Euromonitor: Beauty focus better placed to drive growth for manufacturers

By Andrew MCDOUGALL contact

- Last updated on GMT

Euromonitor: Beauty focus better placed to drive growth for manufacturers

Related tags: Personal care, Procter & gamble

Manufacturers with a beauty focus, such as L’Oréal and Estée Lauder, are better placed to drive growth than those with a cross-industry presence such as Procter and Gamble and Unilever, according to Euromonitor.

As the market sees an increasing level of specialisation and manufacturers drive growth on the basis of scientific and targeted product development, beauty-focused manufacturers hold the advantage.

With first half results 2013 all out in the open for everyone to see, and French giant L’Oréal leading the pack in terms of growth rate, Euromonitor’s Oru Mohiuddin has reiterated her statements made earlier this year.

“Manufacturers with a streamlined focus on beauty are able to dedicate more resources to R&D and product development than those with a cross-market presence and whose resources are spread across different categories,”​ says the Senior Home and Personal Care Analyst.

“L’Oréal’s exclusive focus on beauty enables it to dedicate all its resources to R&D, thus making impressive strides in product development, which have worked in the company’s favor as consumer demand is being driven by product sophistication.”

Breakdown

Estée Lauder and Colgate-Palmolive follow suit, recording solid performance following their respective investment in product development.

P&G and Unilever, on the other hand, have a wide-ranging cross-market presence, from home care to beauty and personal care, which has seen the former drop off in growth slightly as it struggles in a tough market.

The US-based firm is going through a big restructuring programme, which has helped boost results and show signs of improvement, but Mohiuddin questions whether this will be enough to match L’Oréal in terms of R&D investment given that it also needs to allocate resources to a number of other industries.

Unilever, meanwhile, reported 3 percent growth in personal care, thanks to its mass market business but there are questions over whether it can sustain this growth, with the market being so competitive, according to Euromonitor.

Outlook not great

Mohiuddin ends by saying that the outlook for the industry in general for 2013 is not too optimistic, as per the companies’ full-year guidelines.

“The growth rate for combined sales of the above-mentioned companies in the first half of 2013 was down to 3 percent from 7 percent in 2012,”​ she says. “A proportion of growth in the first half of 2012 was driven by mergers and acquisitions, but also emerging markets, which are now slowing, while Western markets continue to remain volatile.”

“In the face of growing macro-economic challenges, the need for products which promise more has become increasingly important, and this will require greater investment in R&D and marketing. To this end, a streamlined beauty focus will prove beneficial.”

Related topics: Business & Financial

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