Key Beauty Industry Leaders: The Year Ahead

Beauty leaders discuss their experience during the year past and their outlooks for 2010.

Appeared In
Special Issue
WWD Special Report issue 01/29/2010

Top leaders in the beauty world are warily looking forward to a hoped-for improvement in the business climate this year, following the severe bruising of 2009. But if life does return to normal, it will bear little resemblance to the free spending era of the past decade, with consumers still feeling the shock of the recession.

Shoppers are pickier than ever, and marketers have to be more careful. As Nicholas Munafo, president of Beauté Prestige International USA, said, “We as an industry will all come out of this recession smarter and stronger; it forces you to rationalize every decision, because consumers are more selective and more discerning.”

Jean-Paul Agon, chief executive officer of L’Oréal, said he is “reasonably optimistic” about the global business this year, with “slow growth” expected in Western Europe and North America and “a very dynamic market in the rest of the world.”

He expects strong growth out of China, India and Brazil. “We believe we could have good news out of Eastern Europe and Russia,” Agon noted. The company will pursue a four-part strategy: pursue “accessible innovation” at a reasonable price to reach a broad swath of the market; widen the targets of new product categories; “accelerate internationalization” in markets like Indonesia, Turkey and Mexico, and invest in business drivers such as brand advertising and research and development. “Innovation is the name of the game,” he asserted.

“We are seeing some initial improvements in economies around the world and some early signs that the consumer is regaining her interest in shopping,” said Fabrizio Freda, president and ceo of the Estée Lauder Cos. Inc. “We could begin to see a recovery in 2010 — at different levels, in different parts of the world. However, this recession has truly changed the consumer. The first companies who understand those changes should win big during the recovery. We believe that the biggest opportunities happen during the first 18 months of a recovery, and that is what we are preparing for.

Freda added Lauder continues to apply cost-cutting and efficiency generating concepts that arose during the recession. “The progress we are making on our restructuring is providing resources to invest behind key strategic priorities and capabilities, such as expanding in China, leveraging our digital assets and building best-in-class consumer insights,” he said. “Our efforts are focused on growing our top line in the key regions and categories where we are strongest and increasing our profitability.”

“If we get lucky and have a good spring, all these [economic] problems might blow away over 2010,” said Coty Inc. ceo Bernd Beetz. “I think that’s the biggest challenge for us all.”

He added it would be “very good news” if the world economy, which was in contraction in 2009, were to grow in 2010. “There is interest and eagerness in the market,” Beetz said. “The consumer is on to something and if the consumer sees something that really [speaks] to her need, she’s buying, she’s reacting.

“The vibration we are getting on Beyoncé is sensational,” he added. “So we’re looking forward to a really big business. That’s somebody who is really bridging different sectors as an artist. It is music; it’s entertainment. It’s a performance with her worldwide tour, so I think we are hitting the right nerve [with Beyoncé].”

“In these days of scare resources and a challenging environment, Clarins’ focus is on skin care and growing markets like Asia while protecting the strong markets like Europe,” said Philip Shearer, the company’s chief executive officer. “When it comes to America, which is considered a big challenge for us, we are [deploying] a strategy based on our potential of differentiation, mainly through spas in skin care and working quite carefully with our retail partners.”

On the fragrance front, Shearer said the focus is on Angel, Alien and the Azzaro franchise, including new concepts for Chrome. The company will launch a new fragrance under the Thierry Mugler brand in the second half of this year.

“The idea overall is to focus on our strong points,” explained Shearer.

When asked about the year ahead, he said, “A piece of advice to everyone: The definition of insanity is to do the same thing over and over again and expect a different result. That’s all I have to say.

“Basically, we just have to change things,” he continued. “I’m not kidding.”

Marc Puig, ceo of the Barcelona-based Puig, observed, “Over the next two or three years, we don’t see much growth in our industry, especially in the developed world.”

As a result, Puig said his company will be looking for chances to gain market share, including acquisitions. “We see that this crisis has opened up opportunities that might not have been there a few years ago,” he noted.

Pamela Baxter, U.S. president of Christian Dior, has finished 2009 with solid performances from her brands. Dior well above the market; Givenchy did well with its men’s fragrance, Play; Guerlain trended ahead of its distribution (Neiman Marcus and Saks Fifth Avenue) in makeup and skin care, and Fresh has done well. “We are in better shape than most,” Baxter said, “and we are not pulling back.”

Guerlain pre-launched a new version of its premium-priced Orchidee skin care line and showed a high-single-digit increase over the original, Baxter said. With its Dior Show mascara ranking number two in the market, the brand is going ahead with its black shade and Extase, as well as extensions of last year’s Dior Skin Nude. Givenchy will launch its new women’s fragrance, Ange ou Démon le Secret, the third incarnation of its Angel or Demon perfume franchise, in March. Guerlain will add new finishes to the Rouge G lipstick it launched last year.

As for Dior’s fragrance business, the company has decided to stick with its big winner, J’adore, following a highly successful experiment over the holidays. The company took the brand’s best market, Miami, and put TV advertising behind it. The result was that J’adore went from ranking fourth in the market to number one for December. “We are putting everything behind J’adore,” Baxter concluded.

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