During a year in which beauty companies were caught up in stabilization efforts—following the shaky conditions wrought by global economic issues, failed takeovers and unpopular strategic planning, to name a few—keen management proved crucial, and many of our Top 20 took to the boardroom to name new executives to take the lead—and keep corporate goals on track. Meanwhile, other CEOs stayed the course, and exceeded their firms’ previous financial records. Read on for a look at the people, programs and products that contributed to overall sales figures that exceeded $154 billion in fiscal 2013.
Fiscal year 2013 proved to once again be a challenging one for beauty companies, but there were plenty of bright spots, too, and almost all of our Top 20 reported gains—some sizable. Our annual comparisons resulted in some reshuffling of global players’ standings, but for the most part, our list remains similar to those of previous years. Most noticeable is the re-ranking of our Top 3, in which all contenders changed position for the first time in years. L’Oréal took a commanding lead, followed closely by Unilever, with P&G a strong third. (Just to keep in mind though, P&G’s drop in positioning had to do in part to a change in how it now reports its figures, with Beauty now split from Personal Grooming.)
Perhaps the biggest executive shakeup occurred this past June at P&G when A.G. Lafley took back command as president and chief executive officer, replacing Bob McDonald when he suddenly announced his retirement from the company after 33 years. Other top tier changes took place at Avon, Shiseido, J&J and Beiersdorf, as well as organizational realignments at L’Oréal, Estée Lauder, Coty and others.
Global beauty remains a mix between developed and developing regions, with much of the current growth coming from developing countries, though many of our Top 20 won market share in developed countries as well. And consumers around the world can’t seem to get enough of luxury cosmetics.
Perhaps Paul Polman, Unilever’s chief executive officer, summed it up best when speaking of the challenges faced in 2012: “Overall,” he said, “it is a ‘bi-polar’ economic world—one of sluggish growth in most developed markets contrasted by still relatively healthy consumption and growth in emerging markets.”
With Chinese consumers contributing to sales for nearly all of our Top 20 companies, other developing regions now beckon. Many beauty companies have sharpened their sights on India, which is predicted to overtake China in population—and beauty sales—over the next couple of decades. Increasing attention is also being paid to Thailand and to a number of African nations.
With emerging markets achieving wealthier demographics, comes the good news that more people have caught the “travel bug,” driving travel retail to new levels. Not to mention increased spending by tourists visiting developed countries, where sales were also on an upswing in many cases.
Overall, many of our Top 20 say that success in all markets hinges on consolidating and strengthening key brands. And as competition grows, innovation and R&D remain key.
Two other trends noted this year among our Top 20: A number of companies (particularly international ones) mentioned a priority of moving toward a culture of sustainability—both in packaging, products and the workplace.
And several, including Natura and Amore Pacific, mentioned better supply chains and working more closely with suppliers.
Product-wise, where foams played a role in new products’ success last year, this year it was oils.
And last—but of course not least—packaging continues to play an important role in bringing beauty to the world. Whether through gorgeous, luxury fragrance bottles or reduced size deodorants, whether cartons are printed in English or Chinese, consumers’ first contact with beauty is always through the package. A few highlights covered in this report range from a luxurious new flacon from Avon to two category “shake-ups” from Unilever: compressed deodorant cans and Vaseline Spray & Go moisturizer.
Just a note on the compilation of this report: Companies were analyzed according to 2012 data. Beauty sales included only cosmetics, fragrance and personal care items when possible. Figures for companies outside the U.S. were based on the exchange rate for the fiscal year on the day it ended. Estimates are provided in cases when full disclosure was not available.