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While new product development in skin care has been as active as ever in 2014, it was Estée Lauder’s acquisition sprint that stole the limelight. After a couple of inactive years, the premium player acquired two US niche skin care brands (GlamGlow and Rodin Olio Lusso) in the space of two months. Unilever followed suit with the acquisition of British natural skin care brand REN in early 2015 indicating that this is the year of niche. In addition, Asia’s beauty influence in skin care is becoming increasingly stronger, from innovation to multi-step routines, and the continent, with South Korea in particular, is increasingly regarded as the holy ground of skin care innovation. Finally, 2014 had been a good year for organisations pushing for cruelty-free cosmetics, a trend expected to continue in 2015, as India banned import of cosmetics tested on animals, while China stopped mandatory animal testing for locally-manufactured cosmetics.
As skin care remains the biggest contributor to absolute growth and makes up around a quarter of total beauty’s annual revenue, innovation, a key driver of growth will remain a key focus of beauty players. The rise of devices in skin care, from cleansing to anti-ageing and electronic face masks, has shaken up both the competitive field and innovation in skin care. Beauty companies have been introducing cleansers and lotions that work with the devices and can further enhance their efficacy. On the other hand, the competitive field is getting saturated, with skin care devices from retailers’ own ranges like Lidl to electronic manufacturers like Philips and Panasonic, and range across the whole price spectrum and they are quickly becoming an additional must-have step/product for beauty advocates.
As Estée Lauder’s latest acquisitions proved, niche is the new mainstream. In fact, smaller product areas within skin care such as face masks and specialised treatments like oils have been growing very strongly. Face masks saw particularly fast growth in skin care in 2013, a position the category is predicted to keep till 2016 inclusive. Sales are expected to rise by a CAGR of 6% till 2018 compared to total skin care’s 4% CAGR. L’Oréal’s acquisition of Magic Holdings at the end of 2013 and Estée Lauder’s Christmas acquisition of GlamGlow in 2014 indicate increasing penetration in the category. GlamGlow’s portfolio for example consists of five lines of face masks including its hero product YouthMud mask, while Magic Holdings’ sheet masks dominate the Chinese market. With face masks in China alone expected to add another US$1.2 billion to its value by 2018, acquisitions and innovation are expected to intensify.
Facial oils’ presence has been increasing since 2012 with most major skin care players adding facial oils to their portfolios. There has also been an increasing presence of niche skin care brands specialising in oils like Sunday Riley and Rodin Olio Russo, which was recently acquired by Estée Lauder. In fact, Nuxe’s success in the struggling French market where it currently ranks third in premium skin care can be largely attributed to its hero product Huile Prodigieuse. Oils are expected to continue to dominate skin care innovation not only as a format or ingredient but also as an extra product to be added to one’s skin care regime.
The influence of Asia in skin care is expected to remain a strong highlight in 2015 including novel concepts, products, formats and benefits. To exemplify, Neutrogena’s latest offering – one of the last innovations to hit the shelves in the US in 2014 – claims to bring Asian technology to the West. Neutrogena’s Hydro Boost range consists of three key products; a Gel-Cream, a Water Gel and an Eye Gel Cream which aim to lock in moisture and draw water into the skin. Hydration is considered to be a key benefit in Asia, from cleansers to toners to face masks and moisturisers.
Skin care is expected to continue to have an Asian trend focus with Chanel’s newest product to hit the shelves in the US called Chanel Hydra Beauty Micro-Serum, indicating that the quest of hydration is set to be strong across both side of the price spectrum. Asia is also influencing skin care as the region is well-known for multi-step routines involving an array of products, with many Western brands adding product offerings like essence and emulsion to their portfolio. Examples include Philosophy’s Brighten My Day All-Over Skin Perfecting Brightening Essence and Embryolisse Emulsion Hydra Mat Freshness Care, among others. The trend has also transpired in colour cosmetics where after the explosion of BB creams across all markets, air cushions a new make-up format from South Korea has started moving west too. L’Oréal’s Lancôme is the first Western brand to adopt this trend, with its Miracle Cushion foundation.
Regulations have always strongly influenced trends in cosmetics, and skin care in particular. In 2014, focus has been on banning animal testing in new markets and it has been successful in India and the Sao Paolo state of Brazil while bills have been launched to ban animal testing in cosmetics in the rest of Brazil, Taiwan, Australia, the US and New Zealand. Furthermore, China has ended the mandatory testing on animals for locally-produced products, and more is expected to come.
In 2015, the bills started in 2014 are expected to materialise, while South Korea has also announced its intention to ban animal testing on cosmetics with the possibility of expanding the ban to ingredients too. However, the biggest change will come when China ends mandatory testing on animals for imported products which will open the doors of skin care’s most lucrative market to many skin care players that avoided China for ethical reasons. Considering China’s weight on skin care’s future (55% of absolute future growth till 2018 will come from China) this could possibly impact the global skin care market.
Learn more about global trends in personal grooming in our free survey extract.