New pattern, the world's top ten cosmetics companies performance competition

Yesterday (March 12), Brazilian beauty company Natura & Co released 2023 earnings data, so far, the world's top ten beauty companies 2023 results have been released.
 
In addition to the joys and sorrows of performance data, the contents of the earnings report often reveal the industry's development trend. Which segment has been favored over the past year? Who is accelerating the adjustment of business and reform?
 

 Top ten revenue totaled 1170 billion yuan 
 
Ranked by performance, last year's top ten cosmetic groups were: L'Oreal, Unilever, Procter & Gamble, Estee Lauder, Kenvue, Beiersdorf, LVMH, Shiseido, Coty, and Natura & Co. Comprehensively, the top ten sales totaled more than 1,170 billion yuan.
 
By echelon, L'Oréal is a unique presence, with total revenue of 319.2 billion dollars. However, in terms of growth rate, L'Oreal's growth rate in the past three years was 16.1%, 18.5%, 7.6%, obviously slowing down.
 
L'Oreal said that the Chinese market on behalf of the purchase of resellers to strengthen control, which affects its travel retail business in Hainan and South Korea, resulting in a slowdown in North Asia.
 
Revenue in the "200 billion yuan" second tier only Unilever. Unilever has been in second place for many years, separated from L'Oreal by a gap of more than 100 billion yuan, and 50 billion yuan more than Procter & Gamble.
 

 
"100 billion yuan" file of the three companies for the Procter & Gamble, Estee Lauder and Kenvue. the past three years, P&G Group's growth rate of 7.28%, 5.35%, 2.27%, although there has been a slowdown, but the overall performance of the year 2023 has exceeded 600 billion yuan, ranking as the world's largest daily chemical group.
 
Performance decline reached 10% of Estee Lauder, in the beginning of the year 2024, the implementation of a new round of price increases, its Estee Lauder Brown Bottle Eye Cream, Aquamarine Mystery "noblewoman cream" and other 1,500 products, including price increases, triggering a lot of consumer debate. Estee Lauder will lay off thousands of rumors, but also hinted at its current bad days.
 
As a subsidiary of Johnson & Johnson, this is Kenvue's first annual earnings report after the spin-off, with results reversing from last year's decline to a 3.3% positive growth. Also according to Johnson & Johnson's full-year earnings report for 2023, global sales were $85.2 billion (about Rs. 613.176 billion), up 6.5 percent. Have risen performance, realize the win-win situation after the spin-off and reorganization.
 

There were a total of five companies below the "100 billion yuan" bracket, accounting for half of the total. It is worth noting that in the sub-100 billion yuan bracket, Coty and Beiersdorf maintained high growth rates, with Coty becoming the fastest-growing company among the top 10 with a 14.5% growth rate.
 
While Shiseido and Natura&Co have both seen substantial declines, Natura&Co and Puig Group, which plans to go public, are currently less than $8 billion apart, and judging from Puig's 19% earnings growth rate last year, Natura&Co has a high likelihood of being squeezed out of the top ten.
 
Last year was also the most turbulent year for Natura&Co, "selling" has become its key word, first to 2.55 billion U.S. dollars (about 18.5 billion yuan) price will be Aesop Aesop sold to L'Oreal, and then to the valuation of 207 million pounds (about 1.9 billion yuan), the brand will be sold to the Body Shop beauty brand. The Body Shop to private equity firm Aurelius.
 
It should be noted that the above data only statistics of daily chemical and beauty business revenue, such as LVMH Group, last year's total revenue reached 86.2 billion euros (about 67.7 billion yuan), far more than the first L'Oreal, but because of its luxury goods accounted for most of the results, then stripped of the part of the data. In addition, Procter & Gamble, Estee Lauder and other companies are based on the 2023 fiscal year (as of the first half of the year) data.
 

"Winning in China" becomes a key strategy for major groups
 

According to the National Bureau of Statistics, the total retail sales of cosmetics in 2023 will be RMB 414.2 billion, which will not only cross the RMB 400 billion mark again, but also maintain a growth of 5.1%. As the world's largest beauty market, the performance of cosmetics companies in China shapes corporate results.
 
One of the best performers in China this past fiscal year was Coty Group. Coty Group's revenue in the Asia-Pacific region grew 13 percent year-on-year, and in China, thanks to a strong rebound in sales of high-luxury beauty products, sales rose more than 25 percent year-on-year to $3.42 billion (roughly Rs. 24.9 billion).
 
It is worth pointing out that Estee Lauder Group's total results slipped 10%, but net sales in Asia Pacific still grew 4% organically. Among them, the increase increased to 36% in the fourth quarter of 2023, with most markets led by mainland China and Hong Kong, China, achieving double-digit growth.
 
The importance of the Chinese market to foreign beauty groups cannot be overstated. In order to seize China as a key market, the global cosmetics company in the past year in the Chinese market action frequently. Last year, L'Oreal several times in China to carry out major personnel adjustments, first Vincent BOINAY to replace L'Oreal North Asia President, CEO of China, and secondly, the first Deputy CEO of China, the position of management of L'Oreal China's business units, by the former head of the Department of L'Oreal China high-grade cosmetics Ma Xiaoyu is responsible for. Behind a series of actions, is L'Oreal North Asia growth rate under pressure.
 

Coty also in the Chinese region twice "change of command", declared the importance of the Chinese market. At the same time, in the Chinese market to increase the high-end skin care, last March, Coty focus on the Chinese market to promote high-end skin care brand "Lancaster" released a new product line, and the official announcement of the spokesman Guan Xiaotong. Currently, Lancaster has opened offline boutiques in Hangzhou and Nanjing.
 
P&G moved its international trade supply chain control center from Europe to Guangdong. Shiseido even emphasized "Winning in China" in its financial report, announcing that it will make efforts in two aspects of the Chinese market. On the one hand, it will strengthen its investment in growth opportunities, and expand its investment portfolio, including color cosmetics and perfumes. On the other hand, operational reforms, including focusing on high luxury brands, and will sink the brand to 3-5 tier cities, targeting the growing middle class consumers.
 

 Fragrance competition heats up 
 
A number of cosmetic companies have mentioned the perfume business in their earnings growth. Just like that, the perfume market has become a new engine for beauty giants to find incremental growth, and one of the most competitive tracks in the market in the coming years.
 

 
In 2023, the LVMH Group's perfume and cosmetics division's revenue amounted to 8.271 billion euros (about 64.347 billion yuan), an organic growth of 11%. Among them, Dior's Wilderness (Sauvage) perfume continues to sell well globally, becoming the world's best-selling perfume again in 2023.
 
Not coincidentally, Shiseido also mentioned that in the first three quarters of 2023, the fragrance business grew 18% year-on-year and is becoming a new growth point for the group.
 
Increased focus on the perfume category has become the consensus of the beauty giants. At the end of December last year, Estee Lauder made a minority investment in Melt Season, a high-end salon fragrance in China, which is also Estee Lauder's first investment in a local Chinese perfume brand.
 

Almost at the same time, L'Oreal Group also announced a minority investment in China's local high-end perfume brand Guan Xia to summer. Just a few days ago, L'Oreal announced that it had taken Prada's Miu Miu brand of perfume license, the two sides "hand in hand" after the first batch of perfume is expected to be launched in 2025.
 
Forecast data from the Prospective Industry Research Institute shows that China's fragrance market is expected to exceed 53.9 billion yuan in 2028, with an average annual growth rate of 20% from 2023 to 2028. At present, the penetration rate of China's perfume market is only 5%, which is in strong contrast with the 50% in the United States and 42% in Europe. In other words, there is still a big gap in the Chinese perfume market. Under the high-speed growth of the market and relatively low penetration rate, China's perfume track attracts all parties to enter the market, and the market's gunpowder flavor is also more intense.