In what may come as a welcome respite from COVID-19 news, this week we’re analysing the annual Brand Finance Cosmetics 50 report. In his foreword, Brand Finance CEO David Haigh stated, “What is the purpose of a strong brand: to attract customers, to build loyalty, to motivate staff? All true, but for a commercial brand at least, the first answer must always be ‘to make money’.” Ah, making money – looks like the pandemic may feature after all. However, the report does instantly assure that cosmetics brands are likely to weather the ‘COVID-19 storm’ – well that’s a relief. Although its next statement that brands are likely to lose up to $1tn in value thanks to the coronavirus, possibly into 2021, does rather take the sting out of that good news somewhat.
Let’s look at how the categories are faring – we’ll start with the bad news first shall we? You guessed it, color cosmetics and fragrances are the worst hit, and are being upheld by a boom in value for skincare, personal care and home treatment products – did someone say quarantine? Indeed, the virus has undoubtedly influenced the movement of brands around the list too. This year the top spot has gone to none other than L’Oréal, which inched up from second place last year having risen +13.1% in value. The brand was hailed for its “digital transformation in the cosmetics industry by developing technologies to better analyse and adapt to their customers’ needs.” And as we know, consumer needs in 2020 are perfectly surmised by digital.
And it wasn’t just L’Oréal that has crept up the chart, with the top three having all moved up a spot; this year Gillette came in at number two, rising 4.1 percent, while Nivea took third place up 7.9 percent. So where, I hear you ask, has Johnsons gone? Well, we wouldn’t like to mention that talc scandal, but that talc scandal has hit the personal care brand hard, seeing it tumble out of the top five, nay the top 10 even, into 16th place. It seems the brand’s covert removal of talc products from the U.S. market under the cover of the COVID-19 storm was too little too late. And despite Neutrogena remaining steadfast as the ‘strongest’ brand, the report acknowledges it has been ‘tarnished’ by its parent company J&J.
In terms of highest year on year brand value growth, SK-II and MAC are 2020’s star performers, rising 33 percent and 32 percent respectively. SK-II was heralded for its innovation, boosting organic sales for parent company Procter & Gamble, with its value expected to continue to rise. Meanwhile MAC has seen its value grow due to its ‘modern, digital marketing strategy’ and the global success of newly formed high-profile collaborations with ambassadors such as Maine Mendoza and Patrick Star. However, the report highlighted that MAC’s emphasis on color cosmetics may hurt the brand in the current COVID-19 era, as consumers increasingly focus on skincare over make-up.
The top five was finished up by Estee Lauder, which went from number 10 last year to number four in 2020, rising 27 percent in value, with stablemate Clinique coming in at number five. New to the list were Sofina and Make Up For Ever. Entering at number 45th, Sofina was lauded as being one of Japan’s top selling beauty brands, while Make Up For Ever, in at number 50, was thought to have been given a helping hand by mum and dad, parent company LVMH, as well as its ‘high-quality products.”
Looking at the strongest brands, which are calculated by, “a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance,” Elvive has jumped up the chart from its 2019 slot of 19th, to number two behind Neutrogena, with Natura, Gillette and L’Oréal coming in at third, fourth and fifth respectively.
So, what are the key takeaways from this year’s Brand Value 50? It’s nothing we haven’t already reported – digital is king, and increasingly so in a current and future post-coronavirus world, and skincare trumps make-up, at least for now. Focusing on digital, as the report states, “The cosmetics sector is largely boosted by online sales, which performed particularly well in China during the COVID-19 outbreak, with brands strengthening their position in the market by leveraging digital tools to virtually engage with consumers.” And as we’ve also previously reported, brands would do well to heed this advice as consumers form and ingrain new habits amidst lockdown, with digital channels getting bolstered beyond recognition.
Acknowledging Asia as a key growth market, the report delves further into the prosperous potential of online. It reads, “Indeed, potential opportunities to cosmetics brands may arise from new consumer behaviours, allowing agile businesses to benefit further from social media influencers, explore channels in both B2C and B2B, and accelerate their digital transformations.” Go forth and digitalize, we’ll be back to monitor the situation next year.