A “streamlined focus” deemed key to beauty brand growth

Companies that have a more streamlined beauty focus are in a better position to take advantage of the growth potential in the market, according to new research from Euromonitor. Companies such as L’Oréal are particularly well placed to drive growth through product sophistication.

“Results in 2013 are not strikingly different from 2012,” said Senior Analyst Oru Mohiuddin, “but it is becoming clear that manufacturers with a more streamlined beauty focus are in a better position to take advantage of the growth potential in the market.”

Mohiuddin looked at several companies, including L’Oréal, Procter and Gamble, Unilever, Beiersdorf and Colgate. “In this group of companies, L’Oréal comes out top with 5% growth rate whereas P&G’s performance was least favourable at negative 1%,” she said.

“This again drives home the fact that manufacturers with a more exclusive beauty focus are able to do better. L’Oréal invests quite significantly in R&D and its launches are based on scientific claims and breakthrough product developments.

"On the other hand, P&G is present in home care and beauty and its resources are more diluted when it comes to investing in R&D. At the same time it is competing with L’Oréal in the category of skin care and it’s not able to match the same level of scientific development.”

Unilever, said Mohiuddin, has cross-industry presence like P&G but is still doing well because it specialises in commodities such as bath and shower, deodorant and oral care, which traditionally have not relied so much on product sophistication to drive growth.