On April 15, 2015, Senior Beauty and Personal Care Analyst Ildiko Szalai presented at in-cosmetics on evolving consumer habits in the global beauty market. She spoke on new beauty frontiers in emerging markets and key industry themes on the global scale.

1. EVOLVING HABITS IN GLOBAL BEAUTY
IN-COSMETICS 2015, BARCELONA
ILDIKO SZALAI – SENIOR ANALYST - BEAUTY AND PERSONAL CARE

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Euromonitor International: Strategic Global Market Research
PRIVATE LABEL AND CONSUMER TRENDS IN EUROPE

3. GLOBAL INDUSTRY HIGHLIGHTS
NEW FRONTIERS IN EMERGING MARKETS
KEY INDUSTRY THEMES
CONCLUSIONS

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0
1
2
3
4
5
6
7
2008 2009 2010 2011 2012 2013 2014
%ValueGrowth
Total / Premium / Mass Growth
Total Beauty Premium Beauty Mass Beauty
Beauty Industry Growth Sustained
GLOBAL INDUSTRY HIGHLIGHTS
Premium vs Mass Proportion
Historic vs Forecast
Premium Beauty Mass Beauty
Note: Inner circle 2009-14, outer circle 2014-19
Global Beauty
US$465bn in 2014,
up by US$23bn

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Power Shift to Emerging Markets Continues Despite Slowdown
GLOBAL INDUSTRY HIGHLIGHTS
41%
51%
-1
0
1
2
3
4
5
6
7
-100,000
0
100,000
200,000
300,000
400,000
500,000
600,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
%Growth
US$million
Developed vs. Emerging Markets in Total Beauty
Developed Emerging % Growth Developed markets % Growth Emerging Markets

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New Prospective Markets Beyond China and Brazil
GLOBAL INDUSTRY HIGHLIGHTS
Beauty Forecast Growth by Country

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0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
0
20,000
40,000
60,000
80,000
100,000
120,000
%valuegrowth
US$millionrsp
Beauty Category Growth Performance 2013 vs 2014
Retail Value Sales 2014 US$ mn % Growth 2013 % Growth 2014
Top 4 Beauty Categories Maintain Growth Momentum in 2014
GLOBAL INDUSTRY HIGHLIGHTS

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Skin Care and Hair Care Largely Dominate Future Potential
GLOBAL INDUSTRY HIGHLIGHTS
Top Category by Country

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Top Growth Segments Bring New Lucrative Opportunities
GLOBAL INDUSTRY HIGHLIGHTS
Top Growth Beauty Categories

10. GLOBAL INDUSTRY HIGHLIGHTS
NEW FRONTIERS IN EMERGING MARKETS
KEY INDUSTRY THEMES
CONCLUSIONS

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China
Brazil
India
Saudi Arabia
Indonesia
Argentina
Mexico
Iran
Thailand
Turkey
South Africa
Pakistan
Chile
United Arab Emirates
Colombia
Peru
Vietnam
Poland
Morocco
Philippines
Venezuela
Malaysia
Nigeria
0
1
2
3
4
5
6
7
8
9
10
100 1,000 10,000 100,000
%CAGR2014-2019
Absolute Market Value Growth 2014-2019 – US$ mn rsp
Emerging Markets’ Growth Prospects 2014-2019
New Emerging Frontier Markets
NEW FRONTIERS IN EMERGING MARKETS

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Emerging
markets
growth
Expanding
middle class
Young
populations
base
Intense
expansion of
multinationals
Urbanization
Beauty habits
sophistication
Common Growth Driving Factors in Emerging Markets
NEW FRONTIERS IN EMERGING MARKETS

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0 10 20 30 40 50 60 70 80 90 100
Indonesia
Australia
France
Germany
Middle East
UK
Russia
US
Colombia
Japan
Turkey
China
Spain
Brazil
India
Mexico
Minutes Spent Daily on Grooming
Daily Grooming Time
More than 1 hour 31-60 minutes 16-30 minutes Less than 15 minutes
Average Daily Grooming Routine Exceeds Half an Hour
NEW FRONTIERS IN EMERGING MARKETS

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0
50
100
150
200
250
300
350
400
450
US$mnrsp
Middle East and Africa
0
500
1,000
1,500
2,000
2,500
US$mnrsp
Asia Pacific
Staples in Developing Markets Set for Higher Absolute Growth
NEW FRONTIERS IN EMERGING MARKETS
Staples Non-essentials
Absolute Market Value Growth – 2014-2019
(US$ million)

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0 20 40 60 80
China
Russia
Turkey
Japan
Mexico
US
UK
France
% of respondents
Ratio of Consumers
Using Face Masks at
Least Weekly
0 20 40 60 80
Mexico
Indonesia
Colombia
Brazil
Spain
Germany
China
Turkey
% of respondents
Ratio of Consumers
Using Body
Moisturizer Daily
0 20 40
Japan
India
Indonesia
US
Mexico
China
Brazil
Middle East
% of respondents
Ratio of Consumers
Apply Hair Oil Daily
Export of Beauty Routines
NEW FRONTIERS IN EMERGING MARKETS
UAE: 13% CAGR
2014-2019
33% y-o-y 2014
15% y-o-y 2014

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Premium
Beauty
Mass Beauty
Mass vs Premium Opportunities in Emerging Markets
NEW FRONTIERS IN EMERGING MARKETS
86%Of Face Masks in China is Mass
96%Of Hair Care in India is Mass
99%Of General Purpose Body
Moisturisers in Brazil is Mass

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Premium Skin Care and Fragrance Potential
NEW FRONTIERS IN EMERGING MARKETS

18. GLOBAL INDUSTRY HIGHLIGHTS
NEW FRONTIERS IN EMERGING MARKETS
KEY INDUSTRY THEMES
CONCLUSIONS

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Customisation
Product
experience
Tailored
solutions
‘Asianification’
Asia inspired
concepts
International
expansion
Niche
Developed
markets
Intensifying
acquisition
Digital
Consumer
engagement
Diversifying
retail
Key Drivers to Define the Industry in 2015 and Beyond
KEY INDUSTRY THEMES

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Age Gender Ethnicity Format Texture Function
Tailored
Solution
Format: Miracle
Cushion
Foundation
Texture: Rodin
Olio Russo
Function: Clear
Scalp & Hair
Tailored:
Clinique Smart
Custom Serum
The Evolving Trend of Customisation
KEY INDUSTRY THEMES
CUSTOMISATION

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Product Customization Themes – Global Versus Regional Focus
KEY INDUSTRY THEMES
Anti-
pollution
Scented
products
Product
safety
initiatives
Brightening
Whitening
Growing
sophistication
in grooming
regimes
Raising the
bar on
ingredients
Growing
premium
potential
Niche
category
focusMultiple
benefits add
value
Niche
category
focus
CUSTOMISATION

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Asian Concepts Expanding into International Markets
KEY INDUSTRY THEMES
Textures
Benefit
Formats
ASIANIFICATION

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•Clarins Extra-
Comfort Anti-
Pollution Cleansing
Cream
Anti-
pollution
•Mise En Scene hair
care range
Scented
products
• Hwa-Hae mobile
app provides
information on
beauty product
ingredients -
South Korea
Product
safety
initiatives
• Wardah product
range - Indonesia
Halal
beauty
Further Potential Asian Waves Heading to International Stage
KEY INDUSTRY THEMES
ASIANIFICATION

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0.0
0.2
0.4
0.6
0.8
%marketvalueshare
AmorePacific Corp: Korean
Brands’ Performance in China
BPC 2009-2014
Mamonde
Laneíge
Innisfree
Growing International Demand for ‘Brand Korea’
KEY INDUSTRY THEMES
Sulwhasoo on Amazon.co.uk
Best selling AmorePacific brands in the
US
The FaceShop
2003: Establsihed
2014: 2,300 stores in 29 countries
ASIANIFICATION

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-3 -2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2 2.5
P&G
Avon
Amway
Beiersdorf
Kao
Shiseido
Unilever
Johnson & Johnson
Jala (Group)
Henkel
Shanghai Inoherb
Nu Skin
Yunnan Baiyao
Mary Kay
Estée Lauder
AmorePacific
Proya Cosmetics
L'Oréal
Market value share growth (percentage points)
China: Share Growth in Selected BPC Companies 2009-2014
Asian Players Intensify Competition
KEY INDUSTRY THEMES
Internationals ‘ eroding
market value share
ASIANIFICATION

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Regional Players Shake Up the Rankings
KEY INDUSTRY THEMES
Global Ranking - Regional Players
ASIANIFICATION
0
5
10
15
20
25
30
35
40
45
50
2005 2014
%valueshare
Top Beauty Players Market Share
Henkel AG & Co
KGaA
Shiseido Co Ltd
Avon Products Inc
Johnson & Johnson
Inc
Estée Lauder Cos
Inc
Beiersdorf AG
Colgate-Palmolive
Co
Unilever Group
L'Oréal Groupe
Procter & Gamble
Co

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Dry Shampoo: Herbal
Essence
Multi-Cultural: Carol’s
Daughter
MEA: Gliss for covered
hair
Exclusive: Le Labo
Wide Range of Niche Growth Drivers
KEY INDUSTRY THEMES
NICHEGROWTHDRIVERS

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La Labo
Rodin Olio
Lusso
Parfums
Frédéric
Malle
Glamglow
NYX
Cosmetics
Niely
Carol’s
Daughter
Magic
Holdings
X x
Penhaligon’s
L’Artisan
Parfumeur
Xx
Rochas
Parfume
REN
Intensifying Acquisition Activities for Niche Brands – 2014-2015
KEY INDUSTRY THEMES
NICHEGROWTHDRIVERS

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Fastest Brands Globally – Where is the Next Acquisition?
NOVEL GROWTH CONCEPTS
0 20 40 60 80 100
Innisfree
Rodan + Fields
Nip + Fab
Bulldog
Ciaté
Glamglow
Black Up
Al Qurashi
Beauty Diary
Byredo
Baylis & Harding
Inglot
Aesop
Kiko Milano
Catrice
Mud
Bioderma
Fastest growing brands 2013-14 %
(17-90% growth)
0 5 10 15 20
The Face Shop
Coreana
Herborist
Rodial
Urban Decay
Jurlique
Proya
Make Up For Ever
Black Opal
Marubi
Perfect
Dabur
Iman
Iope
Jo Malone
Godrej
MG
Fastest growing brands 2013-14 %
(10-17% growth)
NICHEGROWTHDRIVERS

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Multi-
channel
retailers
Pure e-
tailers
Company
websites
Social media
sites
Mobile
applications
Direct
sellers
In-store
digital
Beauty
boxes
From Niche Categories to Diversifying Niche Platforms
KEY INDUSTRY THEMES
DIGITAL
Digital

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0
5
10
15
20
25
30
35
40
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
%CAGR2009-2014
US$million
Internet Retailing Growth by Industry 2009-2014
2009 2014 % CAGR 2009-2014
Internet Retailing Still a Relative Small Channel in Beauty
KEY INDUSTRY THEMES
DIGITAL

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Building Blocks of Digital Beauty Strategies
KEY INDUSTRY THEMES
‘Best price’
Purchase Motivation Comparability
Retail Curation
Self-service Retail Focus on Target Audience
Personalization
Virtual ‘Try –On’ Customized Solutions
Brand Engagement
Brand Building Consumer Analysis
DIGITAL

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0 10 20 30 40 50 60 70
Buy something online
Visit price comparison websites
Read reviews of products and services
Upload/share photos or videos
Participate in microblogging
Use an internet banking service
Stream or download audiovisual content
online
Visit social networking sites
Visit online news sites
% consumers with online activity once a week
Frequency of Online Activities 2011/2013
2011 2013
Selling to More Informed and More Engaged Consumer
KEY INDUSTRY THEMES
DIGITAL

34. GLOBAL INDUSTRY HIGHLIGHTS
NEW FRONTIERS IN EMERGING MARKETS
KEY INDUSTRY THEMES
CONCLUSION

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21,052
10,144
4,052
3,711
2,228
2,112
20,097
China Brazil USA
India Saudi Arabia Indonesia
Others
20,115
7,568
7,317
5,820
5,780
5,212
4,001
3,675
3,457
Skin Care Colour Cosmetics
Hair Care Fragrances
Oral Care Men's Grooming
Baby BPC Deodorants
Bath and Shower
Future Growth Highlights
CONCLUSION
Absolute Beauty Market Value Growth by Country and
Category – 2014-2019
Categories marked with orange forecast to exceed global
beauty growth of 2.6% CAGR 2014-2019

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Reinvention in Global Beauty Required to Sustain Growth
CONCLUSION
asianification
customisation
Cross-category
personalisation
Exclusive
Multi-benefit
Niche segments
premium
multi-culturalreinvention
reinvention
Digital
reinvention
reinvention
reinvention
reinvention
reinvention
reinvention
reinvention
reinvention
reinvention
reinvention
reinvention
reinvention
reinvention
reinvention

37. THANK YOU FOR LISTENING
Ildiko Szalai
Senior Beauty and Personal Care Analyst
Ildiko.Szalai@euromonitor.com