How Beiersdorf Spots Opportunities Amid Beauty’s Slowdown

Instead of fixating on beauty’s slowdown, German-beauty conglomerate Beiersdorf is keeping its focus on steady growth.

The owner of household brands like Nivea and Aquaphor as well as luxury labels like La Prairie and Chantecaille is betting big on emerging markets, strength in mass labels and hero ingredients to keep up momentum at a time when others in beauty may be struggling.

In April, the group reported first-quarter sales growth of 3.6 percent to €2.7 billion ($3 billion) and maintained full-year guidance of 4 to 6 percent sales growth.

Its portfolio of drugstore and dermatological brands has offered the company some stability. Beiersdorf is certainly not immune to challenges: luxury skincare label La Prairie has struggled in part due to the slowdown in China; its global sales dropped 17.5 percent in the first quarter. Still, its mix of premium and accessible labels has bolstered its resiliency.

Global economic and geopolitical uncertainty is among Beiersdorf’s most pressing challenges. According to chief executive Vincent Warnery, the conglomerate was managing US production and product storage costs before any tariffs (or would-be tariffs) go into effect. Meanwhile, other markets, including India, are showing strong potential at a fortuitous time, given the company’s plans to accelerate its global expansion.

The Business of Beauty: Many companies have been facing a challenging start to this year, but you kept your full-year guidance of 4 to 6 percent growth. What are the biggest headwinds facing beauty right now globally, and how is your company overcoming them?

Vincent Warnery: We have to get used to the fact that the market is going down to a slower growth level. We are no longer in the double-digit growth we had after Covid. In this market, the usual headwind is obviously China, because we don’t know what will happen [there]. We are still all hoping to get a recovery. The new headwind [is] we are not so sure what will happen in the US with all this stop-and-go on tariffs. Where we have the really good potential is still in emerging markets, not only the usual suspects, like Latin America and Southeast Asia, but for example, India. India is a country where we are all investing a lot, because there is new distribution online. There is also the middle class willing to spend money.

The Business of Beauty: For La Prairie, are you focusing more on making changes to the China strategy or on other regions?

VW: We have been pretty late entering the e-commerce ecosystem in China. We are super successful, first with Tmall, then we entered with JD.com and [have been active for] one year [on] TikTok.

We are trying to correct a few mistakes. For example, we [were] increasing prices at a level which was not sustainable. The second element: we are trying to make our counters more welcoming. We are changing the look and feel of our counters. We used to be very good at maintaining our VVIPs [very important VIPs], but [we were] no longer [good at] recruiting new consumers. This is changing now.

The Business of Beauty: And moving on to the US, has the company seen any impact from the news of tariffs?

VW: Only 10 percent of the products I’m selling to the US are coming from Europe, where I would have had a 10 or 20 percent tax increase, which is not really material. We’re not hit by that. The issue is more the impact it could have on consumer confidence and the market dynamics in the US. With inflation, we are very afraid that people will start to lose jobs and everything. Beauty might be one of the categories which is less of a priority, and then we’ll see a decline. We see that already happening in some skincare categories.

The Business of Beauty: Have you taken any actions in response to the tariffs yet?

VW: We will not change the supply chain, because we are already producing one third of our products in the US. We will not open a new factory. What we have done is some stocking. We had three months of stock in the US in case something happened. If we have to react, we will go through price increases. That’s the only thing we can do.

The Business of Beauty: Even before the tariffs, there has been talk of consumers in the US and other places feeling pressure on the cost of living. Does that have an impact on your business strategy?

VW: The beauty of the beauty market is that in bad years, we grow 4 percent, and in good years, we grow above 6 percent. We are always growing. This is not a category in which you are ready to make such a compromise that you stop buying products. We have a pretty large range, you know, if you want to buy a Nivea cream at 2 euros, you will find it. If you want to buy La Prairie for 1,500 euros, you will find it. We have an offer which is adapted to any kind of consumer expectations and consumer confidence.

The Business of Beauty: Is there more appetite for accessible brands right now or luxury beauty?

VW: You clearly could see that derma brands were growing at the expense of mass-market brands over the last three, four, five years in the US. Now you see the mass market being more dynamic. There is a little shift from premium to mass, which is not bad for us, because we have both — we have Nivea; we have Eucerin. But we see that people are perhaps less likely to put extra money into skincare, and this is [why] some mass market brands are doing well in the US.

The Business of Beauty: What are the best strategies for keeping household names and classic brands relevant in a beauty industry with so much innovation and newness?

VW: You have to come up with new products. This is something we have been doing extremely intensively [with] Eucerin.

The Business of Beauty: Beiersdorf has been using hero ingredients across brands in its portfolio. What are the benefits of this model, and are there any drawbacks?

VW: The obvious drawback is people are thinking, ‘Okay, why would I put 1,500 euros into La Prairie products with thiamidol? I could get it for 40 euros.’ We have to be able to explain that, yes, the ingredient is the same, but the ingredient is a small part of the product; on top of the ingredients, you have the specific formula, the textures, the positioning of the brand, the storytelling.

If you look at luxury brands today, if you look at the communication ... It’s much more claims, data, proven efficacy.

The Business of Beauty: And as consumers become more educated about skincare and ingredients, is that making its way into the luxury skincare category?

VW: Yes, absolutely. If you look at luxury brands today, if you look at the communication, it’s much less fluffy marketing. It’s much more claims, data, proven efficacy. Consumers are saying, ‘Yes, I really need to pay much more, but give me a reason for that.’ It cannot just be that you are [advertising with] a celebrity or that you have fluffy advertising.

The Business of Beauty: Are you interested in branching into more categories, or are you staying focused mainly on skincare?

VW: I’m interested in categories where I can bring added value. If you look at Chantecaille, this is mostly in foundation, in products which are applied to the skin. I have an expertise there. If you ask me if I have an expertise in mascaras, lipstick, no, I don’t. I will only go into these categories if there really is an impression that as a company, we can bring something, and it will be really an exception to the rule. We are a skincare company. This is where we will focus 90 percent of our energy and investment.

The Business of Beauty: And are you looking to acquire more brands in the near future?

VW: Absolutely. Chantecaille is a good example of what we can do. It took us some time to re-engineer the brand, but this year, we know we are expecting an extremely good year. We are pretty optimistic about Chantecaille, so we want to buy other brands like [it].

This interview has been edited and condensed.

This article first appeared in The State of Fashion: Beauty Volume 2, an in-depth report on the global beauty industry, co-published by BoF and McKinsey & Company.