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Beauty conglomerates, rather than the brands they own, were often the headline story this year. The likes of Shiseido and Coty had to grapple with worsening slowdowns, floating the possibility of axing brands and planning job cuts, while Estée Lauder Companies continued its incremental progress towards a turnaround. L’Oréal and E.l.f Beauty, two of beauty’s most resilient firms, continued to grow, but at a slower pace than in previous years.
While each firm is unique, they all face the same challenges: customers have more choice than ever before when it comes to both brands and retailers, meaning their spending is becoming harder to predict, more spontaneous and more fickle. For conglomerates like Estée Lauder Companies and Coty with heavier reliance on ailing channels like department stores or US drugstores, sales have been especially soft, while even the likes of E.l.f Cosmetics and Cerave are seeing more moderate growth as competition stacks up on social media.
Meanwhile, a new crop of global giants rose — like Korea’s APR Corp, which owns Medicube, or China’s Proya — setting their sights on international expansion, and rattling the cages of incumbent Western juggernauts.
It’s also been a big year for beauty deals. L’Oréal snapped up Color Wow and Medik8 before its surprise $4.6 billion acquisition of Kering’s beauty business, while Johnson & Johnson acquired Kenvue, including its Aveeno and Neutrogena brands. Meanwhile, rumours swirled that LVMH-owned beauty incubator Kendo could be winding down by offloading its 50 percent stake in Fenty Beauty.
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Next year, there’s all to play for. There’s lots of great indie brands hoping to find a buyer, but strategic firms are becoming ever more selective in such a fast-moving climate.
Top Stories
1. The End of the Lipstick Index. After years of double-digit growth and a perception of being impervious to wider economic downturns, the beauty industry is finding that cash-strapped customers aren’t interested in ‘little luxuries.’
2. Shiseido’s Identity Crisis. Japan’s largest beauty conglomerate has had a difficult time adjusting to the shifting cosmetics market, prompting a series of pivots and restructurings. Moving forward may require breaking with past mistakes.
3. Estée Lauder Companies’ Makeover Begins. In order to reverse its sales decline, the company is reportedly considering selling off poorer-performing, lower-margin brands and cutting other costs. Investors want to see the fat trimmed, and more room created for future growth.
4. Who Could Buy Coty’s Brands? Rumours have swirled in recent weeks that the American cosmetics company is looking to offload its consumer and prestige brands. In a cooling market and with a mixed portfolio, finding buyers is a hard sell.
5. Can China’s Biggest Beauty Company Win Over the World? Proya Cosmetics, the largest beauty company in China, is looking beyond its own borders as Asian buyers bring more M&A options to global brands.
6. Why Kering Gave Up on Beauty. The French luxury giant has put aside its ambitions of running beauty in-house. Despite having an enviable stable of brands, the complexity of the business and mounting debt meant it wasn’t worth the pain.
7. What Next for Kenvue’s Beauty Brands? The future of big-name brands like Neutrogena, Clean & Clear and Aveeno, which bring more than $4 billion a year in sales, is less clear under its new ownership by the tissue and feminine care giant Kimberly-Clark.
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