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Fierce Competition in Mass Beauty in 2012 Shows Where Brands Shine, Lack

Posted: March 20, 2013

Outlining how the U.S. beauty industry fared in 2012 in a blog post, Kline & Company’s industry manage for consumer products, Nancy Mill, writes that new beauty market data from Kline “illustrates that although the market grew by 3.4% in 2012, there were varying levels of success where some of the key players fared better than others.”

The blog post, titled “Fierce Competition in Mass Beauty Hits an All-Time High in 2012; P&G’s Category Leading Brands Hardest Hit,” takes a specific look at P&G’s beauty brand and products. Mills writes, “Procter & Gamble (P&G) remains the clear leader in the U.S. personal care market... Via both acquisition and organic growth, this leadership has solidified over the last decade. However, 2012 has proven to be one of the most challenging years to date, as P&G’s category leading brands have lost footing in several categories including shampoos, toothpastes and color cosmetics.”

Mills goes on, writing an analysis of the Olay skin care brand’s recent performance. “Looking at specific categories such as facial treatments, P&G’s Olay remains the largest mass brand, accounting for just over one-quarter of mass facial treatment sales. However, in 2012 Olay brand sales declined for the second year in a row,” she notes. “A number of factors have contributed to Olay’s softness, including increased competition at multiple price points, extensive marketing campaigns from competing brands, consumers trading up to luxury products, mass private label that mimics many of the Olay product lines, and a change in retailer planograms. The brand has lost out to competitors such as L’Oréal and Estée Lauder. While most of the prestige brands such as Clinique and Estée Lauder launched BB creams, and then mass brands such as Garnier, Maybelline and L’Oreal Paris followed, Olay did not take advantage of this major trend of hybrid makeup/skin care creams until very late in 2012 when it released a CC (color correction) cream. Clinique started the dark-spot removing trend already in 2011, which was then successfully picked up by Garnier in 2012, followed by L’Oreal’s Youth Code. Clinique advertised the lightening of dark spots with the striking visual of spotted eggs, and similarly Garnier showed spots on Dalmatians. While Olay has recently taken several innovative steps, these efforts did not have great impact on its 2012 sales. For example, in late 2012 it introduced some reformulated Regenerist products that show more visible results in a shorter period of time, as a way to thwart increased competition.”

Turning the attention to more commodity-like beauty products, Mills writes, “In toothpastes and shampoos, P&G’s Crest and Pantene Pro-V were likewise challenged. In toothpastes Crest retained its No. 1 ranking, but Colgate eroded its share—aided by the success of Colgate 360° Optic White, and Colgate 360° Sensitive Pro-Relief. In shampoos, P&G’s own Head & Shoulders surpassed Pantene to land the leading spot, and P&G also faced intense competition from Unilever and L’Oréal. Kline notes that P&G’s traceable media expenditures (TME) [with data from Kantar Media] declined by more than 12% for oral care and 10% in hair care in 2012, whereas its competitors increased their TME support. P&G’s lack of new products further contributed to share losses in these product classes.”

P&G’s color cosmetics brand also slipped, and Mills writes, “For similar reasons, P&G’s makeup brand Cover Girl took a hit in color cosmetics. In face makeup, Cover Girl suffered territory encroachment from competitive new launches including L’Oréal True Match Super-Blendable Makeup, Revlon Photoready Airbrush mousse makeup, and Maybelline Dream Nude Airfoam makeup. Despite having an impressive cast of megastar spokes models including Taylor Swift and Pink, Cover Girl simply did not have comparable new product launches to promote in 2012. However, the company appears to be rectifying the situation with new products already released in early 2013.”

In moving ahead for P&G, Mills writes, “Looking at the bigger picture, there are a number of factors causing P&G to lose ground to its major competitors in the U.S. The main reason appears to be the company’s $10 billion cost saving plan—announced in February 2012—which has left some of its brands lacking necessary marketing support, particularly in light of its competitors increasing their own promotional activities. Furthermore, P&G’s cost cutting from R&D may have put a damper on its rate of new product introductions and ability to keep up with the rapidly changing marketplace. P&G’s current plight dramatically exemplifies how critical both innovation and proper marketing support are to be successful in the beauty industry.”

For further insights into P&G’s performance and that of the other market leaders, please refer to Kline’s Cosmetics & Toiletries USA report.