IN-COSMETICS 2015, BARCELONA...Absolute Market Value Growth 2014-2019 – US$ mn rsp Emerging Markets’ Growth Prospects 2014-2019 New Emerging Frontier Markets

EVOLVING HABITS IN GLOBAL BEAUTY

IN-COSMETICS 2015, BARCELONA

ILDIKO SZALAI – SENIOR ANALYST - BEAUTY AND PERSONAL CARE

© Euromonitor International

2

Euromonitor International: Strategic Global Market Research

PRIVATE LABEL AND CONSUMER TRENDS IN EUROPE

http://www.euromonitor.com/

GLOBAL INDUSTRY HIGHLIGHTS

NEW FRONTIERS IN EMERGING MARKETS

KEY INDUSTRY THEMES

CONCLUSIONS


4

0

1

2

3

4

5

6

7

2008 2009 2010 2011 2012 2013 2014

% V

alu

e G

ro

wth

Total / Premium / Mass Growth

Total Beauty Premium Beauty Mass Beauty

Beauty Industry Growth Sustained


Premium vs Mass Proportion Historic vs Forecast

Premium Beauty Mass Beauty

Note: Inner circle 2009-14, outer circle 2014-19

Global Beauty US$465bn in 2014,

up by US$23bn



5

Power Shift to Emerging Markets Continues Despite Slowdown


41%

51%

-1

0

1

2

3

4

5

6

7

-100,000

0

100,000

200,000

300,000

400,000

500,000

600,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

% G

row

th

US

$ m

illi

on

Developed vs. Emerging Markets in Total Beauty

Developed Emerging % Growth Developed markets % Growth Emerging Markets



6

New Prospective Markets Beyond China and Brazil


Beauty Forecast Growth by Country



7

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0

20,000

40,000

60,000

80,000

100,000

120,000

% v

alu

e g

ro

wth

US

$ m

illi

on

rs

p

Beauty Category Growth Performance 2013 vs 2014

Retail Value Sales 2014 US$ mn % Growth 2013 % Growth 2014

Top 4 Beauty Categories Maintain Growth Momentum in 2014




8

Skin Care and Hair Care Largely Dominate Future Potential


Top Category by Country



9

Top Growth Segments Bring New Lucrative Opportunities


Top Growth Beauty Categories




KEY INDUSTRY THEMES

CONCLUSIONS


11

China

Brazil

India

Saudi Arabia

Indonesia

Argentina

Mexico

Iran

Thailand

Turkey

South Africa

Pakistan

Chile

United Arab Emirates

Colombia

Peru

Vietnam

Poland

Morocco

Philippines

Venezuela

Malaysia

Nigeria

0

1

2

3

4

5

6

7

8

9

10

100 1,000 10,000 100,000

% C

AG

R 2

014

-20

19

Absolute Market Value Growth 2014-2019 – US$ mn rsp

Emerging Markets’ Growth Prospects 2014-2019

New Emerging Frontier Markets




12

Emerging markets growth

Expanding middle class

Young populations

base

Intense expansion of

multinationals

Urbanization

Beauty habits sophistication

Common Growth Driving Factors in Emerging Markets




13

0 10 20 30 40 50 60 70 80 90 100

Indonesia

Australia

France

Germany

Middle East

UK

Russia

US

Colombia

Japan

Turkey

China

Spain

Brazil

India

Mexico

Minutes Spent Daily on Grooming

Daily Grooming Time

More than 1 hour 31-60 minutes 16-30 minutes Less than 15 minutes

Average Daily Grooming Routine Exceeds Half an Hour




14

0

50

100

150

200

250

300

350

400

450

US

$ m

n r

sp

Middle East and Africa

0

500

1,000

1,500

2,000

2,500

US

$ m

n r

sp

Asia Pacific

Staples in Developing Markets Set for Higher Absolute Growth


Staples Non-essentials

Absolute Market Value Growth – 2014-2019

(US$ million)



15

0 20 40 60 80

China

Russia

Turkey

Japan

Mexico

US

UK

France

% of respondents

Ratio of Consumers Using Face Masks at

Least Weekly

0 20 40 60 80

Mexico

Indonesia

Colombia

Brazil

Spain

Germany

China

Turkey

% of respondents

Ratio of Consumers Using Body

Moisturizer Daily

0 20 40

Japan

India

Indonesia

US

Mexico

China

Brazil

Middle East

% of respondents

Ratio of Consumers Apply Hair Oil Daily

Export of Beauty Routines


UAE: 13% CAGR 2014-2019

33% y-o-y 2014

15% y-o-y 2014



16

Premium Beauty

Mass Beauty

Mass vs Premium Opportunities in Emerging Markets


86% Of Face Masks in China is Mass

96% Of Hair Care in India is Mass

99% Of General Purpose Body

Moisturisers in Brazil is Mass



17

Premium Skin Care and Fragrance Potential





KEY INDUSTRY THEMES

CONCLUSIONS


19

Customisation

Product experience

Tailored solutions

‘Asianification’

Asia inspired concepts

International expansion

Niche

Developed markets

Intensifying acquisition

Digital

Consumer engagement

Diversifying retail

Key Drivers to Define the Industry in 2015 and Beyond

KEY INDUSTRY THEMES



20

Age Gender Ethnicity Format Texture Function Tailored Solution

Format: Miracle Cushion

Foundation

Texture: Rodin Olio Russo

Function: Clear Scalp & Hair

Tailored: Clinique Smart Custom Serum

The Evolving Trend of Customisation

KEY INDUSTRY THEMES

CU

ST

OM

ISA

TIO

N



21

Product Customization Themes – Global Versus Regional Focus

KEY INDUSTRY THEMES

Anti-pollution

Scented products

Product safety

initiatives

Brightening

Whitening

Growing sophistication in grooming

regimes

Raising the bar on

ingredients

Growing premium potential

Niche category

focus Multiple benefits add

value

Niche category

focus

CU

ST

OM

ISA

TIO

N



22

Asian Concepts Expanding into International Markets

KEY INDUSTRY THEMES

Textures

Benefit

Formats

AS

IAN

IFIC

AT

ION



23

•Clarins Extra-Comfort Anti-Pollution Cleansing Cream

Anti-pollution

•Mise En Scene hair care range

Scented products

• Hwa-Hae mobile app provides information on beauty product ingredients - South Korea

Product safety

initiatives

• Wardah product range - Indonesia

Halal beauty

Further Potential Asian Waves Heading to International Stage

KEY INDUSTRY THEMES

AS

IAN

IFIC

AT

ION



24

0.0

0.2

0.4

0.6

0.8

% m

ar

ke

t v

alu

e s

ha

re

AmorePacific Corp: Korean Brands’ Performance in China

BPC 2009-2014

Mamonde

Laneíge

Innisfree

Growing International Demand for ‘Brand Korea’

KEY INDUSTRY THEMES

Sulwhasoo on Amazon.co.uk

Best selling AmorePacific brands in the

US

The FaceShop

2003: Establsihed

2014: 2,300 stores in 29 countries

AS

IAN

IFIC

AT

ION



25

-3 -2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2 2.5

P&G

Avon

Amway

Beiersdorf

Kao

Shiseido

Unilever

Johnson & Johnson

Jala (Group)

Henkel

Shanghai Inoherb

Nu Skin

Yunnan Baiyao

Mary Kay

Estée Lauder

AmorePacific

Proya Cosmetics

L'Oréal

Market value share growth (percentage points)

China: Share Growth in Selected BPC Companies 2009-2014

Asian Players Intensify Competition

KEY INDUSTRY THEMES

Internationals ‘ eroding market value share

AS

IAN

IFIC

AT

ION



26

Regional Players Shake Up the Rankings

KEY INDUSTRY THEMES

Global Ranking - Regional Players

AS

IAN

IFIC

AT

ION

0

5

10

15

20

25

30

35

40

45

50

2005 2014

% v

alu

e s

ha

re

Top Beauty Players Market Share Henkel AG & CoKGaA

Shiseido Co Ltd

Avon Products Inc

Johnson & JohnsonInc

Estée Lauder CosInc

Beiersdorf AG

Colgate-PalmoliveCo

Unilever Group

L'Oréal Groupe

Procter & GambleCo



27

Dry Shampoo: Herbal Essence

Multi-Cultural: Carol’s Daughter

MEA: Gliss for covered hair

Exclusive: Le Labo

Wide Range of Niche Growth Drivers

KEY INDUSTRY THEMES

NIC

HE

GR

OW

TH

DR

IVE

RS



28

La Labo

Rodin Olio Lusso

Parfums Frédéric

Malle

Glamglow

NYX Cosmetics

Niely

Carol’s Daughter

Magic Holdings

X x

Penhaligon’s

L’Artisan Parfumeur

Xx

Rochas Parfume

REN

Intensifying Acquisition Activities for Niche Brands – 2014-2015

KEY INDUSTRY THEMES

NIC

HE

GR

OW

TH

DR

IVE

RS


http://www.google.co.uk/url?sa=i&rct=j&q=official+estee+lauder+company+logo&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.ranklogos.com/cosmetic-beauty-logos/the-estee-lauder-companies-logo/&ei=bPP-VL_hA9HcaoDOgSg&bvm=bv.87611401,d.d2s&psig=AFQjCNEaVpH8CYUnFcsQyHkfX1vCNWwbKg&ust=1426080986246585

http://www.google.co.uk/url?sa=i&rct=j&q=l'oreal+logo&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.loreal.com/diversity/our-main-actions/germany.aspx&ei=azr0VLSJLcHcUq2jgYAB&bvm=bv.87269000,d.d2s&psig=AFQjCNF91U-0bflYNy8DeOuvtZEqhqUTPg&ust=1425378272088688


29

Fastest Brands Globally – Where is the Next Acquisition?

NOVEL GROWTH CONCEPTS

0 20 40 60 80 100

Innisfree

Rodan + Fields

Nip + Fab

Bulldog

Ciaté

Glamglow

Black Up

Al Qurashi

Beauty Diary

Byredo

Baylis & Harding

Inglot

Aesop

Kiko Milano

Catrice

Mud

Bioderma

Fastest growing brands 2013-14 % (17-90% growth)

0 5 10 15 20

The Face Shop

Coreana

Herborist

Rodial

Urban Decay

Jurlique

Proya

Make Up For Ever

Black Opal

Marubi

Perfect

Dabur

Iman

Iope

Jo Malone

Godrej

MG

Fastest growing brands 2013-14 % (10-17% growth)

NIC

HE

GR

OW

TH

DR

IVE

RS



30

Multi-channel retailers

Pure e-tailers

Company websites

Social media sites

Mobile applications

Direct sellers

In-store digital

Beauty boxes

From Niche Categories to Diversifying Niche Platforms

KEY INDUSTRY THEMES

DIG

ITA

L

Digital



31

0

5

10

15

20

25

30

35

40

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

% C

AG

R 2

009

-2014

US

$ m

illio

n

Internet Retailing Growth by Industry 2009-2014

2009 2014 % CAGR 2009-2014

Internet Retailing Still a Relative Small Channel in Beauty

KEY INDUSTRY THEMES

DIG

ITA

L



32

Building Blocks of Digital Beauty Strategies

KEY INDUSTRY THEMES

‘Best price’

Purchase Motivation Comparability

Retail Curation

Self-service Retail Focus on Target Audience

Personalization

Virtual ‘Try –On’ Customized Solutions

Brand Engagement

Brand Building Consumer Analysis

DIG

ITA

L



33

0 10 20 30 40 50 60 70

Buy something online

Visit price comparison websites

Read reviews of products and services

Upload/share photos or videos

Participate in microblogging

Use an internet banking service

Stream or download audiovisual contentonline

Visit social networking sites

Visit online news sites

% consumers with online activity once a week

Frequency of Online Activities 2011/2013

2011 2013

Selling to More Informed and More Engaged Consumer

KEY INDUSTRY THEMES

DIG

ITA

L




KEY INDUSTRY THEMES

CONCLUSION


35

21,052

10,144 4,052

3,711

2,228

2,112

20,097

China Brazil USA

India Saudi Arabia Indonesia

Others

20,115

7,568

7,317

5,820

5,780

5,212

4,001

3,675 3,457

Skin Care Colour CosmeticsHair Care FragrancesOral Care Men's GroomingBaby BPC DeodorantsBath and Shower

Future Growth Highlights

CONCLUSION

Absolute Beauty Market Value Growth by Country and Category – 2014-2019

Categories marked with orange forecast to exceed global

beauty growth of 2.6% CAGR 2014-2019



36

Reinvention in Global Beauty Required to Sustain Growth

CONCLUSION

asianification

customisation

Cross-category

personalisation

Exclusive

Multi-benefit

Niche segments

premium

multi-cultural reinvention

reinvention

Digital

reinvention

reinvention

reinvention

reinvention

reinvention

reinvention

reinvention

reinvention

reinvention

reinvention

reinvention

reinvention

reinvention

reinvention


THANK YOU FOR LISTENING Ildiko Szalai

Senior Beauty and Personal Care Analyst

[email protected]

mailto:[email protected]

Documents

IN-COSMETICS 2015, BARCELONA...Absolute Market Value Growth 2014-2019 – US$ mn rsp Emerging Markets’ Growth Prospects 2014-2019 New Emerging Frontier Markets