THE MULTIFACETED EVOLUTION OF GLOBAL BEAUTY IN-COSMETICS 2014 IRINA BARBALOVA HEAD OF BEAUTY AND PERSONAL

Transcription

1 THE MULTIFACETED EVOLUTION OF GLOBAL BEAUTY IN-COSMETICS 2014 IRINA BARBALOVA HEAD OF BEAUTY AND PERSONAL

2 GLOBAL INDUSTRY HIGHLIGHTS EMERGING MARKETS KEY INDUSTRY THEMES CONCLUSIONS

3 % Value Growth Beauty Industry Growth Wanes Total / Premium / Mass growth $454bn Total global value for overall beauty in $22.5bn Extra value added in Total BPC Premium BPC Mass BPC

4 US$ million US$ million Mass Contribution Sustained, while Premium Drops in , , ,782 +$15bn 290,068 +$15bn 300, , , , , , ,000 50,000 95,028 98,931 +$5bn +$4bn 100,000 50, Mass Beauty Premium Beauty

5 Asia Pacific Reinforces Domination, Western Europe Picks Up 5 1.9% 1.3% 2.7% 6% 13% 12% 2.4% %value growth 2013 US$ 129 Billion US$ 102 Billion US$ Billion US$ 5-30Billion

6 New Power Shifts in Beauty 6

7 US$ million % Value Growth Most Categories See Weaker Performance in , ,000 80, ,000 40,000 20, US$mn % growth %

8 % value growth Top Growth Segments Bring New Lucrative Opportunities 8 Top 10 Fastest Growing Product Segments 2013 Perms and Relaxants Other Facial Make-Up Nail Polish Deodorant Sprays Mass Men's Skin Care Polish Remover % Latin America share of global perms and relaxants 2X Increase of other facial make up since 2007 Mass Face Masks Baby/Child Toiletries Nail Treatments Premium Unisex Fragrances #1 Brazil ranking in global nail polish in 2018

9 GLOBAL INDUSTRY HIGHLIGHTS EMERGING MARKETS KEY INDUSTRY THEMES CONCLUSIONS

10 Brazil and China Key Revenue Generators 10 Top absolute growth categories 2013 Key absolute growth markets 2013 Men's Grooming Deodorants Others Skin Care Rank Country US$ mln growth 1 Brazil 4,653 2 China 3,551 3 US 1,711 Bath& Shower 4 India 1,446 5 Argentina 1,326 6 Venezuela 1,133 Oral Care Hair Care 7 Iran 1,005 8 Indonesia Mexico 507 Fragrances Colour Cosmetics 10 South Korea 455

11 Key Opportunities for Further Penetration in Emerging Markets 11 0% 20% 40% 60% 80% 100% Baby/child products Bath and shower Colour cosmetics Deodorants Fragrances Hair care Men's grooming 55 Global Beauty Sales Developed Emerging 2018 Developed Skin care Emerging Oral care Sun care Emerging Developed

12 Mass Domination, with Strong Premium Potential 12 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Brazil Indonesia India Mexico Argentina Russia China USA Growth in premium > mass in 2013 Growth in mass > premium in 2013 Mass Premium

13 % value growth Premium Skin Care Dominated by China Premium Skin Care Growth #1 China s ranking in global premium skin care in 2018 $4bn Extra value added by China to total premium skin care by 2018 World China India Indonesia Vietnam

14 US$ million Premium Prospects in Brazil Largely Concentrated in Fragrances 14 Brazil Premium Category Potential 700 Price Local tailoring Channel Local production 2013 sales absolute value

15 Local vs International Players in Brazil and China 15 Top 10 Beauty Players Brazil Natura Unilever Grupo Boticário Procter & Gamble Avon Colgate-Palmolive L'Oréal Johnson & Johnson Hypermarcas Beiersdorf Top 10 Beauty Players China Procter & Gamble L'Oréal Unilever Shiseido Mary Kay Colgate-Palmolive Amway Beiersdorf Johnson & Johnson Estée Lauder Local players

16 Brazil Competitive Landscape Changes 16 Direct selling losing ground Store-based brands gain Beauty specialists Drugstores Internet retailing Department stores Supermarkets Direct selling % share change Grupo Boticário Beiersdorf J&J L'Occitane Mary Kay P&G Unilever L'Oréal Colgate-Palmolive Natura Avon % share gain

17 Local Players in China Heat Up Competition 17 China selected companies share change Nu Skin L'Oréal Yunnan Baiyao AmorePacific Shanghai Inoherb Shanghai Jahwa Estée Lauder Mary Kay Jala Beiersdorf Amway Shiseido P&G % share gain

18 Expansion Strategies Continue 18 Local collaborations Joint ventures Acquisitions Local customisation

19 Value (US$ million) L Occitane Benefits from Local Production in Brazil 19 L Occitane Beauty Sales Selected Markets 2008/ USA Japan Brazil China Russia

20 GLOBAL INDUSTRY HIGHLIGHTS EMERGING MARKETS KEY INDUSTRY THEMES CONCLUSIONS

21 Future Revenues in the Hands of Skin Care and Hair Care 21

22 % of respondents Brand Loyalty in Skin Care and Hair Care Prevails 80% Brand Loyalty for Beauty Products 22 70% 60% 50% 40% 30% 20% 10% 0% Hair Care Skin Care Fragrances Colour Cosmetics Always or Usually Buy Same Brand Always or Usually Buy Different Brand Source: Euromonitor International Analyst Survey - Analyst Pulse; November 2013 Note: Showing percent of respondents who indicated their purchasing behavior for beauty products

23 % of respondents Product Efficacy Most Crucial to Brand Loyalty 100% Reasons for staying with the same brand 23 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Product effectiveness Price Out of habit In-store availability Skin care products Hair care producs Source: Euromonitor International Analyst Survey Analyst Pulse; November 2013 Note: Showing percent of respondents who indicated reasons for choosing the same brand Brand image Convenience

24 % of respondents Novelty Spurs Experimentation 70% Reasons for switching brands 24 60% 50% 40% 30% 20% 10% 0% Novelty factor Price In-store availability Product does not give desired results Hair care producs Skin care products Source: Euromonitor International Analyst Survey Analyst Pulse; November 2013 Note: Showing percent of respondents who indicated reasons for choosing different brand Convenience

25 Key Themes to Define the Industry in Multi-benefit becomes ubiquitous Luxury for all At-home beauty Fashion beauty New product experience Selfie beauty

26 Multi-benefit opportunities More Opportunities for Benefit Crossover 26 Hair Hair - anti-age Hair - health Hair - fragrance Hair - make-up Colour Nail - anti-age Nail - skin care Nail - fragrance Lipstick - lip care Skin Skin - body wash Skin - fragrance Skin - textiles Skin - device

27 US$million Fashion Beauty Fashion Entry into Beauty 27 Tory Burch Michael Kors Tom Ford Fragrances Colour Cosmetics Skin Care Fragrances Colour Cosmetics Skin Care Fragrances Colour Cosmetics Skin Care -1 Christian Dior Chanel Yves Saint Laurent value growth CAGR

28 Selfie Beauty Selfie Beauty 28 Nail Polish Individuality Novel textures Nail art Tailored innovation Solution-based Hyperpigmentation Scalp health Skin Perfection Even tone Spot correction Smooth texture

29 New Product Experience New Product Experience Transpires in Different Forms 29 TEXTURE experience experience VIRTUAL RETAIL PACKAGING experience experience experience SCENT experience experience experience experience APPLICATION experience experience IMAGE FORMULATION experience experience STORY experience experience experience experience Format

30 New Product Experience Product Experience: Texture and Format 30 TEXTURE Format

31 New Product Experience Product Experience: Packaging and Application 31 PACKAGING APPLICATION

32 New Product Experience Product Experience: In-Store and Digital 32 VIRTUAL RETAIL

33 New Product Experience Product Experience: Scent 33 SCENT

34 At-Home Beauty Face Masks: Untapped Opportunity 34 Top Growth Segments Skin Care Face Masks Hand Care General Purpose Body Care Anti-Agers Top 5 Face Masks Global Brands MG (Magic Holdings) Inoherb (Shanghai Inoherb) Mary Kay (Mary Kay) Cel-Derma (Genic Co) SK-II (Procter & Gamble) Facial Moisturisers Facial Cleansers Toners % Value Growth

35 At-Home Beauty Skin Care Devices: More Unexplored Potential 35 US Brand Shares in Other Personal Care Appliances 2008/2013 Note: Inner circle 2008, outer circle 2013 Homedics Conair Clarisonic Dr Scholl's

36 GLOBAL INDUSTRY HIGHLIGHTS EMERGING MARKETS KEY INDUSTRY THEMES CONCLUSIONS

37 US$ million New Growth Frontiers Come to the Spotlight 37 70,000 Key absolute growth categories Key absolute growth markets 60,000 $20.6billion Skin care Country US$ mln growth 50,000 China 20,788 40,000 $9.6billion Hair Care Brazil 16,066 US 6,240 30,000 $7.6billion $7billion Oral care Colour Cosmetics India 3,689 Indonesia 2,067 20,000 $6.8billion Men s grooming South Korea 2,055 10,000 Bath & shower Baby care Deodorants 0 Absolute Growth US$ million $20,6billion Fragrances Saudi Arabia 1,853 Mexico 1,347

38 38 NOVEL Products PERSONAL Experience LOCAL Tailoring

39 THANK YOU FOR LISTENING Irina Barbalova Global Head of Beauty and Personal Care Research