BEAUTY SURVEY 2016: KEY INSIGHTS AND SYSTEM UPDATE. October 2016

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1 BEAUTY SURVEY 2016: KEY INSIGHTS AND SYSTEM UPDATE October 2016

2 INTRODUCTION KEY INSIGHTS Targeting Premium Buyers Refining Naturals' Beauty Strategies Beauty Routines by Generations UPDATED SYSTEM OVERVIEW

3 INTRODUCTION Beauty Survey provides consumer insights to top industry players Why study the grooming routines, buying patterns and brand preferences of global beauty shoppers? Industry Evolution High intensity of innovations and new product developments characterise a constantly evolving industry and a growing need for gap assessment and consumer profiling. Consumer Demand Consumer preferences are changing on multiple levels: as people age, their hair and skin changes, their spending power changes, and as they become aware of new trends and products their beauty routines and attitudes evolve. To understand: Consumer beauty routines and product usage Purchase motivators and influencers Consumer brand perceptions

4 INTRODUCTION KEY INSIGHTS Targeting Premium Buyers Refining Naturals' Beauty Strategies Beauty Routines by Generations UPDATED SYSTEM OVERVIEW

5 TARGETING PREMIUM BUYERS Premium beauty buyers key characteristics Premium buyers tend to have more extensive beauty routines than non-premium buyers Consumers with Premium Preferences by Generation Baby Boomers Generation X Millennials...stronger digital influence on their purchasing decisions Generation Z 0% 15% 30% 45% 60%...higher expectations of tangible results and good value for money equally important...more interest in natural ingredients and ethical quality brand than non-premium buyers. Hair Care Colour Cosmetics Skin Care Premium beauty brands most attractive target consumers are Generations Y and X, with over half of them expressing premium preferences across all three categories.

6 TARGETING PREMIUM BUYERS More extensive beauty routines among premium buyers Breakdown of Beauty Buyers by Type of Hair Care Routine 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Premium buyer Non-premium buyer Extensives (4-7 HC products used weekly) Moderates (2-3 HC products used weekly) Minimalists (0-1 HC products used weekly) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Breakdown of Beauty Buyers by Type of Skin Care Routine Premium buyer Non-premium buyer Extensives (8-14 SC products used weekly) Moderates (4-7 SC products used weekly) Minimalists (0-3 SC products used weekly) Breakdown of Beauty Buyers by Type of Make-up Routine 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Premium buyer Non-premium buyer Extensives (7-16 CC products used weekly) Moderates (2-6 CC products used weekly) Minimalists (0-1 CC products used weekly) Although globally consumers with extensive beauty routines are more likely to be premium buyers, regional differences are significant: while in China and South Korea over 50% of premium buyers are extensives, in countries such as France, Germany and the UK, premium buyers tend to be moderate users.

7 INTRODUCTION KEY INSIGHTS Targeting Premium Buyers Refining Naturals' Beauty Strategies Beauty Routines by Generations UPDATED SYSTEM OVERVIEW

8 REFINING NATURALS' BEAUTY STRATEGIES Mapping the market for green and natural beauty products Green features remain one of the top five traits that consumers look for in beauty products, before even brand names. Well-to-do consumers in emerging markets leading charge for green beauty. All-natural, plant-derived and free-from claims are the most powerful green features. Products associated with concentrated chemical ingredients or with deep penetration of skin or hair have the most latent green potential. Six in 10 green buyers are willing to pay more to get the natural and botanical ingredients they value. Across all three product categories tested, green product features, including natural or organic and environmentally-friendly or ethical rest among the top five features sought by internet-connected consumers in 2015 and Green features are secondary only to efficacy, suitability, and a quality-price balance in consumers decision-making for beauty products, and are actually more salient in purchasing deliberations than low prices and strong brand names. This strong importance placed on green features by consumers must be acknowledged and addressed by beauty brands, manufacturers and ingredient suppliers who are interested in sales growth. The market is going green, and smart companies will be greening right along with it, giving consumers the beauty products that they want.

9 REFINING NATURALS' BEAUTY STRATEGIES Where is demand for green beauty unmet and/or growing? Demand for natural or organic or environmentally-friendly or ethical features in beauty products varies substantially by market, with green features more prominent in selection decisions made by internetconnected consumers in emerging markets in East and South-east Asia and the Middle East. Desired Green Hair Care Features 2016 India Indonesia China Middle East Russia Turkey Colombia South Africa Thailand Mexico Brazil Poland Italy South Korea Australia France USA United Kingdom Germany Japan 0% 50% 100% Desired Green Skin Care Features 2016 Indonesia India China Middle East Turkey Russia Colombia Mexico South Africa Thailand Poland Brazil Italy South Korea Australia France USA Germany United Japan 0% 50% 100% Desired Green Cosmetics Features 2016 Indonesia India China Middle East Turkey Colombia Mexico Russia Italy Thailand Poland South Africa Australia Brazil France South Korea Germany United Kingdom USA Japan 0% 50% 100%

10 INTRODUCTION KEY INSIGHTS Targeting Premium Buyers Refining Naturals' Beauty Strategies Beauty Routines by Generations UPDATED SYSTEM OVERVIEW

11 BEAUTY ROUTINES BY GENERATIONS Changing routines at different life stages Extensive beauty routines most typical for consumers under 40 Millennials the most frequent users of all hair care products.....but Generation X is the most focused on skin care Desired hair care product features show subtle differences across generations Beauty routine evolution is both driven by and reflects industry-defining trends and changes in consumer behaviour. Technological and digital developments aid the increasing focus on personalisation in beauty. Consumer demand is moving from suitable for me towards a made for me level of customisation. This is achieved through individual product formulations, digital consultation on brands and retailers websites to find most suitable product ranges and smart devices and applications providing constant feedback on efficacy. The next generation of beauty innovations are going to be aligned better with trends of customisation to identified consumer base s characteristics and expectations with strong focus on product experience.

12 BEAUTY ROUTINES BY GENERATIONS Extensive beauty routines most typical for consumers under 40 Hair Care Routine Types by Age Group 2016 Skin Care Routine Types by Age Group 2016 Women s Make-up Routine Types by Age Group % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Extensives (4-7 HC products used weekly) Moderates (2-3 HC products used weekly) Minimalists (0-1 HC products used weekly) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Extensives (8-14 SC products used weekly) Moderates (4-7 SC products used weekly) Minimalists (0-3 SC products used weekly) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Extensives (7-16 CC products used weekly) Moderates (2-6 CC products used weekly) Minimalists (0-1 CC products used weekly)

13 INTRODUCTION KEY INSIGHTS Targeting Premium Buyers Refining Naturals' Beauty Strategies Beauty Routines by Generations UPDATED SYSTEM OVERVIEW

14 SYSTEM OVERVIEW Who we surveyed and what we asked The Panel Over 20,000 online panellists participate in the Beauty Survey annually The Questionnaire 500+ questions measure consumers attitudes and behaviour relating to: Geographic coverage 20 emerging and developed markets Sample size 1,000 respondents per market Age distribution years old* Gender distribution In % of respondents in each country were female, and 30% male Usage and Grooming Routines Professional Beauty Services Path to Purchase Brand Preferences & Perceptions Retrospective Changes in Usage * Due to limitations in internet penetration in certain emerging markets, the target age range does not extend all the way to age 69 in four markets: Indonesia, Middle East, Thailand, and Turkey.

15 SYSTEM OVERVIEW Country coverage: 20 markets surveyed UK, France, Germany, Italy, Turkey, Russia, Poland US, Mexico, Colombia, Brazil China, Japan, South Korea Middle East, South Africa India, Indonesia, Thailand, Australia Note: Middle East market pools responses from Egypt, Lebanon, Qatar (2016 only), Saudi Arabia, United Arab Emirates. A 21 st country, Nigeria, was surveyed only in 2015 and fielding was discontinued due to issues with recruiting online respondents.

16 SYSTEM OVERVIEW Category coverage: colour cosmetics, hair care and skin care Lipstick COLOUR COSMETICS Lip gloss Lip liner Tinted lip balm Nail polish or treatment Eye make-up (e.g. eye shadow, mascara, eyeliner, eye primer) Foundation Concealer Finishing facial powder Highlighter Blusher Bronzer BB cream or CC cream Primer Pore minimiser Oil blotter HAIR CARE Hair shampoo (wet) Hair shampoo (dry) 2-in-1 shampoo/conditioner Hair conditioner or treatment Hair styling products Heat protection spray Hair colour or dye In-home perm kit In-home relaxant kit Hair loss treatment SKIN CARE Acne treatments Face masks Facial cleansers Facial moisturisers Facial mists, sprays or waters Facial toners Anti-ageing products Pre-shave products Post-shave products Body moisturisers Hand care Untinted lip moisturisers (balms or creams) Sunscreen or dedicated sun protection products Self-tanning products

17 SYSTEM OVERVIEW Robust and relevant coverage 20 markets surveyed covers 80% of global beauty in retail value sales terms Skin care, hair care and colour cosmetics combined account for 55% of global beauty in retail value sales terms Companies Procter & Gamble Co Core Categories of Leading Beauty Players % of Sales by Category 2015 Colour Cosmetics Hair Care Skin Care 6% 30% 10% L Oréal Groupe 27% 29% 28% Unilever Group 1% 29% 16% Estée Lauder 41% 3% 33% Beiersdorf AG 0% 7% 51%

18 SYSTEM OVERVIEW Unique features Global comparability of millions of data points Syndicated, cost-efficient survey methodology Time series data, updated annually to allow identification and tracking of trends Analysis contextualising consumer habits and attitudes with broader industry trends Data visualisations and written analysis provide at-your-fingertips insights for system users Beauty Survey Beauty and Personal Care US$ million BB/CC Cream Retail Value Sales ,000 1,500 1,

19 SYSTEM OVERVIEW Beauty survey offers insight into the most relevant industry topics Usage frequency and grooming routines Obstacles to use Desired product features Functionality must-haves Green concerns Selection trade offs Purchase influencers Purchase outlets Brand perceptions Brand loyalty What are the most important product features for ageing consumers? What are the most powerful marketing influencers in colour cosmetics? How does channel positioning impact consumers brand perception? Whose usage is driving growth of new products, such as BB creams? What are the key hair concerns for consumers by hair type by region? Who are the most brand-loyal consumers? Who is open to trying new brands?

20 SYSTEM OVERVIEW Granular data organised by theme and topic, annually updated

SYSTEM OVERVIEW Standardised questions aid comparability Comparisons between countries, between consumer segments, between products within a

21 SYSTEM OVERVIEW Standardised questions aid comparability Comparisons between countries, between consumer segments, between products within a category, and even between categories are all straightforward, thanks to standardised questions, translated into local languages for respondents.

22 SYSTEM OVERVIEW Data easily searched and analysed in state-of-the-art dashboards Keyword search enables users to find topics of interest quickly and easily. Interactive dropdown menus facilitate exploration of survey results and discovery of new, relevant insights.

23 SYSTEM OVERVIEW Two years of data visualised through state-of-the-art dashboards Results displayed in easy-to-read dot plots for current and previous years, with ability to change to current year only or custom set of years in the Change Topic area.

24 SYSTEM OVERVIEW Strategic analysis for greater insight Global Briefings Opinion Pieces Datagraphics Videocasts/Podcasts

25 SYSTEM OVERVIEW Range of research applications USAGE AND OCCASIONS Captures product usage in context, to help companies understand the different ways that various consumers across markets make use of products in their daily lives. Frequency of use by product Changes in usage from three years ago Product usage and related care activities at home and by beauty services professionals BRAND STRENGTH AND AWARENESS Core data on consumers consideration of, and loyalty to brands in the purchase decision-making process. Trade-off preferences involving brands and purchase decision-making Extent of brand loyalty Place of purchase for main brands Perceptions of each main brand used Subjective placement of brands along the mass to premium spectrum PURCHASE DECISION MAKING Examines product purchase frequency, typical price points and time spent deliberating. Also explores the why questions related to the purchase process: Sought-after and avoided product features Key traditional and digital media and other influencers Impetus and barriers to purchase CONSUMER SEGMENTS Data that enables profiling of key consumer segments usage and purchase decision-making for each product category. Sample segments include: High-potential new users Premium buyers Value buyers Millennials Baby boomers Digital natives

26 SYSTEM OVERVIEW Contact the Beauty Survey team Irina Barbalova Global Lead Beauty and Personal Care Eileen Bevis Head of Consumer Lifestyles and Survey Priyanka Bagde Survey Analyst Ildiko Szalai Senior Analyst Beauty and Personal Care Chethana ArunKumar Survey Associate

27 SYSTEM OVERVIEW Tell the whole story with Euromonitor International data BPC Forecast Model Analytics Income and Expenditure Consulting

28 Experience more... This research from Euromonitor International is part of a global strategic intelligence system that offers a complete picture of the commercial environment. Also available from Euromonitor International: Global Briefings Timely, relevant insight published every month on the state of the market, emerging trends and pressing industry issues. Interactive Statistical Database Complete market analysis at a level of detail beyond any other source. Market sizes, market shares, distribution channels and forecasts. Strategy Briefings Executive debate on the global trends changing the consumer markets of the future. Global Company Profiles The competitive positioning and strategic direction of leading companies including uniquely sector-specific sales and share data. Country Market Insight Reports The key drivers influencing the industry in each country; comprehensive coverage of supply-side and demand trends and how they shape future outlook. Learn More To find out more about Euromonitor International's complete range of business intelligence on industries, countries and consumers please visit or contact your local Euromonitor International office: Bangalore +91 (80) Cape Town Chicago +1 (312) Dubai London +44 (0) Santiago São Paulo Shanghai Singapore Sydney Tokyo Vilnius

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