This Year’s Top 20: |
|
| Company: | Beauty Sales (USD billions): |
| 1. L’Oréal | 17.7 |
| 2. Procter & Gamble | 17.1 |
| 3. Unilever | 13.2 |
| 4. Estée Lauder | 5.8 |
| 5. Shiseido | 5.4 |
| 6. Avon | 5.2 |
| 7. Beiersdorf | 4.6 |
| 8. Johnson & Johnson | 3.5 |
| 9. Alberto-Culver | 3.1 |
| 10. Henkel |
3.0 |
| 11. Kao | 3.0 |
| 12. Limited |
2.7 |
| 13. LVMH |
2.7 |
| 14. Colgate-Palmolive |
2.4 |
| 15. Kanebo |
2.2 |
| 16. Coty |
2.0 |
| 17. Yves Rocher |
1.8 |
| 18. Mary Kay |
1.8 |
| 19. Kosé |
1.6 |
| 20. Alticor |
1.45 |
Companies in this list were ranked according to fiscal 2004 results, unless otherwise noted. Beauty sales included cosmetics, fragrance, and personal care items. Oral care sales, when possible, were not included. Estimates were noted within the individual company profiles.
Several companies stand out from the rest this year. Procter & Gamble had a stellar 2004, with its Beauty Care business unit sales soaring 40 percent. Germany-based Henkel also made news for its acquisition of The Dial Corporation in March 2004, which ultimately led to a 76.5 percent increase in U.S. sales numbers.
Also on the acquisition trail, Coty Inc. purchased the global prestige fragrance unit from Unilever for $800 million, making it the world’s largest fragrance company. Meanwhile, Kanebo Cosmetics International was formed in May 2004, breaking away from struggling Kanebo as its own company.
The year’s Top 20 represents approximately $100 billion in beauty sales. This article provides a wealth of information — and ideas — from the leading companies in the industry.
L’Oréal
Clincy, France
33-1-47-56-70-00
www.loreal.com
Beauty Sales: $17.69 billion
Corporate Sales: $18.07 billion
 L’Oréal’s new Chinese research facility |
Success Despite Challenging Environment
The 2004 annual report cited a “successful year in a difficult environment.” Corporate sales rose 3.6 percent to $18.07 billion. Cosmetics, which account for nearly 98 percent of L’Oréal’s business, grew 3.8 percent to $17.69 billion. Net income improved a scant 0.1 percent.
Company performance varied greatly depending on geographic region. L’Oréal’s biggest market, Western Europe, posted a mere 1.3 percent growth. North American sales were also a disappointment, finishing out at -0.3 percent. The emerging markets, however, experienced significant growth. Eastern Europe jumped a whopping 27.3 percent. Asia also saw double digit growth of 19.3 percent.
Not surprisingly, L’Oréal has committed to investing in its emerging markets. As part of a long-term global strategy to reach out to the important Chinese market, L’Oréal announced the opening of a new research facility in China in September 2005. The Pudong L’Oréal Research Centre will conduct and support basic science research to improve the present understanding of Chinese hair and skin.
“The opening of this Research Centre represents an important turning point for our company and for Asian consumers around the world. The knowledge and insights that we gain through research conducted at the Pudong Research Center will ultimately allow us to develop innovative new products that better service the beauty care needs of the global Asian market,” said Lindsay Owen-Jones, chief executive of L’Oréal.
Skin is In
By operational division, the most significant growth for the company occurred within the Active Cosmetics segment, which jumped 13.8 percent. Accounting for 6 percent of the company’s overall sales, this division markets skin care products that are sold to pharmacies and specialist drugstores.
Helping to propel this category was the Vichy brand, which saw particularly high growth in Eastern Europe, Asia and Latin America. The brand also enjoyed a number of successful product launches in 2004 — Flexilift Teint, Liposyne and Novadiol Anti-Age Spot. The La Roche-Posay skin care brand also experienced double-digit growth within this category.
L’Oréal has further invested in this market with its recent acquisition of SkinCeuticals. The professional skin care company, with sales of $35 million in 2004, is expected to strengthen L’Oréal’s position in professional skin care. The transaction was announced in May and will become final upon customary closing conditions.
Aside from its Active Cosmetics segment, the other divisions also posted growing sales figures, albeit not as significant. Consumer Products, L’Oréal’s largest division, rose 3.3 percent. Professional Products jumped 5.2 percent, and Luxury Products expanded by 2.3 percent.
News for 2005
L’Oréal announced its latest financial results for 2005. Western Europe sales rallied in the second quarter, but finished at -1.1 percent like-for-like for the first half of the year.
Consumer Products sales in the second quarter improved in Western Europe, reflecting the launch of new higher value-added products, particularly in the skin care and make-up segments. The sales of the Luxury Products Division and Professional Products also picked up. Active Cosmetics sales continued upward.
While sluggish spending in Western Europe was a problem for L’Oréal, the company has again enjoyed rapid expansion in the emerging markets of Eastern Europe (26.1 percent like-for-like), Latin America (8.3 percent) and Asia (9 percent).
North American sales increased 7.2 percent like-for-like. The company said growth was particularly strong in the Consumer Products division, which was aided by the continued success of Fructis from Garnier, the Men Expert range from L’Oréal Paris, and successful launches for Maybelline foundations and mascaras.
In other news, L’Oréal announced a top management change earlier this year. Laurent Attal took over from Jean-Paul Agon as president and chief executive of L’Oréal USA in July.
“Enthusiastic, energetic and a great communicator, Laurent Attal is a formidable manager and a great team leader,” said Lindsay Owen-Jones, chairman and chief executive. “I have no doubt that he will use these exceptional talents to take L’Oréal USA to new heights in the years to come.”
 P&G’s Olay brand saw sales growth of 26 percent. |
Cincinnati, OH
(513) 983-1100
www.pg.com
Beauty Sales: $17.1 billion, includes hair care, skin care, cosmetics, fragrances, deodorants, feminine protection
Net Sales: $51.4 billion
Key Personnel: A.G. Lafley, chairman, president and chief executive officer; Bruce L. Byrnes, vice chairman, global household care; R. Kerry Clark, vice chairman, global health, baby and family care; Susan E. Arnold, vice chairman, global beauty care; Robert A. McDonald, vice chairman, global operations; Werner Geissler, group president, central and eastern Europe, Middle East and Africa; Heiner Gürtler, group president, global prestige and professional care; Dimitri Panayotopoulos, group president, global fabric care; Paul Polman, group president, western Europe; Robert A. Steele, group president, North America; Charles V. Bergh, president on special assignment; Ravi Chaturvedi, president, northeast Asia; Paolo de Cesare, president, global skin care, global personal cleansing and deodorants; Christopher de Lapuente, president, global hair care; Carsten Fischer, president, professional care; Deborah A. Henretta, president, ASEAN, Australasia and India; Michael E. Kehoe, president, global oral care.
Growth
Fiscal 2004 was a year of growth for P&G. Corporate sales rose 19 percent and net sales grew 25 percent. It was an even better year for its Beauty Care unit. The Beauty Care business unit reported excellent results in 2004, with sales soaring 40 percent. According to the annual report, unit volume increased 37 percent and net earnings climbed 22 percent.
Several P&G brands flexed their muscles in 2004. Fueled by new products such as Regenerist and continued success with Total Effects and Daily Facial lines, the Olay brand boasted global sales growth of 26 percent.
It was not the only winner in P&G’s portfolio. This year, Head & Shoulders received the designation of becoming P&G’s fifth billion-dollar brand, producing 18 percent global volume growth. Head & Shoulders joins the ranks of Pantene, Always, Olay and Wella. Meanwhile, Pantene achieved another milestone, surpassing the $2 billion sales mark in fiscal 2004.
Lacoste, P&G’s pride and joy in the men’s fine fragrance category, has also turned heads. Annual volume is up nearly 400 percent in just two years.
Beauty Care numbers were also bolstered by a recent acquisition. In September 2003, Wella joined P&G Beauty Care. Wella, with strong presence in the hair care segment, has proven to be an asset for P&G. The venture was responsible for adding approximately $3.3 billion to Beauty Care sales in fiscal 2004.
The Road Ahead
P&G continued to plow forward in 2005, announcing in January its intent to acquire The Gillette Company. The $57 billion proposal was overwhelmingly adopted by shareholders in July, with 96.5 percent of votes cast in favor of the deal.
And while P&G may be second on our global beauty list, the acquisition, which is expected to close by the end of 2005 pending regulatory clearance, will likely create the world’s largest consumer products company.
2005 has started off strong. In addition to the proposed acquisition, P&G has been enjoying healthy sales. In January-March 2005, the company posted sales increases of 10 percent to $14.29 billion. According to P&G, “Broad-based growth across the company’s portfolio of leading brands drove these strong results, despite a difficult cost and competitive environment affecting several categories.”
Beauty care saw another quarter of double-digit earnings growth. Skin care and fine fragrances both grew volume double-digits behind the Olay and Hugo Boss brands, respectively. Hair care volume increased mid-single digits on the continued strength of the Pantene, Head & Shoulders, Rejoice and Aussie brands.
While net earnings increased 23 percent, P&G reports that the earnings were reduced by continued marketing investments to support the launch of Olay Quench, the expansion of Olay in Europe and Asia, Herbal Essences in Japan, Rejoice in Greater China, and Pantene Pro-Health.
Unilever
Blackfriars, London
44-20-7822-5252
www.unilever.com
Beauty sales: $13.2 billion
Net sales: $50.2 billion
Key Personnel: Patrick Cescau, group chief executive; Rudy Markham, chief financial officer; Kees van der Graaf, president, Europe; Ralph Kugler president, home and personal care; Vindi Banga, president, food; John Rice, president, Americas; Harish Manwani, president, Asia/Africa
Challenging Year
In its annual report, Unilever conceded that 2004 was a disappointing year. Underlying sales grew by 0.4 percent, with leading brands scoring only slightly better.
Personal care sales growth was up 2.1 percent. Personal care market share improved in Europe, Africa, the Middle East and Turkey. In other regions, the annual report noted, market share had begun to recover after previous declines.
Notable Brands
The deodorant market is particularly strong for Unilever. In 2004, deodorant sales jumped by double digits.
After only two years in the North American marketplace, Unilever’s brand Axe has gained close to 13 percent market share. Other growth was attributed to increased usage of the personal care product globally, aggressive advertising, and success of other brands. Despite Axe’s growth, Rexona continues on as the world’s largest deodorant brand.
Dove, Unilever’s largest personal care brand, also continued to have success. The Real Beauty advertising campaign, which focused on its firming range of products, enjoyed a large volume of attention for its use of “real women with real curves.”
The core of Unilever’s global personal care business is formed from six brands — Axe, Dove, Lux, Pond’s, Rexona and Sunsilk.
Simplicity is Best
After 75 years, Unilever has abandoned the joint chairman/chief executive structure for a single chairman responsible for the Boards and a single chief executive responsible for the business. Antony Burgmans became the non-executive chairman in May. Patrick Cescau is now serving as the group chief executive, assuming full operational responsibility for the business. The company also announced further structure changes in order to streamline the business.
In keeping with its strategy to focus on core categories, Unilever has shed its prestige fragrance business. In July of 2005, Unilever completed the sale of its prestige fragrance business to Coty. The company received $800 million, with the opportunity for further deferred payments contingent upon future sales.
Second Half 2005
Unilever posted encouraging half-year results. In 2005, the company announced it had halted the decline in overall market share. Underlying sales grew 3.3 percent, entirely from volume. Personal care sales improved in Q1 and was sustained in Q2.
 Upscale cosmetics from the Estée Lauder brand. |
New York, NY
(212) 572-4200
www.elcompanies.com
Beauty Sales: $5.8 billion
Corporate Sales: $5.8 billion
Key Personnel: Leonard A. Lauder, chairman; Ronald S. Lauder, chairman, Clinique Laboratories; William P. Lauder, president and chief executive officer; Dan Brestle, chief operating officer; Fred Langhammer, chairman, global affairs; Malcolm Bond, executive vice president, global operations; John Demsey, global brand president; Patrick Bousquet-Chavanne, group president; Philip Shearer, group president; Cedric Prouvé, group president, international; Richard W. Kunes, senior vice president, chief financial officer; Andrew J. Cavanaugh, senior vice president, global human resources; Evelyn H. Lauder, senior corporate vice president; Harvey Gedeon, executive vice president, research and development; Andrea Robinson, chief marketing officer.
Things are Looking Up
Estée Lauder remains a market leader in the upscale beauty industry. Five of its brands – Estée Lauder, Clinique, Aramis, Donna Karan fragrances and Tommy Hilfiger fragrances – are sold in over 120 countries and territories. Bolstered by outstanding growth globally and across all product categories, the company posted a large sales increase of 14 percent in fiscal 2004.
According to Chairman Leonard Lauder, in 2004 the company’s international sales neared 50 percent of total company sales. Notably, Europe, the Middle East and Africa saw annual net sales increase 24 percent to $1.87 billion. Asia/Pacific also clocked impressive growth of 17 percent to $771.4 million. And the Americas posted healthy gains of 7 percent to $3.15 billion.
Estée Lauder’s skin care and make up categories exceeded $2 billion in sales for the first time in company history. Fragrances were up to $1.22 billion, aided by several new product launches — Estée Lauder Beyond Paradise, Aramis Life and Clinique Simply, as well as a resurgence of the travel retail channel. Hair care also gave a strong performance in fiscal 2004, growing to $249.4 million. This was attributed to exceptional growth from two prestige salon brands – Aveda and Bumble & bumble.
Important Alliances
ELC recently secured some important alliances, one being with fashion guru Tom Ford. Ford will create a line slated to roll out this holiday season, and a broader product line to be launched in Spring 2006.
The company also signed a licensing agreement with Missoni, the Milan-based fashion house. The company will create and market fragrances and related products through its Aramis and Designer Fragrances Division.
“Our relationship with Missoni represents important advances for several of our key business objectives, including the ongoing development of our European fragrance strategy and the expansion of our partnerships with leading fashion designers,” said Patrick Bousquet-Chavanne, group president.
ELC also made a play in the growing skin care segment this year, announcing its intention to create the Clinique Skin Wellness Center. The center, expected to open in the fall of 2006, is a partnership with Weill Cornell Medical College.
Business is Good. And Getting Better.
For the first nine months of fiscal 2005, net sales rose 9 percent to $4.8 billion, putting Estée Lauder in a position to have another great year.
 This fall, Zirh International, a subsidiary of Shiseido International, introduced CORDUROY, a new men’s fragrance. |
Tokyo, Japan
81-3-3572-5111
www.shiseido.co.jp
Beauty Sales: $5.38 billion
Corporate Sales: $6.09 billion
Key Personnel: Morio Ikeda, chairman; Shinzo Maeda, president and chief executive officer; Seiji Nishimori, vice president, domestic group sales; Toshimitsu Kobayashi, corporate executive officer, chief officer of cosmetics business division, president and chief executive officer, Shiseido Sales Co. Ltd.; Kimie Iwata, corporate officer, director, responsible for H&BC business and non-Shiseido brand business; Masaaki Komatsu, corporate officer, director, chief officer of international business division.
China Proves Lucrative
Japanese company Shiseido has made an aggressive bid for Chinese consumers, which contributed to the 2.5 overall increase in fiscal 2005 (ended March 31) to $6.09 billion. Among its Chinese initiatives, the company opened its voluntary chain stores ahead of schedule, with 300 participating stores as of March 31, 2005. It also reorganized its Chinese operations in 2004, appointing a senior officer there. In addition to these measures, Shiseido worked to promote its exclusive Chinese brand AUPRES in department stores. All of these led to Chinese sales growth of 33 percent in local terms, well above company projections.
Sales in Other Segments
International sales are a small piece of Shiseido’s business, however. Japan consumers still account for the lion’s share of its sales. Domestically, Shiseido ramped up its advertising campaigns and its beauty consultant and sales representative force was expanded. Shiseido also launched Sinoadore and skin care line &Face to the Japanese market. These moves contributed to growth in its department store business, but demand remained lukewarm in self-service channels.
Japan claimed nearly three-fourths of its sales, with Europe (12.5 percent), Asia/Oceania (7.8 percent) and the Americas (6.7 percent) trailing behind. By industry segment, cosmetics accounted for 78.9 percent of sales, followed by toiletries (9.5 percent), and other (11.6 percent).
Three Year Plan Unveiled
Shiseido unveiled its Three Year Plan to be completed in March 2008. The plan aims to promote new brand strategy, concentrating spending on 35 brands. It will also accelerate expansion into growth markets, like China, and make several other reforms aimed at maximizing growth and improving profitability.
Shiseido said it hopes to achieve nearly $7 billion in group sales by the end of the Three Year Plan.
First quarter sales numbers, for the quarter ended June 30, 2005, were hopeful. Net sales increased 9.3 percent compared with the corresponding previous period. The company stated that the Japanese economy has begun to revitalize and there have been positive indications of growing consumer spending. Chinese sales, according to the company, continued to “expand greatly.”
 Avon’s My Lip Miracle |
New York, NY
(212) 282-5000
www.avoncompany.com
Beauty Sales: $5.2 billion
Corporate Sales: $7.7 billion
Key Personnel: Andrea Jung, chairman and chief executive officer; Susan Kropf, president and chief operating officer; Lucien Alziari, senior vice president, human resources; Gina Boswell, senior vice president and chief operating officer, North America; Pauline J. Brown, senior vice president, global business development; Robert J. Corti, executive vice president and chief financial officer; Brian C. Connolly, executive vice president and president, Avon North America; Harriet Edelman, senior vice president, business transformation and chief information officer; Bennett Gallina, senior vice president and president, Avon Asia-Pacific; Nancy Glaser, senior vice president, communications; Dennis Ling, senior vice president, global finance and treasurer; Amilcar Melendez, senior vice president and president, Avon Latin America; John Owen, senior vice president and president, Europe, Middle East and Africa; Robert Toth, executive vice president and president, Avon International.
Chief Marketing Officers: William F. Susetka, senior vice president and president global marketing; Elizabeth Smith, executive vice president and brand president, global marketing.
A 13 Percent Jump
Driven by an increase in the number of units and the number of sales representatives, sales grew 13 percent in 2004, reaching a record $7.7 billion. Avon’s beauty sales climbed 17 percent to 5.2 billion in 2004, powered by successes such as the first introduction of the Today Tomorrow Always trilogy and a partnership with celebrity actress Salma Hayek.
Although Avon reported soft United States sales, the international regions of Europe, Asia Pacific and Latin America saw huge growth. Fueled by 70 percent sales growth in Russia, Central and Eastern Europe breached the $1 billion mark a year ahead of schedule. In Asia, China proved to be an asset, growing 42 percent in local currencies.
According to a statement in its annual report, “China remains Avon’s number one future growth opportunity, and we see $1 billion in sales potential for this single market alone.” Across the pond, the Latin American market also had a strong year as the company focused on developing a new market cluster that tapped into existing Avon markets, such as Venezuela, Colombia, Peru and Equador.
The company aims to achieve an annual revenue growth of 10 percent or more in local currencies from 2005 through 2007, bringing sales figures to $10 billion by the end of 2007. After a disappointing second quarter in 2005, these goals may prove harder to reach.
Avon said sales fell short of expectations in Q2 due to an unexpected decline in China, and less growth in Central and Eastern Europe than was initially expected. However, hefty tax benefits enabled Avon to post second quarter earning growth of 41 percent year-over-year. Avon said more tax settlements are possible over the coming year which could result in further financial benefits.
 Twelve European countries voted Beiersdorf’s Nivea as a most trusted brand. |
Hamburg, Germany
Phone: 49-40-4909-0
www.beiersdorf.com
Beauty Sales: $4 billion (estimated)
Corporate Sales: $5.65 billion
Key Personnel: Thomas-Bernd Quaas, chairman, executive board, corporate development/corporate communications; Pieter Nota, executive board member, marketing, research and development, sales; Markus Pinger, executive board member, purchasing, production, logistics; Rolf-Dieter Schwalb, executive board member, finance, controlling, IT; Peter Kleinschmidt, executive board member, human resources, administration, environmental protection.
Mixed Results According to Region
Beiersdorf managed to record higher sales despite the challenging economic environment. Worldwide sales rose 2.5 percent, or 4.5 percent after adjustment for currency translation effects and a small sale of its USA tesa business. Group profit after tax was $376 million, totaling a return of 6.6 percent.
Sales results were mixed, according to region. Thanks to a successful relaunch of Nivea Visage in the United States and Canada, as well as positive advances in Latin America, American sales were up 10.4 percent (adjusted). Highly satisfactory growth was also noted in Africa, Asia and Australia, where sales were up 15.4 percent (adjusted). A stagnant economy in Europe, however, produced sales increases of just 1.8 percent (adjusted).
Consumer Segment Edges Upward
The consumer business segment, which develops and markets cosmetic and personal care products, as well as products for wound and health care, edged up 4.3 percent (adjusted) to $4.78 billion.
Within the consumer segment, Europe sales grew 1.8 percent, the Americas experienced a jump of 9.9 percent, and Africa/Asia/Australia clocked double-digit growth of 14.6 percent (all numbers adjusted). Europe accounts for 74.3 percent of Beiersdorf consumer sales.
A few brands stood out for their successful year. Twelve European countries voted Nivea as one of Reader’s Digest Most Trusted Brands in 2004. That perception translated into higher sales, even in the challenging European marketplace. In addition to European growth, the Nivea brand saw sales increase globally. Eurecin also grew, jumping 7 percent (adjusted). And la prairie recorded an increase of 12.2 percent.
2005 Steady
Beiersdorf declared a successful first half of 2005, with adjusted growth of 3 percent. Sales for the consumer segment edged up 3.3 percent compared with the year prior.
 Johnson & Johnson’s Neutrogena brand was launched in China. |
New Brunswick, NJ
Phone: (732) 524-0400
www.jnj.com
Beauty Sales: $3.5 billion
Corporate Sales: $47.3 billion
Key Personnel: William C. Weldon, chairman and chief executive officer; Robert J. Darretta, vice chairman; Colleen A. Goggins, worldwide chairman, consumer and personal care group.
Record Sales
The company announced record results in sales, earnings and cash flow in 2004, reaching $47.3 billion. Johnson & Johnson’s beauty sales reached $3.5 billion, a strong number for this broad based company.
Skin care sales jumped 19.1 percent to $2.1 billion, with brands RoC, Aveeno, Clean & Clear, and Neutrogena leading the way. The baby and kids care segment rose 10.5 percent to $1.4 billion. The success of Johnson’s Softwash and Softlotion product lines and the Balmex brand products was partially responsible for the double-digit growth.
Among other highlights in 2004, the Neutrogena brand was launched in China. Skin care product company Biapharm SAS, best known for its brand Biafine, was acquired by Johnson & Johnson Consumer France S.A.S. in October. And ABMI’s skin care brand, tailored to women of color, was purchased by Johnson & Johnson Consumer Products Company.
In the second quarter of 2005, Johnson & Johnson announced sales of $12.8 billion, representing an 11.1 percent increase over the same time period last year. Worldwide consumer sales reached $2.3 billion for the second quarter, increasing 13.9 percent from the prior year. According to the company statement, strong growth was again achieved by brands Neutrogena, RoC, Aveeno and Clean & Clear.
 St. Ives is one of Alberto-Culver’s three largest brands. |
Melrose Park, IL
Phone: 708-450-3000
www.alberto.com
Beauty Sales: $3.1 billion (estimate)
Corporate Sales: $3.26 billion
Key Personnel: Carol L. Bernick, chairman; Howard B. Bernick, president and chief executive officer; William J. Cernugel, senior vice president and chief financial officer; V. James Marino, president, Alberto-Culvert Consumer Products Worldwide; Michael H. Renzulli, chairman, Sally Beauty Company; Gary Winterhalter, president, Sally Beauty Company; John R. Berschied Jr., group vice president, global research and development.
 TRESemmé is one of the three largest brands in Alberto-Culver’s portfolio. |
After thirteen consecutive years of growth, Alberto-Culvert topped $3 billion in corporate sales for the first time. 2004 sales jumped 12.7 percent to $3.26 billion. Net earnings increased to $195.4 million.
The company has invested heavily in its advertising and marketing campaigns. In 2004, the company increased spending by 20 percent, investing $254 million.
The strategy is working well. Its three largest brands — Alberto VO5, St. Ives, and TRESemmé — are mature and well-established. In spite of this, each had major successes in 2005 and greatly attributed to the growth in sales.
According to the company, Alberto VO5 and TRESemmé were two of four established brands to grow within the United States’ competitive hair care segment. And St. Ives continued to expand its presence since its acquisition in 1996.
Sales for Global Consumer Products increased 8 percent. Sally Beauty Company, the professional beauty care product branch, expanded double digits in 2004.
Third Quarter 2005 Results Are In
Sales for the first nine months grew 9.3 percent to $2.63 billion. Third quarter sales increased 9.2 percent to $898.9 million.
“These branded product businesses continued their impressive sales growth trend, led by TRESemmé in both the U.K. and North America and the ongoing success of earlier launches of new Alberto VO5 and St. Ives offerings at home and abroad. Strong double-digit revenue growth of our consumer products brands in the third quarter and nine-month periods outpaced overall increases in the hair care and skin care categories worldwide,” said Howard Bernick, president and chief executive officer. “We also completed the acquisition of Nexxus Products Company during the third quarter and look forward to it making a meaningful contribution to our consumer products business in 2006 and future years.”
 Henkel’s purchase of The Dial Corporation in March 2004 resulted in a huge sales increase in the United States. |
Dusseldorf, Germany
49 (0)211 797-0
Beauty Sales: $3.07 billion
Corporate Sales: $13.1 billion
Key Personnel: Prof. Dr. Ulrich Lehner, president and chief executive officer; Dr. Klaus Morwind; Hans Van Bylen, executive vice president, cosmetics and toiletries; Dr. Friedrich Stara, executive vice president, laundry and home care.
Dial Acquisition Impacts Sales
Henkel’s acquisition of The Dial Corporation in March 2004 led to further globalization of its consumer goods businesses and impressive growth numbers for the fiscal year. Henkel’s overall sales increased 12.3 percent to 10,592€. The United States sales numbers, thanks to the purchase of Dial, leaped a whopping 76.5 percent to 2 billion euros. This victory in the United States made up for the less-than-stellar year in Germany, where the company reported sales were down due to the “persistent lack of consumer demand.”
The region of Europe/Africa/Middle East exhibited slight growth of 2.1 percent. The emerging markets saw massive expansion, with Latin America growing 27.5 percent and Asia-Pacific up 10.9 percent. Growth in Latin America was attributed to both organic growth and acquisitions; Asia-Pacific growth was caused by the economic growth in the region.
By consumer segment, the Cosmetics/Toiletry division achieved the greatest growth rate, rising 18.7 percent. This was again attributed mainly to the purchase of Dial. The Dial line includes bar soaps, liquid soaps and shower gels. Operating profit at Cosmetics/Toiletries including Dial jumped 16.2 percent.
The Cosmetics/Toiletries division was also aided by the purchase of Advanced Research Laboratories, giving Henkel muscle in the North American styling business. Henkel also acquired Indola, strengthening its grip on Europe’s hair salon business.
Henkel posted excellent second quarter 2005 earnings. Sales crept up to double-digit growth. Operating profit was 14 percent higher than the same time the previous year. “The positive development of the first quarter has continued in the second quarter. We have markedly increased organic growth thanks to a number of successful product innovations,” said Ulrich Lehner, chairman of the management board. “Aside from the good developments ongoing in our growth regions, the positive trend in Europe – including Germany – has also continued. Both this and our strengthened market positions make me confident that we will meet our targets for 2005.”
 Kao’s Bioré had a strong year. |
Tokyo, Japan
(81) 3 3660 7111
www.kao.com
Beauty Sales: $3.0 billion (est)
Corporate Sales: $8.7 billion
Key Personnel: Takuya Goto, chairman; Motoki Ozaki, president and chief executive officer; Toshio Hoshino, senior executive vice president, corporate functions; Takahiko Kagawa, executive vice president, global consumer products; Akio Tsuruoka, executive vice president, global procurement; Nobuatsu Higushi, executive vice president, Greater China; Naotake Takaishi, executive vice president, global R&D.
Downturn in China
Corporate sales edged up 3.8 percent to $8.7 billion for the year ended March 2005. Beauty sales checked in at an estimated $3.0 billion.
Overall, net sales of consumer products increased 2.9 percent. Kao reported profitable gain in the mature markets of North America, Europe and Japan, while net sales of the consumer products segment in Asia decreased 10.8 percent year-on-year to $498.3 million. Kao stated that restructuring of China into a smaller sales territory was the cause of the decrease.
The consumer products sales in Japan were pumped up 4.4 percent due to further strengthening of the Asience hair care lines. John Frieda and Color Glow hair care brands, as well as Bioré contributed to 4.6 percent net sales growth in North America and Europe.
The prestige cosmetics segment was relatively flat, growing a slim 0.8 percent. In an effort to improve upon its sales, the company announced it will work to achieve growth of the est and Alblanc lines, and expand its sales bases of its prestige cosmetics business in Hong Kong, Taiwan and Shanghai.
Fiscal 2005
The company released fiscal 2005 first quarter results for the period between April 1, 2005 and June 30, 2005. Kao reported net sales were up 3.0 percent compared with the first quarter of last fiscal year. The domestic market was reportedly weak, but was carried by stronger sales in the United States and China.
In personal care, the company stated that growing sales for the Asience hair care brand and its Bioré U hand soap achieved double-digit growth.
Limited Brands
Columbus, OH
Phone: (614) 415-7000
www.limited.com
Beauty Sales: $2.7 billion (est)
Corporate Sales: $9.4 billion
Key Personnel: Leslie H. Wexner, chairman and chief executive officer; Leonard A. Schlesinger, vice chairman and chief operating officer; Jill Granoff, president, Victoria’s Secret Beauty.
Beauty Category a Winner
What was once primarily an apparel-based retailer, Limited Brands has repositioned itself to focus predominately on personal care, beauty and lingerie. The Victoria’s Secret and Bath & Body Works brand makes up the bulk of sales in this category.
In a step toward acknowledging this direction, Limited Brands recently restructured into three distinct business groups: lingerie, beauty and personal care, and apparel. Lex Wexner has assumed group leader responsibilities for lingerie. Len Schlesinger is heading up beauty and personal care in addition to his responsibilities as vice chairman and chief operating officer for Limited Brands. Jay Margolis, former president/chief operating officer of Reebok International, will oversee apparel.
Although the apparel businesses scored a disappointing 14 percent decrease in comparable store sales, beauty proved to be a winner.
Bath & Body Works’ comparable store sales jumped 12 percent, driven by sales growth in the home fragrance and anti-bacterial lines, in addition to the Tutti Dolci launch. A one-week extension of the semi-annual sale also helped to bolster numbers.
A 5 percent increase in comparable store sales was realized for Victoria’s Secret, driven in part by the Beauty business. The Beauty business was supported by continued success of the Very Sexy for Her 2 fragrance, the Basic Instinct fragrance introduction and expanded color and hair care lines.
Limited Brands reported lackluster results for its second quarter 2005. Comparable store sales for the quarter ending July 30, 2005 were flat. Net sales edged ahead 4 percent to $2.291 billion. Net income was $113.1 million compared to $148 million last year. In addition, the company reported negative August store sales, resulting from “softness” at Express.
 Pure Poison fragrance |
Paris, France
Phone:
33 1 56 59 49 00
www.lvmh.com
Beauty Sales: $2.7 billion
Corporate Sales: $15.7 billion
Key Personnel: Bernard Arnault, chairman and chief executive officer; Antonio Belloni, group managing director.
Christian Dior Performs Well
LVMH has its hand in several different industries. Its business groups cover wine and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry, and selective retailing. Despite the difficult economic climate, the company managed to record organic sales growth of 11 percent, and income from operations up 11 percent.
In 2004, the perfumes and cosmetics business group realized organic sales growth of 4 percent. Fragrance accounted for 56 percent of sales, cosmetics delivered 27 percent of sales, and skin care added 17 percent. The strongest performances were in Europe and Asia. North American sales were negatively impacted, said the company, because the “French brands have made significant efforts to reposition their distribution to more high-end points of sale.” The company asserted this was only a short-term loss that will ultimately give way to a more solid foundation for future growth.
Notably, its brand Parfums Christian Dior exhibited tremendous growth, particularly in Europe and Asia. The company said its growth in Japan – where it recently opened a research center — was the strongest among Western brands.
In the first half of 2005, the company posted 7 percent growth for its perfumes and cosmetics industry. Its new perfumes, Pure Poison and Miss Dior Cherie showed particularly strong growth, according to the company.
Third quarter sales were also promising, with organic growth of 12 percent.
In Perfumes & Cosmetics, revenue for Christian Dior perfumes was largely driven by the success of the recent launch of Miss Dior Chérie, the excellent reception to Dior Homme and the sustained growth of make-up and skin care. The new KissKiss lipstick by Guerlain and the re-launch of the SuperAqua skin care range secured a good increase in revenue for the brand. Very Irresistible pour Homme by Givenchy equally contributed to the division’s good performance.
 |
New York, NY
Phone: (212) 310-2000
www.colgate.com
Beauty Sales: $2.4 billion
Corporate Sales: $10.6 billion
Key Personnel: Reuben Mark, chairman and chief executive officer; Ian M. Cook, president; Javier G. Teruel, vice chairman; Michael J. Tangney, executive vice president and president, Colgate-Latin America; Stephen C. Patrick, chief financial officer; Esmond Alleyne, vice president, global info. technology.
Restructuring Program
Colgate markets products in two major categories: oral, personal, and home care; and pet nutrition. Our beauty sales numbers are only for personal care products, which accounted for 23 percent of worldwide sales in 2004 and reached $2.1 billion.
The oral, personal, and home care unit grew to $9.15 billion in 2004 — up from $8.59 billion the year prior. In 2004, new products Colgate Max Fresh and Colgate Simply White toothpastes contributed to record market shares.
Overall, there were mixed results for Colgate-Palmolive. Corporate sales grew 7 percent, but net income dropped 7 percent due to rising raw material and promotional costs. In 2004, Colgate’s advertising spending rose 10 percent to a record high.
The company also announced its 2004 restructuring program, a four-year business plan which the company states will generate savings in late 2005. The plan calls for less manufacturing centers in an effort to create a more global supply chain. It is also expected this plan will generate aftertax savings.
Colgate-Palmolive recently experienced a major shift in upper management as the company’s long-serving president, William Shanahan, retired on Sept. 30. Ian Cook has been elected the next president.
 Kanebo’s Sensai Premier |
Tokyo, Japan
Phone: 81 3 5446 3002
www.kanebo.co.jp
Beauty Sales: $2.2 billion (Kanebo Cosmetics Intl: $1.8 billion; Kanebo Toiletry division: $357 million)
Corporate Sales: $2.5 billion (Kanebo); $1.8 billion (Kanebo Cosmetics Intl)
Key Personnel: Akiyoshi Nakajima, chairman; Takehiko Ogi, president.
Kanebo Cosmetics Formed
In September 2004, Kanebo announced its intention to shed some of its divisions — either through selling or liquidating. 2004 and 2005 saw a flurry of business activity, as its battery, electronics, wool, artificial leather, automotive hybrid electric power storage products, soft drink and textiles businesses changed hands. Kanebo also decided to terminate its food unit. Due to the downsizing, Kanebo witnessed sales plummet 41 percent.
On May 7, 2004, Kanebo Boutique became Kanebo Cosmetics, marking the beginning of a new cosmetic company. The cosmetic company posted sales of $1.34 billion for the 8-month duration following the transfer of business.
According to a statement from Kanebo Cosmetics, the fledgling company is focusing on “brand integration, organizational restructuring, and overseas strategies with the aim of business revitalization.”
In 2004, Kanebo Cosmetics launched Button Down Club, the first new men’s cosmetic product in four years.
Coty Inc.
New York, NY
Phone: (212) 479-4300
www.coty.com
Beauty Sales: $1.95 billion
Corporate Sales: $1.95 billion
Key Personnel: Peter Harf, chairman; Bernd Beetz, chief executive officer; Michael Fishoff, chief financial officer; Eric Thoreux, president, Coty Beauty Americas; Hans-Joachim Honigfort, president, Coty Beauty Europe; Michele Scannavini, president, Lancaster Group Worldwide; Géraud-Marie Lacassagne, senior vice president, human resources, Coty Inc.; Gabriel Ripoll, executive vice president, global operations.
Now Number One in Fragrance
Sales jumped 14 percent in the fiscal year ended June 30, 2004. Fragrance and toiletries accounted for 74 percent of sales, followed by 19 percent for color cosmetics and 7 percent for skin care and sun care. By region, Europe represented 57 percent of sales, the Americas, 36 percent, Asia, 5 percent and the rest of the world, 2 percent. Coty Beauty accounts for 60 percent of its sales; Lancaster Group makes up 40 percent of sales.
News of its sales figures is trumped by news of its acquisition. In July, Coty completed the purchase of the global prestige fragrance business of Unilever for $800 million. Unilever Cosmetics International (UCI) owns the perfume licenses for Calvin Klein, Cerruti, Vera Wang, Chloe and Lagerfeld.
Coty Chief Executive Officer Bernd Beetz said of the acquisition, “The purchase of these prestige fragrances strengthens Coty’s leadership position in the global marketplace. It is an excellent strategic move for Coty and one that is fully in line with our strategy. Coty is now the world’s largest fragrance company and we are in a strong position to achieve our long-term goal of being among the top five beauty companies in the world.”
Yves Rocher
Issy-les-Moulineaux, France
Phone: 33 1 41 08 55 00
www.yvesrocher.com
Beauty Sales: $1.8 billion (estimated)
Corporate Sales: $1.8 billion (estimated)
Key Personnel: Yves Rocher, president, director general.
Botanical Beauty Care
This privately-held company focuses on nature and feminine beauty. The company announced that despite the challenging economic environment, it was able to hold its position in most of its markets. The group has a presence on all five continents and utilizes four distribution channels: direct sales, mail order, Yves Rocher beauty centres, and online sales.
Touting itself as the world leader in botanical beauty care, much of its innovations have been in skin care. This year, however, the company has rolled out two fragrances: Néonatura Elevate and Néonatura Cocoon.
Mary Kay
Addison, TX
Phone: (972) 687-6300
www.marykay.com
Beauty Sales: $1.8 billion
Corporate Sales: $1.8 billion
Key Personnel: David Holl, president and chief operating officer; Dr. Myra Barker, executive vice president, marketing /research and development; Terry Smith, chief financial officer.
Marketing Directors: Rhonda Shasteen, senior vice president, marketing; Yvette Franco, vice president, brand development.
TimeWise Launch is Wise Move
Mary Kay, the number two direct seller of skin care and color cosmetics in the U.S., now operates in over 30 markets around the world. In 2005, the number of consultants has grown to 1.5 million.
Mary Kay launched MK Signature creme lipstick, lip gloss and nail enamel for the summer. The company also re-launched its age fighting skin treatments — the TimeWise Microdermabrasion set and the TimeWise Miracle set. These follow the TimeWise 3-in-1 cleanser and Age-Fighting Moisturizer, which became the most successful product launch in company history.
Kosé
Tokyo, Japan
Phone: 81 3 3273 1511
www.kose.co.jp
Beauty Sales: $1.58 billion
Corporate Sales: $1.58 billion
Luxury Goods in Demand
The company’s net sales for the fiscal year ending March 31, 2005 reached $1.58 billion, a 5.8 percent rise over the previous year. The increase was attributed in part to the company’s use of convenience stores as a distribution channel. Its strong luxury sales also contributed to the increase.
While cosmetic shipments in Japan were generally flat, Kosé reported an increase in cosmetics sales that were perceived as high-value. Luxury product company Albion exceeded sales expectations for its skin care products. Moisture Skin Repair, in particular, became a best seller.
Overseas subsidiaries saw phenomenal growth, achieving a year-on-year net sales increase of 27.9 percent. Overall, cosmetic sales increased 3.7 percent. However, operating income decreased 0.7 percent due to marketing spending in China and South Korea.
The cosmetaries business grew 14.9 percent with large gains in the mascara and cleansing product segments. An Internet movie also proved to be a strong sales tool for this company.
Kosé expects to have a 4.6 percent increase in net sales for its fiscal year ending March 31, 2006.
Alticor
Ada, MI
(616) 787-7565
www.alticor.com
Beauty Sales: $1.45 billion (fiscal 2004 ended August 31)
Corporate Sales: $6.2 billion
Key Personnel: Steve Van Andel, chairman; Doug DeVos, president; Al Koop, chief operating officer, Access Business Group.
Chinese Business Booming
Alticor is a global corporation offering, through its subsidiaries and affiliates, products, business opportunities, and manufacturing and logistics services in more than 80 countries and territories worldwide. Alticor is the parent company of Amway Corp., which has become one of the world's leading direct selling brands; Quixtar, Inc., a leading e-business in North America; and Access Business Group LLC, a business service company specializing in manufacturing and logistics for both Alticor and non-Alticor companies.
Alticor reported a $1.3 billion sales increase from its 2003 worldwide sales of $4.9 billion to a record $6.2 billion in 2004. Exceptional growth in China, along with strong sales in established markets, contributed to this impressive increase. The company’s Chinese affiliate, Amway China Co., doubled its previous years’ sales, breaking through the $2 billion mark.
“We see China as a strong, long-term market for Amway, and we’re looking forward to China fulfilling WTO commitments to keep the market open to fair competition in the direct selling channel,” said Steve Van Andel, Alticor chairman. “There is little doubt that China is a major reason for our overall success, but it isn’t the only success story. Our other markets also are doing a wonderful job, so we feel truly blessed with our growth around the world.”
Artistry product sales grew by nearly 30 percent. Alticor stated that the health and beauty businesses accounted for nearly 60 percent of worldwide sales in 2004.
In 2004, the group introduced the Artistry Time Defiance Intensive Repair Serum, a 14-night, highly specialized treatment that may prevent the visible signs of premature aging.
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