Monday9 March 2020 ★ FINANCIAL TIMES 7
$777m of impairment charges related to
weaker performance of its make-up
brands in the US, where sales fell
5 per cent to $4.7bn in the year to
June 30.
Brands that advocate a more natural
look are thriving. Direct-to-consumer
operator Glossier has become among
the most successful since it launched a
decade ago by popularising a “skin first,
make-up second philosophy”.
Ali Weiss, t New York-based Glossier,a
said it created itsFuturedew il-serumo
hybrid product to respond to women’s
desires for a barely there clean look. It is
“all about healthy hydration, glow and
dew”, she said.
Larissa Jensen, a beauty analyst at
NPD Group, predicted that future
make-up sales would be driven by so-
called “clean beauty” products that
emphasise natural ingredients paired
with more sustainable packaging and
manufacturing. “We think this will be
big,” she said.
Others think the depressed demand
for make-up reflects a more profound
shift, and that the “less is more” spirit is
here to stay.
In videos posted on YouTube, influ-
encers such as Jeffree Starrecount heirt
“anti-hauls” that explain what they did
not buy, and discuss “editing” their mas-
sive make-up collections. Others post to
Instagram about “project pans” in
which people choose products from
their make-up collection and chart
their progress to the bottom of the vial
or bottle.
On online chat platform Reddit,
members of a group dubbedMakeup
Rehab post about their experience
doing “no-buy” challenges in which
they aim to go months or years without
adding to their collections.
One blogger wroteof overcoming a
Sephora “addiction”costing her $4,
a year. Eventually, the desire to buy
faded, she said.
“I realised today... Each dollar I
spend, each minute I take consuming
make-up media is one taken from some-
where else.”sprays — a marked contrast to the high-
maintenance Kardashian aesthetic.
Piper Jaffray’s annual survey of teens
showed that last year spending on cos-
metics fell to 19-year lows, downa fifth
to reach $106 spent per person each
year.A growing number of wealthier
teens indicate they are not wearing
make-up at all — up from 12 per cent to
20 per cent in the past fiveyears.
Women are increasingly shifting their
spending from make-up to skincare
products such as face masks and
serums, or opting for hybrid products
such as tinted moisturisers that blur the
lines between the categories. That
dynamic has helped the big companies
such as L’Oréal and Estée Lauder —
which also have strong skincare offer-
ings — weather the downturn in
make-up.
But it has left many independent cos-
metics brands rushing to launchskin-
care lines,asKylie Jenner’s brand
did last year.
Jean-Paul Agon, L’Oréal chief execu-
tive, said in an interview that the return
of a more natural look was forcing some
of the indie brands it had acquired in
recent years to adapt. L’Oréal’s NYX and
Urban Decay were emblematic of a cer-
tain “very spectacular, visible and a bit
heavy” look that was now out of favour.
“The brands just need to evolve,” said
Mr Agon. “Our teams in the US are
working to launch new products that
correspond more closely to what con-
sumers want now.”
The drag from these brands caused
L’Oréal’s North American sales
to decline .8 per cent last year on a like- 0
for-like basis, ending more than a dec-
ade of consecutive yearly growth. Mean-
whilein February, Estée Lauder bookedL E I L A A B B O U D— PA R I S
When beauty blogger-turned-entrepre-
neur Huda Kattan was shooting an
advertising campaign for her new skin-
care line, she chided staff for airbrush-
ing her to perfection.
“You took away my zits, put them
back!” she recounted in a recent Insta-
gramvideo. “I want photos to be as real
as possible.”
Few have had their finger on the pulse
of the US beauty market like Ms Kattan,
who over the past seven years has built a
make-up business valued at more than
$1bn by championing a heavily
made-up look she dubbed “cake face”.
That the 36-year-old has now moved
into skincare reflects concerns about
how the once-booming US beauty mar-
ket — the world’s largest — has gone into
reverse.
High-end make-up sales fell 7 per cent
to $7.6bn last year, contracting for the
first time in a decade, according to NPD
Group. The market research firm tracks
department stores and speciality retail-
ers such as Sephora and Ulta Beauty but
not mass-market outlets such as Target.
In contrast, US skincare sales rose
5 per cent to $5.9bn, outpacing make-up
for the third year in a row.
This dynamic is already having reper-
cussions for everyone, from the sector’s
biggest performers L’Oréal, Estée
Lauder and Coty to newer independent
brands such as Anastasia Beverly Hills
and ColourPop Cosmetics.
Ulta Beauty, a US chain of beauty
stores, lost almost a third of its market
value in one day last August after it
issued a profit warning and predicted
continued weak demand for make-up.
Industry executives said that a shake-
out is looming that will cull so-called
“indie” brands and challenge estab-
lished companies.Competitors are
scrambling to adapt to an environment
where the latest face mask is more cov-
eted than a new eyeshadow palette.
“In the boom years everyone was win-
ning in make-up, but now you’re likely
to see a gap open between the winners
and losers,” said Chris de Lapuente,
chief executive of LVMH-owned
Sephora. “We’re going to see which of
the new independent brands have long-
term sustainability and which end up
being fads.”
Sephora is unlikely to add as many
new make-up brands as in the past, said
Mr de Lapuente: “If the category isn’t
growing, then we will have to be more
discerning than before.”
While Sephora is pressing on with
plans to open up to 100stores n the USi
this year, skincare and haircare prod-
ucts — rather than make-up — will get
more of the prominent display space
near the front of stores.
As the US stutters, cosmetics sales
have been growing at a double-digit rate
in much of Asia, while Europe has been
flat to slightly up.
Several reasons explain the US
make-up slowdown. Industry execu-
tives and analysts said they range from
aesthetic considerations to acyclical
swing between skincare and make-up.
Many think fatigue has set in among
women whobought toomuch.
One thing is clear: the foundation-
heavy look is no longer in vogue. The
“contouring” technique, whichinvolves
applying several shades of product to
parts of the face to subtly enhance cer-
tain features, has been replaced by a
more natural look.
Brought to the market by influencers
such as Kim Kardashian, contouring
spawned a cottage industry of make-up
tutorials on YouTube and Instagram,
which underpinned salesin the boom.
The change was reflected in the rise of
the “VSCO girl”, a teenage fashion trend
that went viral last year. Named after
the photo-editing app VSCO, and known
for a relaxed and natural look, VSCO
girls favour lip gloss and facial
CO M PA N I E S & M A R K E T S
Fresh-faced fashion takes shine off make-up
High-end sales are falling as consumers turn from ‘cake face’ beauty products to serums and skincare solutions
Sources: NPD Group; L’OrealL’Oréal North America
Like-for-like sales growth ( change, year on year) Total sales ( bn)- - - US make-up sales in decline
Annual change- - Make-up Skincare FragranceE M I KO T E R A ZO N O
Plant-based meat substitute salesgrew
18 per cent in the US last yearto almost
$1bn amid increasing consumer inter-
estinalternativeproteins.
The riseon the previous year’s figures
came as overall plant-based food sales
increased by 11 per cent to $5bn in 2019,
compared with the total US retail food
market, which grew by 2 per cent,
according to the Good Food Institute
and the Plant Based Foods Association,
which commissioned data from market
research firm SPINS.
The environmental impact of live-
stock and dairy sectors as well as con-
cerns about animal welfare and health
have been driving interest in plant-
based alternatives, increasing the
number of so-called “flexitarians” who
are reducing their meat intake.
Plant-based meat sales have been
boosted by anincrease in offeringsfrom
food manufacturers ranging from start-
ups such as Beyond Meat to leading con-
sumer goods companies including
Nestlé and Kellogg’s as well as leading
meat suppliers such as Tyson.
According to GFI, an alternative pro-
tein lobby and consulting group,
14 per cent of US households uy plant-b
based meat, which accounted for 1 per
cent of the total US retail meat market.
Innovation in plant-based alterna-
tives continued to be strong, according
to analysts who attended a leading con-
sumer goods conference in New York.
“Plant-based meat continued to be a hot
topic for food companies with upcom-ing launches and innovations,” said ana-
lysts at Bernstein, the research group.
GFI aid the retail numbers indicateds
that the plant-based food trend was not
a just a “bubble or a fad”.
“This is a tipping point, with so much
product innovation yet to hit the mar-
ket,” said Caroline Bushnell, associate
director of corporate engagement.
The growing market for plant-based
meathas meant increasing production
for market leaders, helping them to
lower manufacturing costs.
Impossible Foods last week said it was
cutting whole pricesto its distributors.
Sales of plant-based milk, the largest
category of plant-based foods, totalled
$2bn, a 14 per cent market share.Oat
milkwas the fastest-growing, with dol-
lar sales surging 690 per cent in 2019.Food & beverage
US sales of plant-based food alternatives rise
Huda Kattan
has moved into
skincare after
building a
$1bn make-up
business,
reflecting fears
the US market
has gone into
reverse— David M.
Benett/Getty Images‘In the
boom yearseveryone
waswinning in
make-up,but now
you’re likelyto see a
gap open’MARCH 9 2020 Section:Companies Time: 3/20208/ - 17:00 User:lyndsey.jones Page Name:CONEWS2, Part,Page,Edition:USA, 7, 1