GlobalData says these are:
1. Premium brands
2. A strong digital platform
3. Millennial appeal
Premium beauty and cosmetics brands are growing market share and sales revenues as they increase their appeal with millennial consumers though innovation and a stronger digital platform, the firm says.
Estée Lauder and L’Oréal: case studies
It says Estée Lauder and L’Oréal are the two key examples of these trends and behaviours.
“Estée Lauder’s recently announced fourth quarter results showed continued strong sales growth with a positive net sales increase of 14% driven by new product launches and the company’s increasing appeal amongst younger consumers through beauty brand acquisitions,” says the market research firm.
“Competitor L’Oreal also announced the strong performance of its luxury brands like Lancôme and Giorgio Armani, with revenue growth of 13% in Q2 and 13.5% for H1,” it continues.
“However its consumer products division registered a modest 2.3% global growth in Q2.”
Targeted acquisitions that complement Estée Lauder’s and L’Oreal’s brand values, while adding novelty, will be crucial for the Western Europe and North America markets, the firm predicts.
Both companies’ sales have been performing particularly well in China. Growth in Asia has been aided by online retail, with L’Oreal’s e-commerce registering a 36.4% growth over H1 2018.
“The Chinese market’s aspirational consumer base will be a key focus for prestige beauty products, with companies targeting millennials through strong product engagement and an increased digital presence,” says GlobalData.
Analyst insight: Aleksandrina Yotova, Consumer Analyst at GlobalData
Aleksandrina Yotova, Consumer Analyst at GlobalData, explains that the data shows the consumer demands are shifting, and premium or prestige solutions are now becoming a more mainstream demand.
‘‘This highlights consumers’ change in attitude towards beauty products in general, rightly anticipated by Estée Lauder, which has shifted focus exclusively towards premium brands,” she says.
“Travel retail has helped fuel growth at the company in 2017, as well as the successful use of video-bloggers and marketing to make-up loving millennials.’’
Yotova continues: ‘‘US-based brand NYX Professional Makeup, acquired in 2014 by L’Oreal, has performed particularly well and by acquiring niche make-up brand players like Too Faced and BECCA, Estée Lauder has challenged previous perceptions of a company known for targeting an older audience and helped it to diversify the portfolio and its consumer reach."