THE UK BEAUTY

INDUSTRY
2010 TRENDS
Report by L’Oréal

CONTENTS
The UK beauty market
Foreword 1
Executive summary 2

Beauty sales trends

IN THE UK
Cosmetics and Fragrance 3
Skincare 8
Haircare 12

1
Foreword

In April this year, L’Oréal published the first UK Beauty Barometer report, providing factual
and empirical evidence of the impact the current economic climate was having on consumer
shopping habits in the UK beauty industry.
Drawing on this research, the following document outlines the key trends L’Oréal anticipates
will drive the UK beauty industry in 2010. The trends are based on the latest market research,
sales information and consumer behavioural analysis.
The report splits the trends according to the following categories: cosmetics and fragrance,
skin care, and haircare and styling.

1
1
Executive summary

• Women will continue to use cosmetics to cheer themselves up and to help them face the
pressures of prolonged economic uncertainty

• In April 2009, research by L’Oréal discovered that a “Foundation Factor” had replaced the
“Lipstick Index” as a new economic indicator. New research indicates that sales of foundation
will continue to remain strong in 2010 – at present, they are outpacing lipstick and lipgloss
sales by 13 percent (Source: AC Nielsen, October 2009)

• The notion of escapism will drive consumer purchasing habits in 2010, as consumers look at
ways to escape the pressure of rational consumption, by embracing personal creativity and
experimentation. In 2009, L’Oréal found that as the recession took hold, women were four
times more likely to choose natural looking make-up than they were to wear brighter colours.
However, latest research confirms that bolder colours are beginning to replace the
nudes, as consumers drive a backlash against recession

• The market for false lashes and false lash effect mascaras is also growing rapidly, as
consumers experiment with their appearance and embrace a bolder, more dramatic look

• Conscious of their budgets, consumers are choosing trusted, established brands which
represent value for money and which offer accountability in terms of product claims

• Faced with financial pressure, discerning consumers will continue to shop around for the best
products and therapies and are increasingly seeking specialist, pre-purchase advice to
ensure they buy products that best meet their needs

• Key innovations in beauty in 2010 and beyond will come from advancements in genomics
(the study of genes in the skin), proteomics (the study of proteins in the skin) and stem
cell research and their ability to provide highly-tailored products which best respond to
individual’s skin age to slow the ageing process

• Cost-conscious consumers will look for products which offer integrated application tools
to ensure maximum effectiveness

• Strong demand in the women’s market for lightened hair will continue to drive the
market for hair colourants both in the salon and at home

2
2
COSMETICS AND FRAGRANCE

Foundation factor

In April 2009, research by L’Oréal discovered that a “Foundation Factor” had replaced the
“Lipstick Index” as a new economic indicator. The popularity of foundation soared across all
sectors and age groups and was considered to be the one “must-have” product that women
wanted*. Latest research by L’Oréal confirms that the market for foundation has since grown
six times faster than the overall cosmetics market – sales of foundation are now outpacing
lipstick and lipgloss sales by 13 percent in the mass market**.

(*Source: Internet MR, poll of 1000 women in Dec 08 & Feb 09 – Asked which one product women could not live
without, 26 percent selected foundation (lipstick 25 percent). **Source: AC Nielsen, 52 weeks ending October 2009)

According to leading psychotherapist Lucy Beresford, this trend is set to continue in 2010 as
women opt for foundation that maintains a flawless complexion and hides the effects of stress
and money worries on the skin. However, as consumer confidence begins to improve, L’Oréal
anticipates growing demand for foundations that provide a more luminous look. In February
2010, L’Oréal Paris will launch Matte Morphose its first foundation formulated with Mati-Crystal
technology, which unlike mattifying powders, allows light to pass through it, resulting in luminous
looking skin that controls shine in all the right areas.

At the end of 2009. Maybelline New York launched Dream Cream foundation for women
prone to dry skin and for whom a mattifying finish is not an option. Offering 100% baby-smooth
perfection, 14 hour hydration and a dewy finish, Dream Cream promises to encapsulate
Spring/Summer catwalk trends for make-up in 2010.

“In times of stress, anxiety often manifests itself on the skin, and so a
flawless complexion can boost a woman’s confidence, making her feel
less vulnerable and more in control. This trend became very evident
at the start of the economic downturn and is set to continue in 2010
because women are still seeking a groomed, refined look.”
Lucy Beresford, leading Pyschotherapist

3
3
COSMETICS AND FRAGRANCE

Personal creativity and false lashes

According to a study by WGSN, (www.wgsn.com) personal creativity will return to the top
of the agenda in 2010 as women experiment with their style and appearance, with a focus
on self-expression. The market for false eyelashes is one such market which continues to
grow; at shu uemura sales of false eyelashes (prices start from £12) represent more than 30
percent of the brand’s business in Selfridges and is growing at 60 percent like-for-like.

“False lashes are a fun and easy way to experiment with your look,
without breaking the bank. Our lashes come in a variety of styles,
suitable for every occasion, and are popular with women and girls alike!
Our in-store make-up artists also offer complimentary lash applications,
making them simple to use and perfect for a quick pre-party fix.”

Amandine Ohayon, General Manager shu uemura, Kiehl’s and Biotherm

Growing demand for more dramatic looking eyes is also driving the market for false lash
effect mascaras and mascaras offering dramatic styling. Sales of Yves Saint Laurent’s False
Lash Effect Volumizing mascara are up seven percent (year to date), while Lancôme’s
Hypnôse mascaras have experienced a 27 percent sales growth year on year (Source: L’Oréal
sales data, Epos YTD week 50 2009). In 2010 Maybelline New York will launch Falsies mascara as
an extension of the UK’s number 1 selling Volum’ Express range offering the mass market
‘instant false lash glam in a tube’.

Based on studies by L’Oréal Research on the mechanisms that determine eyelash growth
cycles, L’Oréal Paris introduced Renewal Lash Serum mascara in 2009. Capitalising on the
anti-hairloss technology developed by L’Oréal’s haircare divisions, researchers established
that by nourishing the lashes, they could prevent lash loss during the telogen phase (the
point at which hair/lashes are shed) and provide optimal conditions for lashes to re-enter the
anagen, or growth phase. The result is the creation of a thicker ‘fringe’ of lashes. The lash
serum now sells one unit every minute, confirming that consumers want quality items that will
deliver on their promise by drawing on proven scientific research.

4
COSMETICS AND FRAGRANCE

“For the past twenty years, L’Oréal has been working towards
understanding how hair and skin work. Our most recent work focused
on comparing the hair fibres on the head with those that form the
eyelashes. We were able to establish that scalp hairs and eyelashes
are composed of the same proteins, which meant that the technologies
that we had developed for hair are transferable to eyelashes.”
Julie McManus, L’Oréal’s Scientific Director in the UK and Ireland

Boldness is back

In early 2009 L’Oréal also found that as the recession took hold, women were tending to opt
for more natural looking make-up (Source: Internet MR, poll of 1000 women in Dec 08 & Feb 09 – over a
third (41%) of women opted for a pared-down, natural look as a direct result of the economic climate, while one in
eight (12%) experimented with brighter colours). However, as economic difficulty became certain and
consumer confidence began to plateau, L’Oréal has observed a resurgence in the demand
for more dramatic looks and darker shades. Dark lipsticks are rising in popularity and demand
for deeper, more dramatic shades are replacing the discreet colours and neutral shades of
early 2009. Since it was launched in October 2009, Rouge d’Armani has fast become one of
the brands top sellers. Sales of Lancôme’s L’Absolu Rouge lipstick have also increased 17
percent over the last year. The Fatal Red shade of Maybelline New York’s Color Sensational
lipstick is the most popular shade in the range, accounting for 12 percent of sales, despite
only being launched in August 2009 (Source: L’Oréal sales data).

“In the run up to Christmas women want to enjoy the excitement of the
season with a dramatic assertion of their femininity. By accentuating
the feminine features of eyes and lips in bold colours, false eyelashes
and dramatic mascaras, the caution evident during the recession is
being trumped by escapism, playfulness and freedom of expression.”
Lucy Beresford, leading Pyschotherapist

5
COSMETICS AND FRAGRANCE

Integrated application tools

L’Oréal is working on a number of revolutionary products which incorporate technology-based

application tools and expects the market for cosmetic technology to grow quickly in 2010, as
more products are introduced both in the mass and luxury markets.

In 2009 Lancôme introduced its first vibrating mascara Ôscillation which pulsates up
to 7,000 times per minute to ensure that lashes are coated through 360°, highlighting
consumers’ interest in innovative products.

Maybelline New York is renowned for offering innovative mascara technology and in 2009
launched its first vibrating mascara, Pulse Perfection. The powerful motor inside generates
a 100 micro-pulsations every second, this combination with a patented waved elastomeric
brush ensures lashes are perfectly coated from root to tip.

L’Oréal Paris also introduced Roll On True Match, an innovative new beauty tool for flawless
foundation application. New Roll On True Match combines a high performance foundation
with an innovative applicator for perfect coverage. With its ergonomic shape, the applicator
conforms to facial contours, even on difficult areas like the eyes and the sides of the nose.

“Consumers will continue to respond to innovation, which will have

a positive effect on the market overall. In the climate we face today,
consumers want to get as much as they can for their money and we
are therefore looking to provide what they want.”
Grita Loebsack, Managing Director, L’Oréal UK & Ireland

Multi-purpose products

In 2010, consumers wishing to keep a closer eye on their purse-strings will look for multi-purpose
products such as L’Oréal Paris’ Color Riche Serum Inside lipsticks, which include L’Oréal’s
most advanced skincare technology (including Hyaluronic Acid Collagen and Pro-Xylane) in a
range of tropical shades to meet next season’s trend for statement lips.

The trend was first spotted by L’Oréal in April 2009, which found that consumers looking for
new ways to consolidate their beauty budgets, were opting for multi-purpose products, such
as two-in-one face washes which experienced a 5.4% increase in sales in the mass-market
(Source: Internet MR, poll of 1000 women in Dec 08 & Feb 09).

6
COSMETICS AND FRAGRANCE

Fashionable and aspirational brands drive fragrance sales this Christmas

The fragrance market is also embracing the notion of escapism, as consumers look to
fragrances to experiment with and upgrade their style at affordable prices.

The introduction of prestige fragrance brands such as Diesel and Stella McCartney has also
created a new trend amongst consumers, who are purchasing fragrance to complement their
wardrobes, rather than upgrade them.

At L’Oréal, over a third of full year fragrance sales are made in the four weeks to Christmas
(Source: L’Oréal sales data 2008) and affordable fashion brands offering fragrances to be bought
alongside their clothes, are expected to profit most this Christmas and beyond. In 2009,
Diesel, known for its alternative and urban fashions, launched Diesel Only the Brave
fragrance for men. Only the Brave has become L’Oréal’s biggest ever fragrance launch
and is now the best-selling fragrance in the men’s portfolio (Source: L’Oréal sales data 09).

In the premium fragrance market, consumers who aspire to designer brands such as Armani,
Yves Saint Laurent and Ralph Lauren, are looking to fragrance lines, as a way of “buying-in”
to the brand at more affordable prices. Viktor and Rolf has grown 48 percent YTD and 19
percent like-for-like (Source: L’Oréal sales data 2009).

“The success of fragrance brands such as Diesel whose heritage lies

in unconventional, urban fashion, is indicative of consumers’ appetite
for high-fashion, affordable luxuries. Fragrances have always been a
popular gift choice at Christmas but now, more than ever, consumers
are considering their spend on gifts more carefully; brands which offer
aspirational fashion at accessible prices will be the biggest winners
this Christmas and in 2010.”

Thierry Cheval, Managing Director of L’Oréal Luxury Products UK

7
SKINCARE

Scientific innovation

Key innovations in skincare in 2010 will come from advancements in scientific research,
particularly genomics (study of the role of genes in the skin), proteomics (study of proteins in
the skin) and stem cell research, and their ability to provide highly-tailored products which best
respond to individual’s skin age to slow the ageing process. Anti-ageing skin creams represent
a third of all facial skincare products (Source: AC Nielsen, 52 weeks ending 3.10.9).

Until recently, scientists did not know which genes and proteins are responsible for the youthful
characteristics of skin. However, for the first time, L’Oréal has developed a way to identify these
genes by monitoring the impact of external influences to the skin (such as skin friction and
contact with detergents). This has enabled the company to better understand the processes
which take place during epidermal recovery.

(For further information see: Large scale study of epidermal recovery after stratum corneum removal: dynamics of
genomicresponse. Experimental Dermatology. (2009) DOI:10.1111/j.1600-0625.2009.00976.x)

The first of these products were introduced on the market in 2009; Lancôme’s Genifique and
Biotherm’s Skin Vivo which sold out within six weeks of launch. Genifique has fast become
one of the top-selling luxury skincare products in the UK, with one unit sold every two minutes
(Source: UK sales data for Lancôme’s Genifique product which launched in march 2009. Before September,
one product sold every five minutes). Genifique is now Lancôme’s biggest selling product in the
UK confirming consumer appetite for anti-ageing products based on proven science.

“The discoveries which L’Oréal made available this year, mark the start of a new
and very exciting era for anti-ageing skincare products. Understanding and
isolating the gene response of skin to external stresses means we can develop
products which are proven to improve and accelerate the process of epidermal
recovery, which we know plays a vital factor in youthful-looking skin.”
Bruno Bernard, Group Leader of Life Sciences Department, L’Oréal Research.

8
SKINCARE

A second area of scientific discovery which is set to lead the market for anti-aging skincare
products in 2010, is stem cell technology. In 2009, L’Oréal became the first company to
discover that contrary to previous industry thinking, the number of stem cells in skin does
not decrease with age, it is their performance that diminishes. Using its reconstructed skin
model, L’Oréal was able to identify new active ingredients which would restore the potential
of stem cells to perform as effectively as they did in younger skin.

With this knowledge, L’Oréal introduced two major product breakthroughs: Lancôme
launched Absolue Precious Cells, its first anti-ageing cream that helps restore the
potential of skin stem cells by providing an optimal environment for the stem cells to
function. Vichy also launched Aqualia Antiox with Citrus Polyphenol™ which helps
protect stem cells from oxidative stress so that skin remains fresh and radiant and hydrated.

“Our customers are discerning and want brands they can trust and
which are accountable for product claims, making scientific innovation
and proven results critical to our success.”
Thierry Cheval, Managing Director of L’Oréal Luxury Products, L’Oréal UK
& Ireland

Integrated application tools

In 2010, discerning consumers who want to maximise the efficacy of a product will choose
products which offer integrated application tools based on technology. In 2009, Garnier
introduced the Garnier Eye Roll On, the first ever roll-on applicator to massage the eye area
and help reduce the appearance of tired-looking eyes. In its advertising campaign, Garnier
confirmed that one product now sells every 15 seconds. L’Oréal is working on a number of
revolutionary products which incorporate technological application tools and expects the
market for these products to grow heavily in next year and beyond. This integration will be
taken one step further in 2010 with the launch of Garnier Tinted Eye Roll On, a 2-in-1
product offering ‘anti-dark circle care’. The roll-on offers instant coverage using tinted mineral
pigments in the caffeine enriched formula.

9
Skincare

L’Oréal Paris also introduced its first facial skincare tool Revitalift Pro Contouring System in
September 2009. Inspired by professional lifting techniques, the dual action treatment combines
massage and concentrated care. With a unique 40 point pressure action, it helps to stimulate
the skin and encourage natural drainage of the tissues through its pressing and lifting action.

The massaging tool reinforces and complements the toning benefits of the concentrated
anti-wrinkle and tautening cream for twice the improvement on jawline sagging, versus the
concentrated cream alone*.

(*Average improvement in the clinical score given for ptosis after 4 weeks: -11% for the formula alone; -23% for the
tool and formula combined.)

“We predict that the fusion of technology, innovation and cosmetics

will be a significant driving force in consumer trends over the next
decade. L’Oréal is working on a number of revolutionary products
which incorporate technology-based application tools and expects
the market for cosmetic technology to grow quickly in 2010, as more
products are introduced both in the mass and luxury markets.”
Damien Bertrand, General Manager, Garnier and Maybelline New York,
UK and Ireland

Specialist advice

Faced with greater financial pressure, consumers will see a shift in the power balance of
brands to consumers; brands must work harder to convince customers that their product is
fit-for-purpose.

According to Mintel, consumers are becoming increasingly interested in the contents of their
products and how ingredients work. At L’Oréal, the Consumer Advisory team (0800 458 4848)
has experienced a 16 percent increase in consumer enquiries year- on-year, the most frequent
callers asking for advice on the best products for them and for education about products.

10
Skincare

In department stores and pharmacies, consumers are demanding more specialist advice before
making purchases. L’Oréal expects this trend to become more engrained in the purchasing
cycle throughout 2010, as consumers continue to ensure their money is well spent.

Vichy and La Roche-Posay are at the forefront of a new derma skincare category within
Boots offering free skin health consultations to meet the demand for accessible, helpful
advice and guidance from skin health experts. In 2009 Vichy and La Roche Posay
hosted National Skin Health Month in association with Boots. The roadshow offered free
independent skin health consultations to the public across ten shopping centres around
the UK, to ensure that consumers were making the best skincare choices for them. At
each Vichy Skin Health Centre, independent dermatological nurses analysed skin type, oil
hydration levels, melanin and skin ageing and recommended individual skin prescriptions.
Customers were also given the opportunity to speak with a Boots derma skincare advisor
using the exclusive Dermo Analyzer (digital skin analysis tool).

“The recession has made customers much more conscious of buying

the right product for their skin type and by informing and providing
derma-skincare advisors with the right diagnosis tools, so that they
can provide a personalised, added value customer service, sales of
pharmacy skincare products will continue to grow.”
Denis Donohoe, Managing Director, Active Cosmetics, L’Oréal UK and Ireland

11
HAIRcare

Scientific research

Key trends in hair care in 2010 will also be driven by scientific research and new product
innovation. In September 2009, L’Oréal Professionnel introduced the first ammonia-free,
permanent hair colour called INOA. The absence of ammonia means that the application
of the colourant is odourless. However, one of the greatest benefits of INOA is its ability to
return hair to a “virgin” or pre colour-treated state, after multiple applications, by using the
product’s innovative Oil Delivery System. The product has already been adopted by 3,000
salons in the UK, and L’Oréal expects consumer demand for the product to take-off in 2010,
as more cost-conscious consumers demand treatments which offer greater long-term
benefits for hair.

Blonde is back

L’Oréal also anticipates a growing demand for natural-looking highlights, particularly in the first
part of the year and in run up to the summer months. At home, women are experimenting more
with their look; the success of products such as Garnier Nutrisse (which has experienced over
1,000 percent* growth for its Shade of the Nation colour) has led to an increase in the number of
who are looking for inexpensive ways to update their look and who are experimenting with home
hair colourants (Source: TNS Worldpanel – Salon Survey, 6 months to March).

(*Source: UK sales data Nov 08- March 09)

The under 24 category is leading this trend and is the age group most frequently buying home
hair colourants (Source: TNS Worldpanel – Salon Survey, 6 months to March). To meet this demand, in
spring, L’Oréal Paris will be introducing a new Blonde collection under its Excell 10 brand.
Garnier will launch two blonde ranges in 2010, Belle Color Luminous Blondes and Nutrisse
Radiant Blondes.

“Blonde hair suggests youth, playfulness and fertility, so by going

blonde, women are tapping in to an “I-like-to-have-fun” image. The
softer look of blonde hair emphasizes the feminine and, especially in
the winter months, highlights suggest attractive sun-kissed health.”

Lucy Beresford, leading Pyschotherapist

12
HAIRcare

Women will not compromise on appearance

Women will continue to visit hair salons as often as they did pre-credit crunch (Source: TNS
Worldpanel – Salon Survey, 6 months to March), confirming the notion that women will not
compromise their appearance despite facing greater financial pressure. In fact in 2009,
the 25-34 age group saw a 10 percent increase in the number of women paying to have
their hair done in salons and a 43 percent increase in the number of women who wanted
colour or a perm (Source:TNS Worldpanel – Salon Survey, 6 months to March 2009).

Customer services

However, in an effort to promote customer loyalty, salons must continue to look at new
ways to maximise their services and drive revenue. L’Oréal Professionnel for example
has increased the number of training courses by 18 percent to provide salons with further
business skills in customer retention (Source: L’Oréal International Academy, London, 2009).

“Our research confirms that appearance is one thing that UK women will
not neglect in wake of the economic downturn. We’re observing that
women are using their disposable incomes to “treat” themselves with
smaller, more affordable luxuries, such as blow dries, hair colour and
styling, rather than splashing out on expensive holidays, cars and clothes.”

“In a competitive market, salons who adopt the latest products and who
upgrade the salon services will reap the biggest rewards. In the last
three months alone, a considerable number of hair salons have adopted
INOA –proof that salons are looking to breakthrough and innovative
products to drive their businesses in 2010 and beyond.”

Vincent Mercier, Managing Director, L’Oréal Professional Products Division

13