L’Oréal Paris reached a value of USD 23.9 billion, becoming the world’s most valuable cosmetics brand for the fifth year in a row
L’Oréal Paris is the world’s most valuable brand in the cosmetics category for the fifth year in a row, according to the BrandZ™ Top 100 Most Valuable Global Brands 2017 ranking announced by WPP and Kantar Millward Brown. Over the past year, the value of the L’Oréal Paris brand rose 2% to USD 23.9 billion after the success of its loyalty-building strategy and a stronger customer focus. The fastest-growing brands were Lancôme (the world’s fourth most valuable cosmetics brand) and Shiseido (No. 13, up from 14th place in 2016). Both increased their value by 10%, to USD 9.4 billion and USD 2.7 billion respectively.
The total value of the top fifteen cosmetics brands in the BrandZ™ ranking rose 1% over the past year. During this period, brands faced challenges related to the emergence of new niche brands, currency fluctuations and pressure to lower margins driven by coupon and price promotions. The total value of brands in this sector remained unchanged from 2015 to 2016.
In the cosmetics category, which is highly commoditized and offers a wide choice of products, brands took action to stand out by responding to increasingly diverse consumer needs and concepts of beauty, introducing personalized products and beauty advice. For example, L’Oréal launched a series of 33 True Match foundations at the Golden Globe Awards ceremony. Brands also sought to align with consumers’ values. Pantene Pro-V’s (+5%) Strong is Beautiful campaign featuring, among others, martial arts champion Ronda Rousey, emphasized the value of diversity and the idea that beauty is not only what is visible on the outside. Shiseido, in turn, strengthened its reputation as a brand that does the right thing for customers and employees. In the US, Dove (+6%) used political satire in its Alt Facts campaign, which listed alternative facts about its deodorant, such as the ability to raise the IQ of users of those deodorants.
Many brands tried to increase their reach and appeal by entering new subcategories and targeting new consumer groups. For example, Lancôme – a classic brand generally preferred by somewhat older users – introduced the Juicy Shaker gloss for younger women, while Gillette (-1%) developed products for a growing group of somewhat older consumers.
Consumers are becoming less loyal to brands, and social media plays an increasingly important role in their choices. In this context, brands are striving to build stronger bonds with customers. For example, L’Oréal Paris enlisted five British beauty bloggers to collaborate. This is how the L’Oréal Beauty Squad was created, with the aim of building deeper relationships with female consumers. Brands also used technological innovations to make consumers’ lives easier and increase product accessibility: L’Oréal Paris and Lancôme developed the ability to buy directly through a mobile app, a blog or a YouTube tutorial video.
The top fifteen of the BrandZ ranking in the beauty industry faces competition from innovative niche start-ups such as Too Faced, which benefit from consumers being willing to switch brands with little pain and being able to meet their expectations for greater personalization of the offer. Local brands such as Boots, No. 7 (United Kingdom), Wardah (India), Avene (France), Fair and Lovely (India) and O Boticário (Brazil), along with retailers’ private labels, also pose a threat to global brands because of their strong understanding of local consumer needs.
The world’s 15 most valuable brands in the cosmetics category in the BrandZ™ 2017 ranking
The BrandZ ranking is the largest and most authoritative platform reflecting brand dynamics worldwide – it includes brands that successfully fit into the lifestyles of today’s consumers. BrandZ is based on a unique brand value study that combines findings from interviews conducted with more than 3 million consumers worldwide and an analysis of companies’ financial and business results (based on Bloomberg and Kantar Worldpanel data).
Doreen Wang, who heads the global BrandZ ranking, said: “If a brand wants to grow in today’s crowded and diverse beauty world, it must understand its position in the sector and know who its audiences are. Luxury brands must find innovative ways to emphasize the differences that consumers value so much, and thus build relationships with them. Mass-market brands should create bonds with consumers by focusing innovation around meeting consumer needs and making their lives easier. All brands can build loyalty by using data and technology to deliver the right message at the right moment, for example by contacting consumers and prompting a repeat purchase when they run out of a product.”
Key trends from this year’s global BrandZ Top 100 ranking:
Consumer-centric technology ecosystems are making brands an indispensable part of life. Consumers can increasingly take various actions – from shopping online to watching television – within the environment of a single brand and across multiple devices. By offering convenience to consumers, the strongest brands are able to minimize the risk that consumers will look for another provider.
New brands are becoming increasingly global, enabling them to grow quickly. Thanks to new technologies, companies can offer products and services worldwide from day one of operation. This is creating a new group of entrepreneurs, unconstrained by the geographic or sector boundaries that traditionally limited the pace and scale of growth.
Traditional non-technology brands are introducing technological innovations to increase their appeal to consumers. The fastest-growing company in the ranking, Adidas, introduced 3D printing into footwear production, while Domino’s Pizza offers customers real-time order tracking.
The BrandZ Top 100 ranking is getting younger. The average brand age is now 67 years, whereas in 2006 the average age was 84. This is the result of the emergence of newer technology brands and the development of brands in China.
Brands that clearly communicate how they will make their customers’ lives easier, such as Huawei and Toyota, recorded average growth three times faster over the past 12 years (the top tercile of the ranking grew by 170%, while the bottom third grew by 57%).
Effective communication gives brands an advantage. The top third of brands in terms of communication (including McDonald’s and L’Oréal Paris) increased their value by 196%, while brands in the bottom tercile recorded growth of 47% over the same period. Brands owe such strong results to effectively strengthening their distinctiveness among competitors.
The reports and rankings of the world’s most valuable brands, BrandZ™ Top 100, as well as a wealth of information about brands from the key regions and 14 market sectors, can be found online here. The global report, rankings, charts, articles and many other materials can also be downloaded via the BrandZ app. The BrandZ app contains the same features and functionality for all BrandZ regional reports. The version for Apple iOS and all Android devices can be downloaded free of charge at www.brandz.com/mobile or by searching for BrandZ in the iTunes or Google Play app stores.
About the BrandZ™ Top 100 Most Valuable Global Brands ranking
The BrandZ™ Top 100 Most Valuable Global Brands ranking, run by Kantar Millward Brown, which provides marketing advice and brand research within the WPP group, has existed for twelve years. It is the only study that combines brand value metrics based on interviews conducted with more than 3 million consumers worldwide. These interviews cover thousands of global consumer brands and business-to-business brands. This is followed by a methodologically rigorous analysis of each company’s financial and business results (based on data provided by Bloomberg and Kantar Worldpanel) to isolate the brand’s contribution to generated sales and shareholder value. A key element in determining brand value is how consumers perceive it, because brands are the product of business results, product appeal, clear positioning and leadership. The ranking takes regional differences into account because – even in the case of truly global brands – the metrics of brands’ contribution to value creation can differ significantly across countries.
