Financial results underline growing gap between mass and premium segments

This trend was most evident when looking at the latest quarter for the world’s biggest player, L'Oréal, underlining how premium sales had helped to buoy a less than shining performance in the mass market segment.

Likewise, Estee Lauder, which is focused primarily on the premium segment, reported an exceptional quarter, whereas Germany-based Beiersdorf, owner of the global mass market Nivea brand, revealed that it had faced a significant struggle.

L'Oreal's results underline contrast between mass and prestige market ​

L’Oreal’s third quarter and most recent results showed that revenue rose 4.8 per cent compared to last year, to €4.94bn, a figure that was expected by many but one that also underlined the polarisation of the mass and luxury categories.

Looking ahead to future, the company said that it expects further volatility, related mainly to the economic environment and the effect that this is having on consumer spending patterns.

L'Oreal's mass brands struggle​

The company said that its consumer products division, which accounts for mass market brands such as Garnier and Maybelline, saw sales growth slow to 3.4 per cent in the third quarter compared to 5.2 per cent in the first half of the year.

However, L’Oreal saw strong performances from high end brands such as Lancome and Yves Saint Laurent as the luxury segment posted 8.8 per cent growth contributing to a quarter of company sales.

Although much of the growth was attributed to the emerging markets, the company underlined that gains were seen in all geographies.

Estée Lauder powers ahead on premium wave​

Estée Lauder, which has even more exposure in the premium segment, posted an increase in revenues of 18.4 per cent to $2.48bn during the quarter, while net income rose 45.8 per cent to $278.6m, figures that far exceeded analysts’ expectations.

The company revealed that the driving force behind these exceptional results was the continued growth of its luxury brands, particularly fuelled by travel retail as well as the Asian markets.

During an investor conference, Fabrizio Freda hailed the return of the luxury shopper, highlighting how the results had marked a pronounced turn around after the major hit the luxury industry took at the height of the recession in 2009.

Beiersdorf struggle on higher exposer to mass market​

At the other end of the spectrum, mass market-focused Beiersdorf reported that net income declined to €76m ($103m) from €101m a year earlier, while revenue falling 0.6 per cent to €1.37bn during its third and most recent quarter.

These results were marked by the fact that revenues in the economically volatile European market fell by 3 percent, underlining how mass market consumers there are tightening their purse strings – a trend that is expected to continue in the short-term as the Euro comes under pressure from debt pressures in countries such as Greece, Italy, Spain and Ireland.