INSIGHTS
Multiple International Cosmetic Groups Recorded a Substantial Growth in 2021
BY Ye ChenMar 17, 2022
Many international cosmetic groups achieved great sales in 2021. The financial statements show various driving factors worthy of attention: the Asian market, high-end product lines, fragrance business, e-commerce, etc.

Recently, many international cosmetic groups released their latest financial results. According to these statements, almost every group achieved remarkable results in 2021.

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L’Oreal group achieved the highest growth in sales in the recent 33 years. The Perfumes & Cosmetics business of LVMH group increased 8.6 times in profit, returning to the 2019’s level. Shiseido and Amorepacific also witnessed over 100% growth in their profit of 2021. Other groups also recorded double-digit growth both in sales and profit, including Estee Lauder and Johnson&Johnson. It seems that most cosmetic groups have gotten rid of the pandemic’s impact and ushered in a full recovery.

Growth Points

When ChemLinked analyze these financial statements thoroughly, we find several driving factors are hidden behind the excellent performance.

-          Asian market

The Asian market led by China plays an essential role in the global market. L’oreal’s financial report specifically pointed out that China’s growth remained dynamic, supporting by the figure in 2021H1 growing by 58% compared to 2019H1, and the growth rate in 2021H2 achieving was 49%. Both Estee Lauder and Shiseido achieved great sales in the 2021 Double 11 shopping festival, a unique shopping festival in China. Sulwhasoo and Laneige from Amorepacific grew by double digits in China, and the former grew more than 20% in South East Asia countries. KAO stated that, it recorded continuing strong sales in China, mainly through the e-commerce channel, and also began its duty-free sales on Hainan Island, turning out to be a good idea.

-          Prestige cosmetics

The high-end and prestige product line is another sale boost. Big companies always have competitive advantages in the high-end product market, and this advantage becomes more evident in the post-pandemic era. L’Oreal’s financial report pointed out that L’Oreal Luxe achieved a strong rebound and returned to the pre-pandemic level, contributing to 1/3 of the sales of the whole group. Amorepacific’s high-end product line achieved a 22% increase in South Korea. Other groups also saw the opportunity and put more effort into promoting their prestige product lines. Kao Group began a full-scale rollout of its prestige cosmetics. Whoo from the LG group reinforced its ultra-high-end lineup such as ‘Cheonyuldan’ and ‘Hwanyu’ to further strengthen its luxury positioning in the global beauty market.

-          Fragrance

The rise of the fragrance business is another driving force that should not be neglected.

In the Perfumes & Cosmetics of LVMH group, Christian Dior benefited from the enormous success of Miss Dior and Sauvage. In 2021, Sauvage became the highest selling fragrance in the world (women’s and men’s lines included) which is a worldwide first for a male fragrance. Parfums Givenchy continued its success of perfume L’Interdit. Maison Francis Kurkdjian continued to enjoy rapid growth momentum thanks to the ongoing success of fragrance Rouge 540, particularly in the United States. As for L’Oreal, the fragrance business increased by 35%.

Owning multiple popular fragrance brands, Estee Lauder benefited greatly from its fragrance business. Jo Malone London’s net sales grew double-digits primarily driven by its strength in colognes. Tom Ford Beauty grew strong double-digits, reflecting strength in its Oud Wood, Rose Prick, and Black Orchid fragrances. Net sales from Le Labo rose strong double digits, primarily reflecting the reopening of brick-and-mortar, improved retail traffic, and strong holiday demand. Kilian Paris’ net sales increased strong double-digits, driven by retail reopening and demand for hero products.

-          E-commerce

E-commerce continued its positive influence on business, including the sale growth brought by the Double 11 shopping festival.

Estee Lauder Group strengthened that, in mainland China, its skincare products and fragrances ranked the top by net sales in 2021 Double 11.

L'Oréal also pointed out that, due to strategic investment, e-commerce remained strong, accounting for 40% of total sales, since its sales growth was much higher during the Double 11 in China.

In the future

In the Chinese market, international cosmetic groups always have competitive advantages in R&D, supply chain, and branding over local brands. Still, they have shortcomings, such as “slow market response” and “unfamiliar with local cultures and trends”. These shortcomings give local brands a opportunity to catch up. However, these big companies are trying to overcome these weaknesses as they attach more importance to the Chinese market because other markets were affected more by the pandemic. More and more international brands appoint local employees who are more familiar with the Chinese market in charge of their Chinese business to make decisions and react to the market faster. In the meantime, international brands are willing to give China-based employees more autonomy to adapt to the ever-changing market.

As these international players update their strategies, the competition is getting severe in the Chinese market. Brands that want to stand out must create their own R&D system and develop the hard-core products to win the match.

Ye Chen
ChemLinked Research Analyst
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