L’Oréal strengthens position as world’s most valuable beauty brand

By Simon Pitman

- Last updated on GMT

L’Oréal strengthens position as world’s most valuable beauty brand

Related tags Currency United states dollar Foreign exchange market

French cosmetics giant L’Oréal has strengthened its position as the world’s top beauty brand, while Brazil’s Natura and Avon both take a tumble under tough market conditions.

The Brand Finance Cosmetics 50​ assesses the value of the world’s top 50 cosmetics brands every year, and this year’s results demonstrate the significant upheaval a lot of players have had, particularly in the face of strong currency headwinds.

However, L’Oréal has proved to be the one significant exceptions, with its L’Oréal Paris brand not only holding but strengthening its position at the top of the table.

The analysts at Brand Finance estimable the value of L’Oréal Paris to now be $13.7bn, a record for the industry and one that shows a 22% increase in value over last year’s assessment.

L’Oréal Paris has brand strength too

Brand Finance also assesses brands according to their Brand Strength Index (BSI), which is calculated as a score out of 100. In this category L’Oréal Paris also notched up a winning score of 91.5, making it by far the strongest cosmetic brand globally, but also the third from any industry, with the analysts noting that its performance even beat Lego and Disney.

 “L’Oréal Paris continues to impress: bettering itself and raising its game the whole time. It is performing well in three key respects: it is investing in trends and technology; it is innovating digitally; and it continues to inspire trust,” ​said Brand Finance’s Cosmetics Analyst Emilie Milton-Stevens.

“Across the Brand Finance Cosmetics 50, brands based outside the US have been negatively impacted by foreign exchange rate changes, but L’Oréal revenue and brand performance was so strong that it not only counteracted that impact but actually grew 22%.”

Unilever’s Axe brand also had a noteworthy performance for 2016, thanks to a rebranding that has widened its appeal through a campaign that encourages men to be less ‘laddish’ and more expressive, in turn helping to increase the brand value by 69% to reach $1.7bn.

Other brands that also improved their position in the index included Nivea, Clinique, Chanel, Garnier and Estée Lauder, which were all also in the top ten, while new entries included Aveeno, Laneige, RoC and Sunwhasoo.

Brands that took a tumble

Given the tough economic conditions seen in many markets such as Brazil and Russia, the cooling of the China market and currency headwinds created by a strong US dollar, the past year has been tough going for a lot of cosmetics players.

Brazilian brand Natura was among the hardest hit, mainly due to a 67% decline in revenues that reflect the recession in the mainstay domestic market, from where it derives more than 80% of its revenues.

Avon has also has an extremely tough year, partly due to the recession in Brazil, which is also one of its biggest markets, but also reflecting a downscaling of some of its international operations and the poor performance of its North American operations.

As a result, the index shows that Avon’s brand value decline 54% to an estimated $1.8bn. 

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