30 SPC May 2016

Top beauty brands are successfullyadapting to the changing marketenvironment, boosting long term revenuesas a result and putting themselves on a parwith titans like Disney and Google, newresearch from leading brand valuationconsultancy Brand Finance has revealed. In the sixth of SPC’s 50 Most ValuableCosmetics Brands series of reports, beautyand personal care has once again proveditself to be a robust and fiercely competitive industry.Calculated by Brand Finance, the top 50

beauty league table is based on brand value,established using the royalty relief method,which determines the value a companywould pay to licence its brand as if it didnot own it; it estimates the future revenueattributable to a brand to find its royaltyrate in a process explained in more detailon p36.In addition, Brand Finance allocates each

brand a ‘rating’, with AAA indicating anextremely strong brand and D being onethat’s failing. This brand rating is derivedfrom the Brand Strength Index (BSI),which benchmarks the strength, risk andfuture potential of a brand.

BEAUTY STANDS ITS GROUNDAs well as calculating industry-specificleague tables, Brand Finance is famous forits ‘Global 500’ ranking of brands across allsectors, which in 2016 included ten bignames in beauty. Commenting on thebeauty world’s position in the pan-industryarena, Emilie Milton-Stevens, Analyst atBrand Finance, tells SPC: “In terms ofbrand value, they [beauty brands] arescattered throughout the Global 500.However, in terms of brand strength, all ofthe beauty brands are in the top 200 andtwo-thirds are in the top 100.”In 2016’s Global 500, only seven brands

were given the highest AAA+ rating – butthere was one beauty brand among them.With a huge BSI score of 91, L’Oréal Parisranks just below Walt Disney and Lego asone of the world’s strongest brands.

GLOBALTOP50BRANDS2016For the third year running, L’Oréal Paris has toppedthe Brand Finance 50 Most Valuable CosmeticsBrands beauty league table. But how does the beautyand personal care industry compare with high-fliersacross the worlds of entertainment, finance, fashionand tech? SPC and Brand Finance provide theiranalysis of 2016’s findings

Walt Disney

Lego L’OréalParis

PWC Nike

92AAA+

92AAA+

91AAA+

Coca-Cola

Neutrogena LouisVuitton

Microsoft Maybelline Samsung Apple McDonald’s Tiffany& Co.

Google Garnier

91AAA+

91AAA+

90AAA+

90AAA+

89AAA

89AAA

88AAA

88AAA

87AAA

87AAA

86AAA

86AAA

86AAA

HOW DOES BEAUTY’S ‘BRAND STRENGTH INDEX’ COMPARE WITH OTHER INDUSTRIES?

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May 2016 SPC 31

top 50brands

WHICH COMPANY HAS THE MOST BRANDS IN THE TOP 50?

The most valuable beauty brand of 2016,according to Brand Finance’scalculation, was L’Oréal Paris,which shot up by $2.48bn toreach $13.7bn.

Commenting on the label’sstrong performance, BrandFinance’s Milton-Stevens tellsSPC: “L’Oréal continues to beimpressive: bettering itself andraising its game the whole time.It’s doing well in key beautyindustry themes: investing intrends and technology; innovatingdigitally; and generating trust.

“Across the table there has been anegative foreign exchange impacton brands, but L’Oréal’s revenuewas so strong that it outweighedthat impact.”

Success is in part due to smartinvestment in key growthmarkets and novel platforms.According to Marc Menesguen,President of the L’Oréal ConsumerProducts Division, the brand hasbenefitted from its focus on haircare. The group’s 2015 AnnualReport says innovations in itsElvive hair care label meant hair

care remained key to the ConsumerProducts Division growth. The L’OréalParis hair care business also innovatesfor lucrative consumer groups, such asthose in China.

Sulwhasoo 71%

Lynx 69%

Hera 39%

Natura -67%

Avon -54%

SK-II -46%

WINNERS VS LOSERS (% change in brand value)

L’ORÉAL: TOP OF THE TABLE

TOP FIVE L’ORÉAL BRANDS

Brand 2016brandvalueL’Oréal Paris 13,697 Garnier 4,815 Maybelline 3,178 Lancôme 2,682 The Body Shop 1,328

With year-on-yearbrand value growthof 71%, Sulwhasoowas the fastestrising brand in thetop 50 in 2016

Its quantified brand strength was as high asthose of fellow AAA+ brands PWC andNike, and higher than both Coca-Cola andGoogle. Johnson & Johnson-ownedNeutrogena was the second strongestbeauty label; a BSI of 89 and a AAA ratingput it on a par with Louis Vuitton andahead of Microsoft. Maybelline – the nextbeauty label in terms of brand strengthwith a value of 88 – is placed ahead ofSamsung and Apple, while its L’Oréalstablemate Garnier has a BSI of 86, thesame as McDonald’s and Tiffany & Co.Achieving that AAA+ rating is no mean

feat, as Milton-Stevens explains. “The BSIis based on a balanced scorecard ofattributes – it’s all benchmarked and fromexternal data,” she tells SPC. “We look atinvestment, equity and performance. Brandinvestment needs to be sustainable with aclear plan for providing growth in thefuture. Then there’s equity: we take scoreson how your brand is perceived andrecognised by consumers, finance analysts,government stakeholders, etc. And the lastpart is output, whereby we ask ‘how is yourbrand driving business performance?’ Theydo, in theory, lead onto each other. If you

top 50brands

May 2016 SPC 33

invest correctly, and put in the time andeffort you build a loyal, understandingcustomer base.” Indeed, many of the best-performing

brands in 2016’s beauty top 50 aresucceeding precisely because they’veinvested and continue to invest in newproduct development (NPD) and digitalinnovations to secure long-term sales, saysMilton-Stevens. She notes that beautybrands are building greater levels ofconsumer trust, especially among youngergenerations, by placing more emphasis onecommerce and adopting online strategiesthat target social media ambassadors. Brands’ efforts to foster a better

connection with consumers and respond to

their individual needs is also apparent ingreater instances of personalisation,resulting in more diagnostic and tailoredcosmetics from boutique and big-namebrands alike, as well as a proliferation of‘try on’ apps like L’Oréal’s Makeup Genius. All in all, the world’s leading beauty

brands are “showing what they have to doto attract and maintain customers” and, asMilton-Stevens notes, “that will obviouslyhave an impact on revenue”.

A LOOK AT THE LISTBased on Brand Finance’s brand valuecalculations, L’Oréal Paris was the leadingbeauty label in 2016’s top 50, with a valueof almost US$13.7bn. This should not be a

TOP 25 GLOBAL BEAUTY BRANDS 2016

Rank Rank Brand Domicile Value Rating Value Value Rating 2016 2015 2016 2016 change 2015 2015 1 1 L’Oréal Paris France Mass 13,697 AAA+ 22% 11,218 AAA+

2 2 Gillette United States Mass 7,189 AAA -20% 8,988 AAA

3 4 Nivea Germany Mass 6,171 AAA- -6% 6,565 AAA

4 6 Clinique United States Premium 5,960 AAA- 4% 5,741 AAA-

5 8 Chanel France Premium 5,802 AAA- 18% 4,921 AAA-

6 3 Neutrogena United States Mass 5,709 AAA -35% 8,794 AAA

7 9 Garnier France Mass 4,815 AAA 4% 4,630 AAA

8 7 Pantene United States Mass 4,802 AAA -10% 5,364 AAA

9 10 Estée Lauder United States Premium 4,170 AAA- -4% 4,328 AAA-

10 5 Dove United Kingdom Mass 4,104 AAA- -30% 5,821 AAA-

11 13 Clarins France Premium 3,501 AA+ -1% 3,550 AA+

12 16 Shiseido Japan Premium 3,273 AAA- 8% 3,027 AA+

13 17 Maybelline France Mass 3,178 AAA- 13% 2,814 AAA

14 18 Lancôme France Premium 2,682 AAA 3% 2,602 AAA

15 19 Head & Shoulders United States Mass 2,680 AAA 4% 2,577 AAA-

16 15 Christian Dior France Premium 2,513 AAA -18% 3,051 AAA

17 20 Schwarzkopf Germany Mass 2,348 AAA -4% 2,437 AAA-

18 11 Olay United States Mass 2,191 AAA- -45% 3,986 AAA-

19 New Aveeno United States Mass 2,139 AAA 0%

20 23 MAC United States Premium 1,803 AA+ 2% 1,776 AAA-

21 12 Avon United States Mass 1,785 AA -54% 3,897 AA+

22 35 Lynx United Kingdom Mass 1,675 AA 69% 989 AA+

23 22 L’Occitane France Premium 1,639 AAA- -10% 1,818 AAA-

24 21 Rexona United Kingdom Mass 1,536 AAA- -16% 1,838 AA+

25 28 The Body Shop France Mass 1,328 AAA 4% 1,278 AAA-

All the figures are shown in US$m

TOP FIVE PARENT COMPANIES BY BRAND VALUE, US$M

Parent Company Total brand Total brand % change value 2016 value 2015 portfolioL’Oréal 27,729 27,114 2%Proctor & Gamble 22,907 27,455 -17%EstéeLauder Companies 11,933 7,688 55%Johnson & Johnson 10,834 6,321 71%Unilever 9,034 11,268 -20%

Garnier brand-ownerL’Oréal has the mostvaluable brands

surprise for regular readers; it is, after all,the third year in a row that L’Oréal’sflagship brand has taken pole position. Farmore interesting, however, is the fact thatthis value is $2.48bn higher than in 2015,making L’Oréal Paris the biggest ‘riser’ invalue terms by a significant margin;Chanel, which enjoyed the next biggestvalue increase grew by a comparativelymeagre $881m. It also meant that L’OréalParis was the fourth highest ‘riser’ bypercentage in the entire top 50, despitestarting from a much higher base thanother brands. While Procter & Gamble-owned Gillette

retained its second position from 2015 to2016, its brand value actually slipped by20% to $7.19bn. Milton-Stevens attributesthis to “softening sales” of the men’sgrooming brand in China and in general inthe razor market, a result of the currenttrend for facial hair. However, she adds thatthe decrease was “nothing severe and it[Gillette] would have to do a lot worse tolose its second-place spot”. The highest placed premium brand was

Clinique (the most valuable brand in TheEstée Lauder Companies’ extensiveportfolio), which saw its brand value growby 4% to reach $5.96bn and its position onthe table boosted from sixth in 2015 tofourth in 2016, just below Beiersdorf ’s skincare staple Nivea at number three. Chanel’s brand value increased a healthy

18% on 2015, reaching $5.80bn andpropelling the luxury label into the table’stop five; last year the brand placed numbereight. Chanel, says Milton-Stevens, was one

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34 SPC May 2016

not more. Not only do the luxury brandstend to consolidate towards the upper endof the table, they are also “drivinginnovation and the mass brands arefollowing”, she says. She also states thatprestige labels Bobbi Brown, La Roche-Posay and Crème de la Mer are all in thenext tier, and that boutique cosmeticsbrands are “an increasingly relevant force”despite the fact that they’re still too smallto make it onto the table.

SNAKES & LADDERSA notable pattern in 2016 was that, as inthe case of L’Oréal Paris, those brands witha strong presence in colour cosmeticsenjoyed significant percentage growth inbrand value compared with those associatedprimarily or solely with skin care orfragrance. Revlon, for example, saw itsbrand value jump 15% year on year, withMaybelline growing 13% and Max Factorup 12%. Milton-Stevens attributes this

CHANGE IN BRAND VALUE %

brand that survived the luxury decline in China. The 2016 top 50 is dominated by mass

market and ‘masstige’ brands: 32 comparedwith 18 luxury brands. However, Milton-Stevens is keen to stress that premium ishaving just as much of an impact on theoverall value of the beauty sector as mass, if

CHANGE IN BRAND VALUE (US$)

One of the best performing brands in terms of percentage change was Unilever’sAxe/Lynx, which shot up 69% in brand value (by $686m) to reach $1.68bn, scaling theleader board from 35th to 22nd place.

This surge reflects a realised attempt by the brand to shed its ‘laddish’ image,achieved via a combination of higher-end products and well-crafted campaigns.

“It’s appealing to a more sophisticated, diverse male audience, because appealing to‘the lad’ was quite narrowing,” says Milton-Stevens. “What is notableis that in the US and UK deodorants is a declining market – not likein developing countries. But Lynx is maintaining its sales and thebrand’s transition has happened seamlessly.”

In January, Lynx launched its ‘Find Your Magic’ campaign, whichfocused on celebrating individuality and empowering men to fight thelabels that prevent self-expression – a very suitable message from abrand attempting (and succeeding) to regenerate its own image. ‘FindYour Magic’ was reinforced by three new cross-category collections,Signature, Urban and Adrenaline, all of which feature products withadded premium touches (a new pump format to create subtlerscents – and anti-mark, anti-bacterial and ‘microactive’ capsuletechnologies in the antiperspirants) to support this new positioning.The brand also recently launched a Lynx Black Night line to“capitalise on the consumer demand for understated fragrances”.

LYNX: FINDING ITS ‘MAGIC’

TOP FIVE P&G BRANDS

Brand 2016brandvalueGillette 7,189 Pantene 4,802 Head & Shoulders 2,680 Olay 2,191 Max Factor 1,250

top 50brands

May 2016 SPC 35

France41,18511 brands

Germany9,1133 brands

Switzerland642

1 brand

UK9,0345 brands

US50,20422 brands

Brazil1,0511 brand

Japan5,0743 brands

South Korea3,5474 brands

TOP 50 BEAUTY BRANDS BY COUNTRY: TOTAL BRAND VALUE (US$M) AND NUMBER OF BRANDS

TOP 25-50 GLOBAL BEAUTY BRANDS 2016

Rank Rank Brand Domicile Value Rating Value Value Rating 2016 2015 2016 2016 change 2015 2015 26 29 L’Oréal Corporate France Mass 1,293 AAA+ 2% 1,262 AAA+

27 32 Max Factor United States Mass 1,250 AAA- 12% 1,115 AAA-

28 New Le Petit Marseillais United States Mass 1,246 AAA 0%

29 31 Cover Girl United States Mass 1,168 AAA- -2% 1,192 AAA

30 27 Clairol United States Mass 1,154 AA+ -11% 1,298 AA+

31 New Laneíge South Korea Premium 1,127 AAA- 0%

32 34 Bioré Japan Premium 1,078 AA+ 7% 1,007 AA+

33 36 Palmolive United States Mass 1,056 AAA- 10% 957 AA+

34 14 Natura Brazil Premium 1,051 AAA- -67% 3,220 AAA-

35 25 Sunsilk United Kingdom Mass 916 AA+ -37% 1,446 AA+

36 37 Old Spice United States Mass 914 AAA- 1% 903 AAA-

37 38 Wella United States Mass 906 AAA- 10% 827 AA+

38 40 Revlon United States Mass 896 AA 15% 782 AA

39 New RoC United States Premium 884 AAA 0%

40 44 Sulwhasoo South Korea Premium 880 AA- 71% 515 AA-

41 24 Clean & Clear United States Mass 856 AAA -43% 1,505 AAA-

42 43 Hera South Korea Premium 839 AA- 39% 602 AA-

43 26 Lux United Kingdom Mass 803 AAA- -42% 1,377 AA+

44 39 Rimmel United States Mass 793 AA- -3% 815 AA

45 41 Vichy France Mass 736 AAA 1% 732 AAA-

46 42 Kosé Japan Premium 723 AA- 7% 677 AA

47 New Mamonde South Korea Mass 700 AA- 0%

48 30 SK-II United States Premium 654 AA+ -46% 1,205 AAA-

49 33 Oriflame Switzerland Premium 642 AA+ -38% 1,038 AA+

50 New Syoss Germany Mass 594 AAA- 0%

All the figures are shown in US$m

TOP FIVE COUNTRIES BY BRAND VALUE

Country Brand value Brandvalue 2016 $USm 2015 $USm1United States 50,204 49,938 2France 41,185 41,067 3Germany 9,113 6,951 4UnitedKingdom 9,034 11,268 5 Japan 5,074 6,299

partially to colour cosmetics “growing in Asia and the Middle East”, but also tothese brands’ “modern” images, cultivatedthrough trend-led products, digitalinnovations and interaction with consumers.The best performing brand, however, in

terms of year-on-year percentage gain wasSouth Korea’s Sulwhasoo, which grew amassive 71%. Indeed, there are now fourAmorePacific-owned brands in the top 50:Laneige, the highest placed at number 31, isnew to the table, while Sulwhasoo is atnumber 40, Hera is at 42 (with a notablebrand value increase of 39%) and Mamondeis also new in at 47.

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36 SPC May 2016

South Korean companies generally havebeen buoyed by interest in the country’spop culture and AmorePacific’s beautybrands in particular continue to benefitfrom the popularity of its patented cushiontechnology and the “many years ofinvestment we’ve made in developingoverseas markets to introduce our world-class brands”, adds Sean Kim, EVP ofGroup Strategy at AmorePacific Group. While AmorePacific is synonymous

with the much-loved cushion format, it is not resting on its laurels and continuesto innovate in this format to meetconsumer demand. “In 2015 AmorePacific sold

approximately one cushion every secondand our total accumulated cushion unitsales has exceed 80 million as of end of2015,” says Kim. “We continuously offervarious new products and upgradesthroughout our brands, but what stands outin any of our cushion efforts is that it isbased on customer feedback that dates backthe longest in the industry. All of theimprovements that were made in ourcushions – from SPF, skin care function,

application, etc – were all reflective of thecustomer feedback we have amassed overyears and years.”At the other end of the spectrum,

Brazil’s Natura suffered the biggestpercentage slide in brand value, dropping67% from $3.22bn in 2015 to $1.05bn in2016 and slipping down the table fromnumber 14 to number 34. While, on thesurface, this might seem to be a disaster,Natura’s decline in brand value was largelythe result of external influences over whichit had limited control. The Brand Financeevaluation is based on present values offuture revenue streams and is discountedusing the cost of capital. Risk – the level ofperceived risk and the degree ofuncertainty in expected future economicincome – is reflected in this rate, and if thisrate increases, the present value goes down.And, unfortunately for the brand, 81% of Natura’s revenues come from recession-hit Brazil. However, Milton-Stevens notes that

(alongside AmorePacific) Natura is thebrand in the top 50 with the highest levelof R&D reinvestment. It is also investing

The valuation in the Brand Financebeauty brands puts a value on theintangible assets of a certain company,namely its ‘trademarks, logos andassociated intellectual property’ on aspecific date: 1 January 2016.

The royalty relief approachBrand Finance calculates brand valueusing the royalty relief methodology,which determines the value a companywould be willing to pay to license itsbrand as if it did not own it. Thisapproach involves estimating the futurerevenue attributable to a brand andcalculating a royalty rate that would becharged for the use of the brand. Thesteps in this process are as follows:1. Calculate brand strength on a scale of0-100 based using a balanced scorecardof a number of relevant attributes suchas emotional connection, financialperformance and sustainability, amongothers. This score is known as the brandstrength index. 2. Determine the royalty rate range forthe respective brand sectors. This isdone by reviewing comparable licensingagreements sourced from BrandFinance’s extensive database of licenceagreements and other online databases. 3. Calculate royalty rate. The brand

strength score is applied to the royaltyrate range to arrive at a royalty rate. Forexample, if the royalty rate range in abrand’s sector is 1%-5% and a brand has abrand strength score of 82 out of 100,then an appropriate royalty rate for theuse of this brand in the given sector willbe 4.1%. 4. Determine brand-specific revenuesestimating a proportion of parent companyrevenues attributable to each specificbrand and industry sector. 5. Determine forecast brand-specificrevenues using a function of historicrevenues, equity analyst forecasts andeconomic growth rates. 6. Apply the royalty rate to the forecastrevenues to derive the implied royaltycharge for use of the brand. 7. The forecast royalties are discountedpost tax to a net present value whichrepresents current value of the futureincome attributable to the brand asset.

Why use the royalty relief approach?The royalty relief approach is used forthree reasons:� It is favoured by tax authorities and thecourts because it calculates brand valuesby reference to documented third partytransactions � It can be done based on publicly

available financial information � It is compliant with the requirementunder the International ValuationStandards Authority and ISO 10668 to determine the fair market value of brands.

Brand Finance was one of the firstcompanies in the world to be accreditedto provide ISO 10668 compliant brandvaluations. The ISO 10668 globalstandard provides a consistent, reliableapproach to brand valuation thatemphasises transparency andobjectivity.

Valuers must take all relevantfinancial, behavioural and legalinformation into consideration. In orderto make its valuations of the world’s topbrands ISO 10668 compliant, Brand Finance uses data from a rangeof partners, including: Havas, BAVConsulting, Alexa, Bloomberg,Meltwater, VI360, CSR Hub andNovagraaf.

Brand ratingsThese are derived from the BrandStrength Index, which benchmarks thestrength, risk and future potential of abrand relative to its competitors on ascale ranging from D to AAA. It isconceptually similar to a credit rating.

BRANDVALUATION METHODOLOGY

BRAND RATING DEFINITIONS

Brand rating StrengthAAA Extremely strongAA Very strongA StrongBBB–B AverageCCC–C WeakDDD–D Failing

more in CRM (customer relationshipmanagement), specifically for thedevelopment of products for a youngergeneration, both of which bode well forstrong future performance. And Natura –like all Brazilian brands – stands to benefitfrom this summer’s Olympic Games, hostedin Rio de Janeiro. All in all, the brand’s lotisn’t as concerning as the statistics suggest. Another big name hard-hit by the

lacklustre Brazilian economy was AvonProducts – Brazil being the brand’s biggestmarket. Avon slid from number 12 to 21 inthe ranking with a brand value drop of$2.11bn or 54%. Avon’s biggest problemlast year, however, was its domestic NorthAmerica business, which the company itselfadmitted suffered from eroding relevance, adeclining base of representatives andprofitability struggles.In response, it recently undertook

major troubleshooting measures,which could spur a resurgence infuture months. In December, in orderto transform its international businessand strengthen the Avon Productsbalance sheet, the company sold 80%of its North American division toprivate investor Cerberus CapitalManagement. The division has sincebeen renamed ‘New Avon’ and put inthe hands of a new CEO. AvonProducts (now headquartered in theUK) has cut 2,500 jobs to achieveannualised pre-tax savings of around$65m-$70m by the start of 2017.

TITANS OF INDUSTRYAnalysing the Brand Finance beautytop 50 by parent company, bothL’Oréal and P&G come up trumps.L’Oréal was the group with the

highest total brand value, with thecombined brand values of all companiesincluded amounting to an enormous$27.73bn, streaks ahead of P&G, thecompany with the second highest total at$22.91bn. The group is also investingheavily in its up-and-coming brands;although not in the top 50 at present,Californian label NYX ProfessionalMakeup, which the company has takenglobal since acquiring it in 2014, has beendescribed as the “current star” in L’Oréal’sstable by the head of L’Oréal’s Consumer

Products Division, MarcMenesguen. The company with the most

brands in the top 50, with a total often compared with L’Oréal’s six,however, was P&G. In this year’sranking, the brands that notablychanged hands from P&G to Cotyin 2015 – including colourcosmetics labels Max Factor (27)and CoverGirl (29), and professionalhair care line Wella (37) – are stillcategorised as part of P&G’sportfolio. This, Milton-Stevensexplains, is because the transactionwas carried out via a ReverseMorris Trust, a form of tax-efficientdivestment. “Basically, it means thatP&G is still the legal brand owner –as, from our understanding, thetransaction has resulted in P&Gretaining 52% ownership of thebrands and therefore control,” shetells SPC.

Despite placing number two, P&G’scombined top 50 brands’ value dived 17%on its 2015 total, largely as a result of thestrong dollar. Likewise, Unilever, whoseportfolio’s value dropped by 20%, was hurtby both the Euro and falling revenueforecast, but Brand Finance is confident thecompany will put in a solid futureperformance on the back of its brands’strong marketing campaigns. Johnson & Johnson and Unilever both

own five brands in the league table, butthird place in dollar terms was The EstéeLauder Companies, which owns Clinique(4), Estée Lauder (9) and MAC (20), valuedaltogether at $11.93bn. Unsurprisingly, theparent company with the highest year-on-year brand value percentage growth wasAmorePacific, whose companies grew 152%to total $3.55bn.

BY COUNTRYAs it is home to leading brand ownersP&G, The Estée Lauder Companies andJohnson & Johnson, it’s little surprise thatthe US lead the way when it came to boththe number of brands (22) and the totalvalue of brands ($50.2bn) included in 2016’stop 50. Fewer brands, just 11, are domiciledin France, however they amount to$41.19bn, giving the French brands a higheraverage brand value of $3.75bn than theirAmerican counterparts ($2.28bn).Five brands in the top 50 were based in the

UK, while Germany and Japan were home tothree. Meanwhile, the AmorePacific portfoliomeant there were four South Korean brandsin the listing this year. A country to watch, says Milton-Stevens,

is India, where beauty and personal care isno longer limited to urban environmentsand where the GDP per capita is growing atan even higher rate than in China or Brazil.Here, growth opportunities lie in skin careand deodorants, and conglomerates likeHindustan Unilever, which owns thepopular make-up brand Lakmé, as well asFair & Lovely for skin care, are positionedto get the most advantage from skyrocketingconsumer demand.

RED IN TOOTH & CLAWOverall, as Brand Finance concludes, beautyis an especially “unforgiving andcompetitive” sector, and one in which“consumers lack loyalty, which is why thedrops [in brand value] can be quiteextreme”. However, it is this precise struggleto gain that elusive loyal customer and brandadvocate that drives brands to innovate,personalise and engage to stay ahead of thecompetition... and these behaviours have putthe top names in beauty among the greatestbrands in the world.

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May 2016 SPC 39

Olay might dominate the global skin care market, but its brand value dropped 45% in2016 meaning that it slid from number 11 to number 18 on the table.

Part of its problem, suggests Milton-Stevens, is its somewhat bloated portfolio,which, until recently, sat at more than 100 skus, as well as a lack of defined target market.

“Branding wise, it [Olay] has also lost its way a bit. There’s a real range of pricepoints, from $6 to quite prestige,” she tells SPC. “It has lost sight of its core marketand its line-up is too big and complicated. There is a fine line between customerattraction via innovation and going overboard.”

It seems that Olay might just agree; in a reflection of parent company P&G’s recentbrand divestment, Olay is actively reducing the number of products in its line-up,discontinuing the poorest sellers and those products that don’t fit in with its core anti-ageing message. If P&G’s move pays off, Olay could be scaling the table once again in 2017.

OLAY: TIME TO STREAMLINE

TOP ESTÉE LAUDER BRANDS

Brand 2016brandvalueClinique 5,960Estée Lauder 4,170MAC 1,803

AmorePacific’s strong portfolio meantSouth Korea had four brands in the top 50