PPage 44age 44 DCF and valuation pIndustry oaramevervieterws … and remains a supply-driven market underpinned by innovation Global luxury goods Title for section H Global cosmetics market H X Welcome to the third edition of EY’s annual Sales of industry players are expected to grow at a healthy rate, led by double-digit annual growth rate for Financial Factbook for the luxury and cosmetics L’Occitane and Natura from FY11A to FY14E. X sector. The Factbook combines financial Increased demand through innovative products will cater to underserved emerging markets. data, insight from EY’s global team of sector X Introduction of eco-friendly, sustainable and naturally derived beauty products and cosmetics will stimulate specialists and opinions of external experts. demand in established geographies. 1 Natural products 3 Strong potential from the men’s segment Titles for charts • The product portfolio of industry players has expanded into natural and green • The demand for men’s products has also boomed during the past five years, with products, replacing commonly used chemicals and synthetic ingredients with Asia emerging as the most crucial market. organic inputs, responding to changes in consumer tastes and preferences. • Consumers in Asia account for 64.0% of the global men’s skin care market, which • Initially introduced into the skin-care product segment, the natural product shelf still pales in comparison with the overall women’s skin care, but is reportedly has now expanded to other segments of the industry. growing at a rapid 9.4% per annum. • The new product lines have created new markets for the industry, and new • Moreover, spending on men’s skin care still totals less than 3.3% of the total companies have entered the industry to satisfy this demand. women’s skin care market, further indicating potential room for growth. • The demand for research and development personnel has increased significantly, which is key to remaining competitive and staying on top of the latest industry trends. 1 2 Key role of digital media 4 Widespread growth Titles for charts • The digital revolution has opened up huge opportunities for the beauty world as it • For the second year running, dermocosmetics was the most dynamic market, with allows mass-market brands to foster closer relationships with their consumers growth of 5.1%. through web interaction. • Makeup, which provides consumers with a medium to express themselves and their • It has enabled brands to provide new ways to reach, educate and inspire new creativity, was in 2014 the fastest growing category worldwide at 5.0%. consumers, as well as loyal customers, in order to stimulate the market’s future • The market was buoyant on all continents, even in Western Europe, with growth of growth. nearly 3.0%. • Today’s consumers are informed and connected, and are looking to personalize • With growth of 5.2%, the selective market continued to grow at a steady pace in their routines. The tendency is also clear in the prescription-based dermocosmetics 2014, bolstered by Asia, the United States and e-commerce; it contributed 29% of sector, which meets the health and beauty expectations of a growing number of global growth. consumers. Source: Data based on consensus of several brokers’ reports for each company. SNooutercse:M: La’rOkreét cal Aapnitnauliazl Ratieopn iors bt 2a0s1e4 ad onn a od otnhee-r smeolnetch ated rveerasgee aarcs oh f December 2012. NTohte 2e: 101) L2 g’Orroéawl eth cstiomrraetseps oonf tds the wo tohre sldwalieds ge crooswmteh rticas ite bn neetwt meean FnuYfa1c1tA aurenr cd FosYt1s, e2Ax/cElu. ding soaps, oral hygiene, razors and blades as well as currency effects. The luxury and cosmetics financial factbook 2015