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Tuning Strategy to an Evolving Landscape

By: Rob Walker, Euromonitor International
Posted: August 26, 2014, from the September 2014 issue of GCI Magazine.
  • In 2013, global sales increased 5% at fixed U.S. dollar prices, down from 6% in 2012.
  • Multitasking brands remain at the forefront of product innovation.
  • Brand owners are expanding their portfolios with age-specific products, and the upper end of the age pyramid is presenting some of the most attractive opportunities for product development.
  • The deodorant sprays category was the standout performer in 2013, largely driven by younger male consumers in emerging markets.
  • Skin care put up its weakest performance in four years, with growth slipping below 5% in 2013.

The year 2013 will go down as a disappointing one for the beauty industry. Nothing dreadful happened, but global brands largely failed to capitalize on resurgent economic confidence in developed markets while formerly booming emerging markets became less dependable as growth engines. The end result saw global sales increase 5% at fixed U.S. dollar prices, down from 6% in 2012.

Demand for products with multi-tasking solutions spread right across the industry, triggering fiercer cross-category competition as brands battled to recruit new consumers and hang on to existing ones. The innovation stakes in terms of product development, marketing and distribution ratcheted up, reflecting a consumer base that has become brand savvy and hungry for novelty yet increasingly price sensitive.

All-singing, All-dancing Beauty

Multitasking brands remain at the forefront of product innovation. This is squeezing growth in the overall value of the market because consumers now expect a single product to serve multiple functions, whereas in the past they might have bought two or three products to do the same things. In developed markets, it is telling that the total value of beauty and personal care climbed only 1% in 2013, compared with 2% in the two preceding years.

BB/CC creams kicked off the multi-tasking trend, but it has cross-fertilized across almost all industry categories, especially in Western Europe and North America. Anti-aging and moisturizing are the must-have functions, visible in categories as wide ranging as foundations, nail polish, hair care and lipstick. This has raised the bar for industry innovators.