Light at the End of the Beauty Tunnel

The words “an unprecedented global crisis” marked nearly every annual report from those on this year’s list of the Top 20 Global Beauty Companies. But the words “resilient,” “creative,” “efficient” and “proactive” describe how each and every one responded to the economic challenges they faced. By the end of the year, many began to see the results of changes they had made at the crux of the crisis, such as cutting costs and under-performing brands, and focusing on expanding existing brands instead. In many cases, the slight improvement in volumes and market share enabled companies to make more confident plans for the future, with several accessing entire beauty firms.

Expansion of a worldwide presence proved key to gaining market share even during a rough consumer-purchasing climate. Never have the opportunities to go global proved so effective at boosting the bottom line, as a rising middle class of consumers in emerging regions tipped the scale upwards for beauty products—especially for skin care and hair care.

Mass market goods had positive effects on many of the companies listed here, including Unilever and Beiersdorf, which continued the trend through the first half of this year. In fact, Unilever’s personal care business, which includes brands such as Dove, Sunsilk and TIGI became its largest category in 2010. Now, the status of the Anglo-Dutch consumer goods giant could seriously alter our Top 3 on the list for next year—which has remained the same for quite some time—with Unilever’s recent announcement that it is acquiring Alberto-Culver, adding beauty care brands including TRESemme, Alberto VO5, Nexxus, St. Ives, Simple and Noxzema to the corporate portfolio.

Meanwhile, certain prestige companies also fared well. The Estée Lauder Companies, for instance, gained global market share with several prestige brands, including Estée Lauder’s Advanced Night Repair products and makeup artist brand M-A-C. Other prestige brands, such as Chanel and LVMH, also gained followers worldwide.

Many of the leading beauty purveyors included on the following pages put their money where their future lies—into R&D—with several establishing executive positions and new facilities aimed toward discovering the new and different. The investments seemed to have paid off with category coups such as Inoa hair color from L’Oréal, Dove Body Wash with proprietary NutriumMoisture technology from Unilever and Oriflame’s triple core lipstick, with a core that hydrates and protects.

Continued hopes for recovery and growth lie not only with the BRIC and emerging markets, but are also pinned on the potential rise in demand of men’s skin care and other products in Asian markets; skin care for increasingly aging Baby-Boomers (with several brands now launching products even for 60-somethings) and skin lightening/whitening offerings.
No doubt, continued cost cutting, strategizing and R&D will define the coming year, but with things looking brighter, we are already anticipating next year’s results.

Just a note on the compilation of this report: Companies were analyzed according to 2009 data (except as noted). 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.