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The year in review and winning strategies for the future

GLOBAL BEAUTY AND PERSONAL CARE: THE YEAR IN REVIEW AND WINNING STRATEGIES FOR THE FUTURE
IRINA BARBALOVA 29-31 MARCH 2011, IN-COSMETICS, MILAN

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The year in review and winning strategies for the future

Beauty beyond the crisis


Industry dynamics New positioning and value perceptions The beauty brand as an experience The Outlook

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The year in review and winning strategies for the future


BEAUTY BEYOND THE CRISIS

MOVING OUT OF THE RECESSION


Real GDP: % growth over previous period, annualised
10

% growth

0
-5 -10 2008 2009 2010 2011 Q1 2006 Q4 Q1 2007 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q2 Q3 Q2 Q3 World Advanced economies Developing economies

Retailing Growth
10

% value growth

8 6 4 2 0 -2 Retailing 2005 2006 2007 2008 2009 2010


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Grocery Retailers

Non-Grocery Retailers

Non-store Retailing

BPC Non-store sales

The year in review and winning strategies for the future


BEAUTY BEYOND THE CRISIS

WESTERN EUROPE CONSUMER EXPENDITURE SLOWEST TO RECOVER


15
10 % growth (US$)

5
0

-5

2006-07

2007-08

2008-09

2009-10

-10

-15
Health Goods and Medical Services Alcoholic Beverages and Tobacco Clothing and Footwear Personal Care Food and Non-Alcoholic Beverages

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The year in review and winning strategies for the future


BEAUTY BEYOND THE CRISIS

MORE HURDLES TO BE OVERCOME

Number of countries with an unemployment rate above 10% in 2007

14

Number of countries with an unemployment rate above 10% in 2010

25

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Source: Euromonitor International from national statistics Data refer to 80 major economies

The year in review and winning strategies for the future


BEAUTY BEYOND THE CRISIS

THE CONSUMER IN 2011 AND BEYOND

Nuanced luxury

Valueseeking

The postrecession consumer


Experiencefocused Staying ahead and well
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Digital and connected

The year in review and winning strategies for the future

Beauty beyond the crisis


Industry dynamics New positioning and value perceptions The beauty brand as an experience The Outlook

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The year in review and winning strategies for the future


INDUSTRY DYNAMICS

GLOBAL INDUSTRY RECOVERS FROM THE SLUMP


400,000 350,000 300,000 US$ million 250,000 200,000 3 150,000 100,000 50,000 0 2005 Total BPC
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8
8 7 6 5 4

2 1 0 -1 2006 2007 2008 2009 2010 % Mass growth

% Total growth

% Prem growth

% Value growth

The year in review and winning strategies for the future


INDUSTRY DYNAMICS

2010 COUNTRY PERFORMANCE


2010 Country performance

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The year in review and winning strategies for the future


INDUSTRY DYNAMICS

PREMIUM COSMETICS ON THE REBOUND

10

9% 1%

1%
2%

12%

11%
1%

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The year in review and winning strategies for the future


INDUSTRY DYNAMICS

PREMIUM MARKET SHARE STILL LOW IN LATIN AMERICA

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Mass Cosmetics Premium Cosmetics

The year in review and winning strategies for the future


INDUSTRY DYNAMICS

MASS COSMETICS TO DRIVE FUTURE GROWTH


100 90 80

12

76%

72%

% value (US$)

70 60 50 40 30 20 10 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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28%

24%

Global Premium Cosmetics

Global Mass Cosmetics

The year in review and winning strategies for the future


INDUSTRY DYNAMICS

TOP CATEGORY BY REGION

13

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The year in review and winning strategies for the future


INDUSTRY DYNAMICS

DISCRETIONARY CATEGORIES PICK UP


2010 US$mn 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 08-09 % growth 09-10% growth 9 8 7 5 4 3 2 1 0 % value growth 6

14

US$ million

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The year in review and winning strategies for the future

15

Beauty beyond the crisis


Industry dynamics New positioning and value perceptions The beauty brand as an experience The Outlook

Euromonitor International

The year in review and winning strategies for the future


NEW POSITIONING AND VALUE PERCEPTIONS

PRIVATE LABEL PICKS UP MARGINALLY


Private label share 14
Germany

16

12

% value share

10 8 6 4 2 0 2006 2007
France United Kingdom

Spain

Global PL growth by category

Colour Cosmetics (+10%) Mens grooming (+10%) Skin Care (+8.5%) Oral Care (+5.6%) Hair Care (+4.4%) Bath & Shower (+0.5%)

2008

2009
USA

2010

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Germany Spain

The year in review and winning strategies for the future


NEW POSITIONING AND VALUE PERCEPTIONS

PRIVATE LABEL KEEPS UP THE PACE IN INNOVATION


Tapping into budget and high end lines
Focus on product efficacy and ingredients Increasingly green savvy Diversifying existing lines

17

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The year in review and winning strategies for the future


NEW POSITIONING AND VALUE PERCEPTIONS

INNOVATION IN BRANDS STILL A PRIME FOCUS


Scientifically-advanced innovation New concepts and professional status Time-saving vs long-lasting beauty

18

Building on successful brands

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The year in review and winning strategies for the future


NEW POSITIONING AND VALUE PERCEPTIONS

NEW POSITIONING IN SKIN CARE

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Category cross- over


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New consumer targets

Holistic skin care

Increased polarisation

The year in review and winning strategies for the future

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Beauty beyond the crisis


Industry dynamics New positioning and value perceptions The beauty brand as an experience The Outlook

Euromonitor International

The year in review and winning strategies for the future


THE BEAUTY BRAND AS AN EXPERIENCE

INTERNET CONTINUES TO RESHAPE THE WORLD


More than 40% of the worlds population will be on the Internet in 2020 % of world population 50 40 % of worlds Internet users 30 20 10 0 Half of all Internet users will be in Asia Asia 100% 90% Rest of world

21

80% 70%
60% 50% 40% 30% 20% 10% 0%

2000

2010

2020

711 million
Chinese Internet users in 2020
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281 million
US Internet users in 2020

2000

2010

2020

The year in review and winning strategies for the future


THE BEAUTY BRAND AS AN EXPERIENCE

INCREASING IMPORTANCE IN BEAUTY RETAILING


Global Beauty Channel Breakdown 80 70 60 % value share
12.4 14 15.3 16.1

22

12.9 9.7 13.4

12.8 9.5 13.4

50
10.6

40 30 20 10 0 2005 2006 2007 Drugstores Super/Hypermarkets 2008 2009 2010


26 27 26.9 13.1

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Non-Store Retailing Beauty Specialists

Department Stores

The year in review and winning strategies for the future


THE BEAUTY BRAND AS AN EXPERIENCE

VARIED PENETRATION ACROSS KEY MARKETS


Beauty Internet Retailing Top Five Markets 9 8 % share of total retail sales 7 6

23

5
4 3 2 1 0 S.Korea France USA UK Japan

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The year in review and winning strategies for the future


THE BEAUTY BRAND AS AN EXPERIENCE

NEW WAYS OF ENGAGING WITH BEAUTY CONSUMERS

24

Social Media

Mobile Technology
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New In-store Experience

The year in review and winning strategies for the future


THE BEAUTY BRAND AS AN EXPERIENCE

25

500 million 30 billion

Facebook users Pieces of content per month

700 billion
130 62% 50%

Minutes of log-in time per month


Average friends per user Of users between the age of 18-34 Users of Facebook are female Registered tweets per day

55 million

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The year in review and winning strategies for the future


THE BEAUTY BRAND AS AN EXPERIENCE

ONLINE PRESENCE AND SOCIAL MEDIA NOT TO BE IGNORED 26


Key players increasing online presence Opportunities for smaller brands Social commerce still limited

Blogging/vlogging offer new experience

1,614,613 people like this

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The year in review and winning strategies for the future


THE BEAUTY BRAND AS AN EXPERIENCE

THE POWER OF THE SMARTPHONE APP


Key success factors: Personalised Added value Interactive experience Real-time updates

27

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The year in review and winning strategies for the future


THE BEAUTY BRAND AS AN EXPERIENCE

WHERE NEXT FOR VIRTUAL CONNECTIVITY?

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The year in review and winning strategies for the future


THE BEAUTY BRAND AS AN EXPERIENCE

IN-STORE BEAUTY EXPERIENCE VITAL FOR THE INDUSTRY


Beauty services challenged by at-home beauty Creating value is key

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Retailers enriching the in-store experience


Fastest Growing Beauty Sectors 2009-10 (value) Nail Polish Mens skin care Mass fragrances Sun protection Anti-agers Colourants Eye liner/pencil Blusher/bronzer
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(+17%) (+12%) (+9%) (8.5%) (7.6%) (+7%) (+7%) (+7%)

The year in review and winning strategies for the future


THE BEAUTY BRAND AS AN EXPERIENCE

RE-CREATING THE SPA EXPERIENCE


Innovative retail concepts Mobile beauty becomes prominent Health and wellness factor to drive interest in spas New consumer targets
Key Spa Tourism Markets, absolute growth 2010-15 (million) USA Japan China France Israel India Austria Euromonitor International Vietnam US$ 1,660 US$ 1,350 US$ 1,030 US$ 856 US$ 362 US$ 363 US$ 266 US$ 221

30

The year in review and winning strategies for the future

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Beauty beyond the crisis


Industry dynamics New positioning and value perceptions The beauty brand as an experience The Outlook

Euromonitor International

The year in review and winning strategies for the future


THE OUTLOOK

GROWTH TO CATCH UP WITH PRE-RECESSION LEVELS

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The year in review and winning strategies for the future


THE OUTLOOK

CONSUMER NEEDS BECOMING MORE DIVERSE

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Value

Efficacy

Personal touch
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Experience

The year in review and winning strategies for the future


THE OUTLOOK

BEAUTY INTERNET SALES TO BECOME MORE COMPETITIVE 34


Beauty Internet Sales 2010-15 16,000 14,000 12,000 US$ million 10,000 8,000 6,000 40 35 30 25 20 15

4,000
2,000 0

10
5 0

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2010

2015

2010-15 CAGR

The year in review and winning strategies for the future


THE OUTLOOK

GLOBAL GROWTH TO BE DRIVEN BY MASS BEAUTY

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Mass Fragrances Mass Colour Cosmetics Mass Skin Care Premium Hair Care Mass Hair Care Premium Skin Care

Premium Fragrances
Premium Colour Cosmetics
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0.5

1.5

2.5

3.5

4.5

5.5

% value growth (real terms)

The year in review and winning strategies for the future


THE OUTLOOK

MORE OPPORTUNITIES TO BE HAD IN PREMIUM SKIN CARE


12,000 20

36

18 10,000
US$ million (nominal) 8,000 6,000 4,000 2,000 0
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16

14
12 10 8 6 4 2 0 -2 % value growth

2010
USA

2011
Japan

2012

2013

2014

2015
Japan growth

China

China growth

USA growth

The year in review and winning strategies for the future

2X
80%
BILLION

37

Chinas premium cosmetics market will double by 2015, to reach $7billion

of Latin Americas industry value will be accounted for by mass products in 2015

$83
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Latin America industry value in 2015, third largest region globally

The year in review and winning strategies for the future

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THANK YOU FOR LISTENING


Irina Barbalova, Head of Beauty and Personal Care Research Irina.barbalova@euromonitor.com

Q&A?
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