France's beauty market shows shoots of growth

After a challenging 2015, skin care and make-up offer hope, says Jo Allen

French consumers may still be among the world’s biggest spenders on beauty and personal care products, lavishing €202 per capita in 2015, but they may struggle to retain the title in the years to come. Consumers’ continued reluctance to increase their spend was one of the key factors behind the lacklustre performance of the French C&T market in 2015, which declined by 2% to $16.8bn according to Euromonitor International.

Natalie MacMillan, Senior European Retail Analyst at Mintel, comments: “The French economy remains weak and it is not seeing the same rate of recovery as Spain or Italy. Consumer confidence is among the lowest in the eurozone, although it is improving.” Yet it would appear that, while household spending starts to pick up, French consumers are singling out C&T products as a category in which to reduce their spend. “Growth in spending on the personal care goods category has been weaker than that of overall spending since 2012,” explains MacMillan “This is a mature market and a good proportion of it is non-discretionary spending. The tendency for consumers to hold back from larger purchases has restrained growth a little, as has the ongoing stagnation and decline in prices in the last few years.”

Despite this, “the prestige market continued to perform better than mass products”, says Izaskun Bengoechea, Research Manager at Euromonitor, “although the difference is not as big [as in previous years]”. Consumers continued to be lured by the breakthrough innovations and enhanced benefits offered by premium products, particularly in the facial skin care and colour cosmetics categories, which were “very slightly positive in 2015”, according to Mathilde Lion, Beauty Europe Industry Expert at The NPD Group, while fragrance, which accounts for two thirds of the prestige beauty market, was a challenging sector, declining by 1.6%.

Indeed, the prestige market was faced with a greater number of difficulties in 2015 than it was in 2014. Lion tells SPC: “If we look at the full year, January was down following the [Charlie Hebdo] attacks, then the market started to recover with a positive Valentine’s Day and Mother’s Day. But we started to see a slowdown in the summer, which has been amplified since the Paris attacks on 13 November. Due to the closure of department stores that weekend and fewer people in the stores, sales during the two weeks that followed were down 18% and they did not recover in December. This was not the only explanation for the performance of the prestige beauty market in 2015, but I believe it contributed quite highly to the losses.”

Other issues that affect the prestige market remain the intensifying long- standing competition both from online sales and specialist beauty retailers. For example, Bengoechea notes: “Chanel decided to open a permanent beauty boutique in November 2015 following the success of its pop-up version in 2013 and MAC continues to go from strength to strength largely thanks to its expansion in the number of stores.”

There is also increasing competition from pharmacy brands, which carry a lower price tag yet are high on innovation, such as Caudalie, which is ranked fifth in the pharmacy channel. Angélique Mahot, Sales Manager at Caudalie France, tells SPC: “The pharmacy channel grew by 2% thanks to new consumers from selective stores who come to pharmacies to buy quality premium products at a less expensive price.” Parapharmacies, of which there are now 700 in France, are also winning consumers, posting dynamic sales up 5.6% in 2015 according to IRI. The pharmacy and parapharmacy channel is performing well in France as it “has a good reputation with consumers, thanks to the readily available and comprehensive advice from pharmacists and a wide range of prices for the consumer,” says Mahot. Emily Mayer, Unit Director at IRI, adds that “Everything is growing very well in this channel. Parapharmacies are very strong on face care and body care. Face care is the biggest category and still dynamic, up 2.2% with brands such as Sanoflore, Caudalie and Nuxe performing well.” Meanwhile, the channel has benefited from Chinese and South Korean tourists who are visiting Paris and taking the opportunity to stock up on coveted French pharmacy brands, which are often cheaper in France.

Over in the mass channel, cosmetics and personal care was in fact the only FMCG category to be in decline, with sales through hypermarkets and supermarkets dipping by 0.7%, according to IRI. “This trend is not new in France,” notes Mayer. “Value sales have been very low since 2004, so 2015 is not atypical.” There are several reasons for this, she says: “The price war on C&T products is worse than in other markets. The resulting price decrease in 2015 was -2.2% compared with 2014, which is why it is difficult to create value; the level of promotion increased last year, and a very important factor was that in 2015 innovation generated less turnover than in 2014.”

Heading for a fall

Of all C&T sectors, the worst hit was hair care, which, according to Euromonitor, retracted by 2.8% due to heavy discounting and bulk offers, as well as the inevitable backlash that followed the introduction of higher priced innovations over the past three years. “All three sub-categories, hair care, styling and colourants were in decline,” confirms Mayer. However, even in this category, there were some successful launches. Thomas Gramain, Marketing Director of hair salon operator Provalliance with brands such as Franck Provost and Jean Louis David, explains: “The most popular products are those that are oil-based and promise multiple benefits in one treatment; those that promise miracles.” One key launch that ticked all the boxes came from L’Oréal, which is the biggest player with 65% of the French hair care market. Elsève Total Repair 5 Miracle Instantané is a 60-second intense restoring treatment that contains pro-keratin and ceramide to transform damaged hair, claiming to leave it uniformly smooth and soft.

It was a hairy year for men’s grooming products too, as 1.8% was shaved off this category, due in part to the decline of razors, shaving foams and aftershave: a result of beards remaining popular. But even in parapharmacies, the men’s facial skin care segment is struggling, with a dramatic 8.8% decline (IRI) as brands fail to seduce men to invest in their products. It is a problem symptomatic of the segment in general, and one that Unilever’s Axe brand is striving to address with its new Find Your Magic campaign to promote its new Signature, Adrenaline and Urban grooming line trio, with a concept which marks a radical u-turn as it steps away from stereotypes about manliness to celebrate the individuality of each man.

Major new launches usually play a key part in the success of the fragrance category in France, and the market saw some strong innovations in 2015. The two best performing launches, according to NPD, were Lancôme’s La Nuit Trésor, a flanker with a mix of black rose and Tahitian vanilla orchid absolute that is described as a gourmand aphrodisiac; and Sauvage from Dior, the brand’s first cologne for ten years fronted by actor Johnny Depp. So why did sales remain underwhelmed, and drop by 1.6% in prestige? As Lion says: “We cannot say that it was a lack of innovation because there were strong launches, particularly since the autumn. But these were not enough to drive growth.” Lion cites a drop in  purchase frequency among consumers, while “the revenue driven by women’s launches was below that of last year”.

But it was not all doom and gloom. Some product sectors positively sparkled with growth, such as the sun care category, which according to provisional figures reached €375m. IRI’s Mayer confirms: “The most positive beauty category was sun care, as France had very good weather last summer.” Bengoechea adds: “French consumers are now using higher SPF protection, and also throughout the year as opposed to just during summer months. Consumers are not only aware of the risks of sun exposure, but they increasingly know that it is one of the key reasons for premature skin ageing and wrinkles. Despite the fact that many skin care creams and colour cosmetics contain SPF, many French consumers are increasingly applying it on top of these products.” Campaigns such as Skin Checker from La Roche-Posay have successfully helped to raise awareness of skin cancer prevention, while innovations in tinted, brightening and blur-effect cross-category formulations have also added interest to the category. 2015 saw the introduction of product claims that further protect the skin from oxidative stress too, such as La Roche-Posay’s Anthelios XL SPF 50+ Creme which incorporates a new antioxidant active derived from traditional Chinese medicine, baicalin, and L’Oréal Paris’ Sublime Sun Cellular Protect range, which contains jasmine polyphenol for its antioxidant properties.

Skin care shines

But the brightest star in the French C&T market last year was probably the fact that the largest category, skin care, worth a staggering t4.17bn, not only recorded positive growth overall, it experienced a revival in the prestige channel, climbing by 1.6%, its best result in three years. Growth was achieved by the core segments, anti-ageing products and moisturisers, while Lion notes: “We can also see we had new kinds of growth coming from trends linked to achieving radiant skin that is free from imperfections.” Smaller segments such as lotions and tonics rocketed by 10% and masks – which are booming all over Europe and the US – shot up by 5%, while skin cleansing devices jumped 31% as brands developed ways for consumers to achieve a glowing complexion. The best performing prestige launch was in fact a cream-serum formula, Dior’s Capture Totale Dreamskin, described as an “age-defying perfect skin creator” that reduces dark spots and redness, evens skin tone, combats wrinkles, increases firmness and – the all-important claim – boosts radiance.

Caudalie’s Mahot points to another important trend: “The oils market is booming. Our Polyphenol C15 Detox night oil and Vinosource Nourishing night oil are a huge success, as is the Divine Oil for the body.” She notes that they appeal due to their “very lightweight textures, efficient active ingredients and ultimately the pleasure of the beauty ritual”. Indeed, oils have flowed into multiple product categories, from hair colourants to even mascara: Rimmel London, which is performing well in France, according to Mayer, even brought the trend to mascara, with the launch of Wonder’full Mascara with Argan Oil.

Mayer also notes how micellar water – a long time favourite in pharmacy skin care – has become a big seller in the mass market, as leading brands Nivea, Mixa and Garnier all launched their own versions.

A further development in skin care is that, says Bengoechea, “natural and organic brands are coming of age, and customers are taking these natural features for granted”. This has pushed brands such as Caudalie to develop innovations that feature cutting edge technologies, such as those used in the brand’s Resveratrol Lift range of anti-ageing products which, says Mahot, “has been created in partnership with Dr David Sinclair and Harvard Medical School”.

Grocery brands claim victory Many of the leading perfumery chains, including Sephora, Nocibé and Marionnaud, have placed considerable focus on developing, expanding and promoting their own private label lines in recent years. Now grocery retailers have woken up to the potential of offering exclusive own brands, dedicating more shelf space to a broader product selection from these lines, which are being increasingly well received by consumers. In fact, consumer panel-led cosmetics award event Victoires de la Beauté recognised the growing popularity of exclusive supermarket brands in its 13th annual ceremony last September. Together they accounted for 15 of the total 49 award winners, being singled out due to their sophisticated textures and product benefits. Les Cosmétiques Design Paris, a brand exclusive to Carrefour, Intermarché’s Labell and Lidl’s Cien dominated the mass market category awards across facial skin care, colour cosmetics, hair care and shower gel. One winning product, Labell’s BB Cream 5 en 1, was awarded for its ability to mask redness, blur imperfections and create an even complexion with a natural tone.

Defining demand

Colour cosmetics sales have also been brightened by the same trends that have propelled the skin care market. The contouring and strobing craze has generated stronger sales in powders and concealers in the premium market, while primers and highlighters have driven 5.8% growth of the market’s ‘all other face’ products category. Concealers are also performing well in the mass market, as they are “being used to camouflage certain spots and help to create the new contouring trend to sculpt and create shadow and depth or to reflect light”, says Brian Feinman, Marketing Director of Biguine Make-Up. He notes that lip make-up has also been a key trend in 2015, with both nude lips and vibrant and intense colours proving popular. “Biguine Make-Up’s Color & Mat Lipstick is a huge success on the market and some sales points were sold out after a few months,” he adds. In the prestige market, lip colour in fact surged by 13%, driven by very strong launches from Chanel, with Rouge Coco and the relaunched Dior Addict lipstick, with its breakthrough hybrid colour and top coat formulation. “When you have both Dior and Chanel launching new products, or even relaunching products, it has a strong effect on the market,” says Lion.

2015 was not an easy year for the C&T market in France. But despite the significant challenges it faced, there were some glimmers of success in all channels. It appears, however, that there is a long road to travel before a glowing set of results will return. For the mass market, Mayer believes that brands will have to do more than innovate to help the channel to recover decent growth, “especially in terms of merchandising in-store, because beauty brands are currently sold like cans of soup”. She adds: “It is not very attractive for shoppers. There needs to be a big change, otherwise shoppers will be seduced by other channels, such as the internet and pharmacies, but I don’t think this is going to come this year. At best, I think we will end 2016 on 1% growth.”

Meanwhile in the prestige market, Lion believes that unless the economic situation improves, there is unlikely to be strong growth in prestige, while a possible decline in tourist numbers might also affect the market. “Yet prestige resists quite well in times of crisis,” she notes, “so the market should stay stable and remain on the same trend in 2016.”

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