative performance.

L’Oréal, Estée Lauder and Unilever all made smaller-scale purchases of fast-growing, niche labels such as IT Cosmetics, BECCA, Too Faced and Dollar Shave Club, adding strong development to their portfolio of more sluggish mainstream heritage brands.

indusTry ChallenGes on The horizon

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intensifying competition for share in dynamic premium spaceAll main beauty companies have been building stronger, aligned portfolios via acquisition and innovations, as premium segments have been the key growth engines in the industry in recent years. Competition between L’Oréal and Estée Lauder has strengthened for the global top position in premium beauty. Both have purchased share via niche, well-performing labels as well as invested heavily in digital innovations in expanding the consumer base for their heritage premium brands.

Coty has strengthened its premium portfolio in fragrances and salon hair care via its recent purchases. It has jumped to the top global position in premium fragrances, a category that Estée Lauder is also strongly focused on with multiple attainments, i.e., Le Labo, By Kilian and strong brand innovation pipeline for its Jo Malone and Tom Ford labels in the category.

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CONCLUSION

The shift towards premiumisation Premiumisation no longer refers only to a higher price tag. Added experience, unique ingredients and formulations, sustainability credentials and ethical values all contribute to higher quality perceptions. Technology is at the forefront of this behavioural shift, with devices, digital platforms and science evolution facilitating consumer awareness, health tracking and vetting brand and ingredient authenticity.

skin care leads the industryPremiumisation and a focus on healthy living have resulted in skin care greatly impacting the beauty industry. Consumer are more willing to spend on high-quality skin care solution and tap into the luxury market. Additionally, updated messaging and branding to address a spectrum of consumer needs helped eliminate skin care stigmas.

large-scale m&as create significant shiftsThe move towards more expensive products is pushing mass brands in the premium direction as more consumers seek the quality and results associated with high priced formulations. While global mass colour cosmetics and skin care remain stronger than the premium segment, predicted to add US$6 billion and US$12 billion in absolute gains, respectively, the key regions of North America and Western Europe reveal a healthier outlook for the more expensive segment.

smaller brands increasing competition A flux of mergers and acquisitions by larger, heritage brands has resulted in the expansion of the premium beauty space. Additionally, with the emergence of new brands, products and concepts, the battle for consumers’ attention and dollars has been more difficult. Established and emerging market companies must continue to refine strategy and innovate to ensure they are appealing to changing consumer interests and that they are able to stay ahead in an ultra-competitive marketplace.

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