Global Beauty Giants Record Stellar Growth: 3 Trends Driving the Booming Cosmetics Sector

In late July and early August, a number of global beauty giants published their latest quarterly, semi-annual or annual financial reports. ChemLinked sorted out and analyzed the financial statements of 10 iconic cosmetic groups including L’Oréal SA, in order to explore growth and understand and identify opportunities within the sector.

1. Financial Performance of 10 Groups

The business of beauty is thriving and most of the big companies in the cosmetics sector recorded major gains in both revenues and profits. Specific data is as follows: 

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2. Key Growth Drivers

There are 3 main drivers of growth which are common denominators consistent to all the enterprise listed above.

(1) High-end cosmetics driving growth

Demand for high-end cosmetics continues to grow. High-end brands from L'Oréal Co., Shiseido Co., Procter & Gamble Co., Estee Lauder Co. and etc. all showed or maintained strong growth and were significant contributors to bottom-line growth.

(2) China’s market significantly outperforming global counterparts

In terms of cosmetic regional sales, China outpaced other regions. For Estee Lauder Co., China and the emerging markets in Southeast Asia delivered excellent net sales growth, overtaking the US to become the world’s fastest-growing market. Driven by Chinese consumers and the increasing success of e-commerce in China, the growth in L'Oréal’s AP market was up 24.3% translating to a valuation of $5.13 billion.

China’s promising cosmetic market also means that more international cosmetic brands are now attempting to enter the sector. For example, Fenty Beauty, a makeup brand owned by American superstar Rihanna, is scheduled to land in China Hong Kong and Macao in September. Another American skincare brand Drunk Elephant also plans to enter the market in September this year. In addition to being launched in Tmall Global, it will also be sold at Sephora in Hong Kong International Finance Centre and Causeway Bay.

(3) Online channel and travel retail contribute significantly to strong sales growth

The e-commerce segment shows growing importance in accelerating growth. Younger consumers are trending towards purchasing online via e-commerce channels primarily for the benefits of convenience and flexibility. In addition, the travel retail channel is playing an increasingly important role in driving the sales growth of beauty giants and this coincides with an overall increase in international tourism amongst Chinese.

L'Oréal Group's financial report clearly indicates that e-commerce, travel retail, the premium skincare segment and Asia Pacific markets were four main powerful growth drivers. Currently, a total of 24 brands of L'Oréal including Armani and YSL have established flagship stores on Tmall. In 2018 “Double Eleven Shopping Festival”, Lancome and L'Oreal Paris both joined in the "Tmall Billionaire Club (The sales revenue in Tmall exceeds 1 billion RMB)". The success continued in this year’s “618 Shopping Festival”, sales of L'Oreal Paris soared past 100 million RMB within 45 minutes. Apart from L'Oréal, Estee Lauder and Shiseido also recorded strong growth supported by online channel and travel retail.

Beauty companies are now putting a high priority on accelerating the construction of e-commerce channels, especially in China. For instance, KOSE Co. indicated that its activities in Asia will focus on reinforcing existing sales channels and expanding new sales channels such as duty-free stores and e-commerce. Revlon will continue to grow in its key strategic investment areas such as China, particularly e-commerce.

Notably, Estee Lauder-owned premium skincare brand GlamGlow, P&G-owned high-end skincare brand Oriental Therapy, French perfume Atelier Cologne and Sweden beauty brand Barnängen are all planning to open flagship stores in Tmall this year.