Beauty and Personal Care: Quarterly Statement Q4 2017

Strategy Briefing

About This Report

Dec 2017

The Q4 update as of October 2017 reveals the second consecutive quarter of improving outlook in the global beauty market, albeit marginal. The most significant upgrades continue to stem from Brazil and Japan, joined by key Western European markets, indicating a positive state of affairs in the long-stagnating region. Skin care experienced the most significant upgrade compared to baseline forecasts, due to positive impact from two main drivers: GDP, and product pricing in the above geographies.

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Beauty and Personal Care: Quarterly Statement Q4 2017

Positive growth momentum continues in beauty and personal care

The most significant upgrades continue to stem from Brazil and Japan, joined by a range of key Western European markets, most notably Spain and Germany, indicating more positive state of affairs in the long-stagnating region.

Almost clean sweep of positive category upgrades

Skin care contributed most to the Q4 upgrade compared to baseline forecasts at USD539 million, due to a strong positive impact from two main drivers, GDP and product pricing, in the above geographies.

Surging Western European economic performance fuels upgrades

Signalling the importance of the largest Western European markets, some 40% of the global upgrade stems from the combination of Spain, Germany, Italy and France, reflecting the region’s steady economic stabilisation.

L’Oréal shows confidence in Brazil with large R&I investment

The new centre is making L’Oréal’s best global innovations relevant to Brazilian and Latin American consumers through local developments and customisation of worldwide technologies, and also setting the pace for breakthrough innovations in key categories, such as sun care and hair care.

Japan premium skin care taps into ageing population and Chinese tourists

There is strong demand for value-added products offering benefits such as boosting radiance, evening skin tone and softening wrinkles. Many ageing consumers sought to maintain a youthful complexion by buying the best products they could afford.

Saudi Arabia’s premium BPC continues to suffer, mass gets a boost

While the economic headwinds are halting premium opportunities, the same forces are benefitting mass, most significantly due the lack of category maturity in mass. Unmet market potential in mass BPC is twice the size of premium in Saudi Arabia.

Rising competition for share in the still more dynamic premium space

Competition between L’Oréal and Estée Lauder has intensified for the global top position in premium beauty. Coty has beefed up its premium portfolio and has jumped to the top global position in premium fragrances.

Q4 Macroeconomic Update

Executive summary
GDP forecasts: revisions over last quarter
Global risk scenarios
Major macro risks for Beauty and Personal Care industry

Q4 In Beauty and Personal Care

Key finding
Positive growth momentum continues in beauty and personal care
Mass on a steady upward curve, premium experience more uncertainties
Almost clean sweep of positive category upgrades
Surging Western European economic performance fuels upgrades
The tale of two categories: Spain’s premium fragrance and mass skin care
Local players the major beneficiaries of the improving outlook in Brazil
L’Oréal also shows confidence in Brazil with large R&I investment
Japan premium skin care taps into ageing population and tourists
Mexico’s forecast dithers from expected rise in unemployment
Saudi Arabia’s premium BPC continues to suffer, mass sustains better
Rising competition for share in the still more dynamic premium space
Challenges to sustain drive in premium BPC generated by acquisition
Conclusions: Q4 prospects in global BPC

Appendix

About Euromonitor International’s Industry Forecast Model
Soft drivers and the Industry Forecast Model
Growth decomposition explained
Significance and applications for growth decomposition
Key applications for Industry Forecast Models