The Multifaceted Evolution of Global Beauty

Strategy Briefing

About This Report

Oct 2014

With major markets, including the US, Brazil and China, witnessing growth pressures and innovation becoming saturated, the beauty industry needs to find new frontiers for expanding revenue potential. Cross-category product developments have been explored and brands continue to be inspired by synergies among beauty segments and cross-industry shifts. Despite the slowdown, Brazil and China will remain crucial to expansion strategies, while hair and skin care should see dynamic innovation activitie

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The Multifaceted Evolution of Global Beauty

Beauty industry growth slows in 2013

Despite a moderate slowdown, beauty industry growth remained robust at over 5% in 2013, down from close to 6% in 2012. Resulting from poor consumer demand in emerging markets and restrained demand in traditional markets.

Asia reinforces domination, Western Europe picks up

2013 year-on-year growth in Asia and Latin America was moderately down, but the sheer size of China and Brazil meant the global impact was clearly evident. While Western Europe’s growth in 2013 strengthened marginally, led by positive signs in the UK.

New frontier markets with good growth potential

Amongst the smaller markets, those outside the top 20 beauty and personal care markets, there is a group forecast to register a compound annual growth rates (CAGRs) well above the global average in the coming year, e.g. Indonesia and Saudi Arabia.

Emerging markets reach parity in beauty sales by 2018

China and Brazil combined will contribute some 53% of the global BPC market value growth over the 2013-2018 period. Staple products, such as soap and shower gel, are receiving a strong boost in India. Deodorants, fragrances and hair care reflect the magnitude of the Brazilian market.

Mass domination, with strong premium potential

Although mass beauty products will continue to dominate national markets, with largest expected absolute value growth up to 2018, the forecast percentage growth for premium products is more dynamic in both emerging and developed markets.

Future revenues in the hands of skin and hair care

Retail value growth in China, the US and Indonesia will largely be generated by skin care to 2018. While in Brazil, Turkey and Central Asian markets hair care will add most significantly to the total beauty market in sales terms.

Key themes to define growth in beauty

Many brands have already experimented with multi-benefit combinations but this is becoming more mainstream. Consumers are now more than ever preoccupied with their own image; 2014 will be the year of “selfie” beauty. However interest in fashion brands and “luxury at home” remain key trends.

What this report includes

  • Top-level strategic analysis of how major consumer trends will influence global markets
  • Consumer insight
  • Impact across all relevant consumer markets
  • Unique graphics and case studies
  • Key market snapshots
  • Accompanying presentation to synthesise main findings

Why buy this report

  • Identify factors driving change now and in the future
  • Understand motivation
  • Forward-looking outlook
  • Briefings and presentation should provoke lively discussion at senior level
  • Take a step back from micro trends
  • Get up to date estimates and comment

Introduction

Scope
Key findings

Global Industry Highlights

Beauty industry growth decelerates in 2013
Mass contribution sustained, premium drops slightly in 2013
BPC 2013: Asia reinforces domination, Western Europe picks up
Mixed growth prospects in largest BPC markets
Growth potential with new frontiers coming to the fore
Most categories see weaker performance in 2013
Niche categories post most dynamic growth in 2013
Product developments major impact on category performance

Emerging Markets

Brazil and China key revenue generators
Growing market sophistication in Indian and Indonesian beauty
Key opportunities for further penetration in emerging markets
Emerging markets reach parity in BPC sales by 2018
Mass domination , with strong premium potential
Premium skin care dominated by China
Premium prospects in Brazil largely concentrated in f ragrances
International brands adapt to Brazil’s premium market environment
Local players hold stronger positions in Brazil than in China
Diverse competitive landscapes in Brazil and China
Brazilian competitive landscape changing
Local players in China intensify competition
Trends favouring local Chinese beauty players
Korean exports reach new high thanks to huge China sales
Expansion strategies intensify
Estée Lauder develops Osiao for China
L’Occitane benefits from local production in Brazil
L'Occitane targets men’s grooming in Brazil

Key Industry Themes

Future revenues in the hands of skin care and hair care
Brand loyalty in skin c are and hair c are p revails
Key themes to define the industry in 2014 and beyond
More opportunities for benefit crossover
Multi-benefit product launches in hair care and colour cosmetics
Fashion brands up their investment in beauty
Opportunities in skin care still untapped
“Selfie” beauty
The power of social media on skin care product developments
New product experience comes in different forms
Product experience : Texture and format
Product experience : Packaging and a pplication
Product experience: Scent
Product experience : Changing retail environment
Product experience: In-store and digital retail developments
At-home beauty: Face masks an untapped opportunity
Skin care devices : More unexplored potential
Iluminage: First in-home laser device

Conclusions

New growth frontiers enter spotlight
Key themes to define growth in beauty