The numbers, as they say, never lie.
For the first time since we have been tallying these figures, a majority of the companies on the list — 59 percent — posted a decline in sales. Total sales for all of the companies equaled $212.59 billion, a decrease of 6.6 percent.
And yet — the news wasn’t all grim.
There were some bright spots in 2020 and some big winners, with 36 percent of the firms posting gains. Those are the companies pointing the way forward for the industry, and to get a better idea of what the future of beauty might look like, we analyzed the 2020 Top 100 to discover what it portends for
the future. Here, the top 10 takeaways.
1. China continues to be the primary driver of global beauty sales. Businesses with a strong presence in China — and those that were proactive in adapting to the new market realities there — benefited disproportionately as China started to bounce back after the end of the first quarter. For many companies, China was the major and, in some cases, only driver of sales growth in 2020.
2. Speed and adaptability were key differentiators. Fast-acting leaders that pivoted to digital across all aspects of the business, from consumer-facing to operational to sales, more successfully offset the profound impact of COVID-19.
3. Prestige beauty took a blow. Between the steep decline in travel retail sales and the anemic performance of the makeup and fragrance categories, luxury beauty companies were the hardest hit for the year.
4. But personal care surged. In a year in which self care, sanitation and hygiene were top of mind, health and wellbeing were a prime concern. This benefited the big mass-market players with a strong presence in the category, which overall saw lesser declines than their peers; companies like L Brands, for example, posted a massive sales leap thanks to cross-selling of products like hand sanitizer with personal care.
5. Skin care, too, captured the consumer’s interest. Skin care became not just the prevalent beauty category in China, but around the world as well. The big winners were dermocosmetics and clinical brands, as concerns shifted more toward health and self care. Market leader L’Oréal, for example, saw strong gains for its Active Cosmetics division, while gains in the category at The Estée Lauder Cos. meant it now accounts for 60 percent of the firm’s total business.
6. Is prestige hair the next big boom? Prestige hair, a nascent category, grew throughout the pandemic as consumers linked hair health with the idea of wellness. Firms that capitalized on that — including Olaplex and the Luxury Brand Partners hair portfolio — did well, even as salons closed.
7. Direct-to-consumer was a bright spot. And not just for digitally native firms. Several of the historic direct marketers ramped up their digital and social selling initiatives and outperformed the overall market.
8. J-beauty and K-beauty were among the hardest hit businesses. Both countries had benefited in recent years from strong demand from inbound tourists, which nosedived last year as international travel stalled. Several of Japan’s players took a particularly strong hit, as the importance of customer service, largely dependent on brick-and-mortar retail, and slower uptake of e-commerce than many markets, hampered business. Nevertheless, Japan’s players were particularly proactive in implementing new tools like online consultations, and the shift is likely to be profound and to shape the industry for years to come.
9. There’s a new player in the top 10. South America’s beauty leader Natura entered the top 10 ranking for the first time, thanks to its acquisition of Avon. Notwithstanding the acquisition, the company’s sales growth was impressive for the current context — its like-for-like sales gained 12.1 percent for the year, although this was in part due to inflationary pressure, which impacted the other Brazilian players in the ranking, too. At constant currency and on a pro-forma basis, Natura & Co.’s sales actually fell 2.3 percent. Still, the company outperformed its peers significantly.
10. Clear and meaningful sustainability goals are now table stakes. Consumer expectations around the environmental impact of the products they purchase has spurred companies to create clear, meaningful — and measurable — goals. Purpose-driven companies are growing at a faster-rate than those without clear initiatives.
Click on the photos below to view the products in each category.
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