Analyst Opinion by May Ling Tham, Head of Personal Care and Accessories
Approximately 285 million people worldwide live with limited vision and blindness, although 80% of these visual impairments are actually avoidable, according to the International Agency for the Prevention of Blindness (IAPB). IAPB, together with the World Health Organization (WHO) and other worldwide communities and
organisations, observe World Sight Day every second Thursday of October.
This year, it falls on 10 October.
Source: International Agency for the Prevention of Blindness (IAPB)
On this day, associations, businesses and government bodies are
encouraged to hold events to raise awareness of blindness and vision
impairment. More importantly, the objective is to educate the masses and
encourage governments to participate and set aside funds for blindness
prevention programs. Euromonitor International takes a look at a couple
of these events around the world and at what more can be done to support
this meaningful cause.
In the second article of this series, Euromonitor International
examines the evolving relationship between fashion and fragrance.
The global fragrances industry is being propelled ahead, primarily on
account of Brazil, which is set to account for a third of overall
growth over 2012-2017. However, Brazilian consumers’ strong preference
for mass fragrances is eroding premium brands’ share of the overall
category. In light of this price competition, premium brands have been
looking for an edge.
While some premium players are using smaller packaging and body mists
to lower their average ticket prices, others are seeking to justify
their high prices through bespoke formulations. However, most
interestingly, we have observed fashion alignment in branding emerging
as a key competitive advantage.
9-11, 2013 Location: Hotel Cascais Miragem, Lisbon, Portugal Presentation Date and Time: Friday, October 11, 9:45-10:15 a.m.
local time More
Bartels, Tissue and Hygiene and Home Care Analyst at Euromonitor will present
“What Europe brings to the world and the world could bring to Europe." The
presentation will include case studies about nappies, diapers, pants, sanitary
protection, incontinence and wipes, revealing strengths and weaknesses of the
European hygiene industry.
the world's premier personal care products conference, going from strength to
strength for 11 editions, attracting more than 390 participants from 35
countries in 2012. It owes its success to high level speakers, a diverse and
relevant programme and unparalleled networking opportunities for all players in
the absorbent hygiene products supply chain. It attracts a high-level audience
of middle and upper management from the whole supply chain of the absorbent
hygiene products industry.
cosmetics are recovering following a difficult period at the onset of the
economic downturn. Premium cosmetics players focus on brand experience
through high tech, targeted and more customised innovation, while increasing
the scope of consumer interaction with the brands, both in store and in the
Analyst Insight by Rob Walker, Contributing Analyst at Euromonitor International
beauty care is on course to deliver its strongest annual performance in more
than a decade. For the three months to the end of June, category leader Estée
Lauder delivered a jaw-dropping 84% jump in profit thanks to upbeat sales
across a raft of different markets, including Italy, the UK, Japan, China and
Brazil. Total net sales for the full fiscal year broke US$10 billion for the
first time ever.
world’s biggest super-premium beauty care markets only South Korea
underperformed. This supports our view of two months ago (Seoul’s Ballooning
Luxury Goods Market Punctured by Cheaper Prices in Tokyo) when we warned of
contagion from Seoul’s mounting middle-class debt crisis.
results in Estée Lauder’s portfolio came from top-tier brands, notably Crème de
la Mer, Tom Ford and Jo Malone. Each generated value growth of more than 20% in
the latest quarter. The company has since adopted a cautionary tone about the
year ahead, but we should not read too much into that. Restraint is part of Estée
Lauder’s business persona. In fact, the prospects of further upbeat results
look strong, and there are a number of reasons why.
A conservative business model
over the last two years the company has channelled greater resources behind
fewer products. Clinique, for example, dramatically cut its new product
offerings. The strategy is now bearing fruit because there has been more
targeted focus on building the cachet and prestige value of core brands. This
is playing out especially well in the emerging markets.
Estée Lauder’s expansion into emerging markets has been conservative but
astute. It is significant that L’Oréal launched into China a decade earlier,
yet Estée Lauder is fast catching up in terms of market share. Between 2007 and
2012, Estée Lauder’s compound annual growth in China’s premium cosmetics
category ran at 30%, according to data from Euromonitor International, compared
with 19% for L’Oréal (both measured at fixed US dollar prices). In China,
spending on luxury beauty care has not been badly affected by the clampdown on
extravagant gift giving.
over the last year, Estée Lauder has focused on raising brand awareness in
mid-sized cities in both China and Brazil. In China, this strategy has been
helped by a big increase in outbound travel from consumers living in the
interior. Estée Lauder is tapping into this market due to strong visibility in
key outbound destinations such as Hong Kong and Tokyo (not least in the
Estée Lauder has held firm in its commitment to prestige brands, rather than
segment too heavily into mass-market products. The latter is big business in
the emerging markets, but over-exposure at lower price points can dilute the
cachet of super-premium brands. A similar focus on high-end branding has worked
extremely well for French fashion house Hermès over the last year
Caution belies ambition
Hermès, Estée Lauder is cautious in its outlook for the year ahead,
highlighting potential for lacklustre demand in Southern Europe as well as
ongoing weakness in South Korea. However, Estée Lauder has been bold in its
portfolio focus, not cautious, and that is what will count going forward.
global beauty care market where there is intense pressure to bring new products
to market, it seems counter-intuitive to cull new offerings. Yet, by so doing
Estée Lauder has freed up substantially more cash to spend on its prestige
cautious expansion drive does not imply lack of ambition either. We should expect
to see Estée Lauder-owned brands grow in visibility across the myriad of small
and mid-sized cities of China, emerging Asia and Latin America over the next
five years, albeit at a controlled pace.
worth remembering that the company’s founder of the same name (who died in
2004) used to follow her brands – in person - to every store opening or new
cosmetics counter in the US and around the world. That personal touch is part
of the heritage of Estée Lauder, and ties in with the prestige value of its
brands. Resisting segmentation pressures and the temptation to accelerate
expansion in the emerging markets could become tougher, however.
Breaking the US$10 billion sales mark
Source: Euromonitor International
Note: Estée Lauder: Net Sales by Category, Year Ending 31 June 2013
first of a series of articles exploring the flourishing relationship between
the global beauty and apparel markets, Euromonitor International examines the
diverging trends of tailoring and multi-functionality. While both industries
have embraced tailored products to showcase expertise while appealing to the
individual, multi-functionality currently remains the prerogative of beauty
Bespoke moves from niche to mainstream
‘tailor’ has always had inherent links with the apparel industry, being a
process which, or person who, creates clothing to fit somebody’s exact
measurements. As apparel and beauty brands at the luxury end of the price
spectrum dig deep to seek ways to stand out from the crowd, it is that very
word which has re-emerged as a tool of choice. Tailored, personalised, curated
or bespoke, whatever the buzzword of choice, the metanarrative is clear –
appealing to the consumer as an individual and breaking away from the
collective has never been more important.
logo t-shirts and lumberjack shirts, and, now, lipsticks; apparel retailer
Superdry plans to shake up its consumers’ make-up bags with a premium beauty
range, set to launch globally in February 2013. This initiative, along with the
growing success of fellow British brand Topshop, illustrates how apparel brands
are looking to beauty for growth opportunities.
into colour cosmetics is no novel strategy for apparel brands; the category is
considered a natural extension to clothing due to its evident association with
fashion. Traditionally adopted by luxury fashion houses to bring their brands
to the masses without losing their exclusivity, now an increasing number of
high street labels are developing their positions in this category. The
relatively affordable nature of beauty, even at the premium end of the market,
makes it an alluring shield for apparel brands against the ongoing discounting
environment in Western Europe and North America. But with a plethora of pure
beauty brands already competing in the category, where can apparel brands look
Virginia Lee, Senior Research Analyst at Euromonitor attended the HBA Global Expo in June 2013 and highlighted the key trends in the beauty industry that she observed at the show. Click on a video below to see Virginia's recaps.
First-half results in 2013 increasingly reveal that manufacturers with a more streamlined beauty focus are better placed to benefit from growth potential in the beauty industry. The market is witnessing an increasing level of specialisation as manufacturers drive growth on the basis of scientific and targeted product developments. This is now becoming the norm and manufacturers with a streamlined focus on beauty are able to dedicate more resources to R&D and product development than those with a cross-market presence and whose resources are spread across different categories.
Companies with an exclusive beauty focus better placed to drive growth
On a comparable platform (using a 2013 euro to dollar exchange rate to measure growth for the first half of 2012 and 2013 for the equivalent beauty and personal care categories), L’Oréal’s growth rate of 5% was above that of Procter & Gamble, Unilever, Beiersdorf, Colgate-Palmolive and Estée Lauder. L’Oréal is increasingly aligning its products with science, claiming to have the highest R&D budget in the industry, at over €800 million. It claims to have developed 130 molecules over the past 40 years, putting it ahead of its competitors in terms of patenting active ingredients. L’Oréal’s exclusive focus on beauty enables it to dedicate all its resources to R&D, thus making impressive strides in product development, which have worked in the company’s favour as consumer demand is being driven by product sophistication.
- Key industry and consumer trends shaping Turkey's business environment
- New government taxes, regulations and initiatives helping and hindering industry growth
- Which retailing channels are poised for growth in each industry
- How the economic crisis has impacted industries and consumer spending in Turkey
“Turkey continues to be one of the most influential countries
in the region across many industries such as beauty and personal care and
retail,” according to General Manager at Euromonitor for the Middle East, Hussein Doughan. “With impressive growth
figures across these categories, we expect to see continued strong interest
coming in to Turkey from international brands.”