After the Spring Festival, major beauty brands have successively announced price increases. Est é e Lauder Group, L'Oreal Group, LVMH Group, Chanel, and others have all raised the prices of their cosmetics brands, with the highest single product increase approaching 60%. A counter staff member said that the price increase in this round may be greater than last year.The price of
Makeup Brush Kit has increased accordingly
In the past three years, every Spring Festival holiday, beauty brands will gather together to raise prices. Why do big brand beauty brands still choose to raise prices in the face of increasingly rational consumers? Some industry insiders believe that brands aim to establish their image through price increases, and agents and other channels can also use this to digest a portion of product inventory. Behind the price increase is the pressure on the performance of big brands, as well as the emergence of domestic cosmetics that are no longer on par with big brands. Can the price increase strategy ultimately be effective in a fiercely competitive environment?For example,3PC
Makeup Brush Set Of Chanel 129# Yellow,price is about RMB3529.00,Some function Brush is also increased,such as
Concealer Brush. 
Under pressure from performance, big brands are teaming up to raise prices
On February 19th, Est é e Lauder Group announced an increase in the prices of approximately 1500 products under brands such as Est é e Lauder, Sea Blue Mystery, Zumalong, MAC Meike, and Yuemu Zhiyuan, with an average price increase ranging from 10% to 30%.
The reporter from Blue Whale Finance and Economics noticed that the Tom Ford Fierce Night Luxury Black perfume (100ML) under Estee Lauder Group increased by 600 yuan to 1950 yuan, the popular product DW liquid foundation increased from 430 yuan to 450 yuan, and the 15ml small brown bottle eye cream increased from 550 yuan to 565 yuan. However, starting from February 19th, Est é e Lauder will launch a 38 day recharge and free shopping event. After receiving the voucher, the actual paid price for 15ml of small brown bottle eye cream is still 550 yuan.
Est é e Lauder's Tmall flagship store customer service told Blue Whale Finance reporters, "Our product pricing needs to consider various factors, including raw material prices, operating costs, and transportation and warehousing costs. We will evaluate and adjust the suggested retail prices of some products in a timely manner." According to incomplete statistics, Est é e Lauder has undergone at least 10 price adjustments since 2012.
Coincidentally, brands under the L'Oreal Group such as Coyenne, YSL Saint Laurent, Armani, etc. have also recently raised their product prices. Among them, Armani's increase is within 10%, while Bioquan's increase is 30% -40%; Several well-known overseas beauty brands under LVMH Group, including Givenchy, Guerlain, Dior Beauty, and Occitane, have also announced price increases. Chanel released a price adjustment letter on the official website of the Japanese market, saying that it would raise the prices of 56 series of products in three categories, including skin care, perfume and cosmetics, from March 27, 2024. The reason for the price adjustment was explained in the price adjustment letter as "the price of raw materials rose".
Behind the price increase is the declining performance of big brands.
Est é e Lauder's financial report shows that in the three months ended December 31, 2023, Est é e Lauder's net sales were $4.28 billion, a decrease of 7% from $4.62 billion in the same period last year, and its net profit was $313 million, a decrease of 18.39% from $394 million in the same period last year. Est é e Lauder stated that the main reason for the decline in performance is the weakness of Asian tourism retail and the high-end beauty market in mainland China.
In addition, half a month before announcing the price adjustment, Est é e Lauder announced that in order to achieve its profit recovery goals for the fiscal years 2025 and 2026, it is expected to carry out global layoffs of 3% to 5%. It is reported that Est é e Lauder has approximately 62000 employees worldwide, and based on this data, it is estimated that the number of layoffs will be between 1800 and 3000.
In 2023, LVMH Group's sales revenue increased by 9% year-on-year to reach 86.2 billion euros; Net profit increased by 8% to 15.2 billion euros. Despite maintaining growth in performance, the growth rate has slowed down. In 2021 and 2022, the sales growth of LVMH Group was 44% and 23% respectively, and only 8% in 2023. Especially in the third quarter of 2023, sales only increased by 1% year-on-year, while organic revenue increased by 9% year-on-year, far lower than the 17% year-on-year growth rate in the previous two quarters and the analyst's expected growth rate of 11.2%.
Domestic brands welcome opportunities
The market has mixed opinions on this round of price increase strategy.
Xu Xiongjun, founder of Jiude Positioning Consulting Company, stated that international beauty brands have the ability and space to offer a premium. By raising prices to achieve sales growth, they can widen the gap with domestic or mid to low-end brands in the fiercely competitive beauty market. Maintaining high brand value is a more advantageous marketing strategy for them.
For example, in 2021, Unilever's annual revenue was 52.4 billion euros, a year-on-year increase of 3.4%; Basic sales increased by 4.5% year-on-year, which is the largest growth rate of Unilever in the past 9 years; The annual net profit reached 6.6 billion euros, with a year-on-year growth rate of 9%.
In the financial report, Unilever said that in 2021, Unilever chose to respond to the rising cost by increasing the pricing, with the basic price increasing by 2.9% in the whole year and accelerating to 4.9% in the fourth quarter.
However, there are also views that suggest that a price increase strategy will bring about a "reaction force".
Zhan Junhao, founder of Fujian Huace Brand Positioning Consulting, said that with the development of the domestic beauty market, consumers have an increasingly wide range of choices. Price increases may cause some consumers to have a rebellious mentality, especially for consumer groups with high price sensitivity. If the brand fails to provide sufficient reasons and proof of value, consumers may choose to turn to other brands or products.
The substitutability of internationally renowned cosmetics has been widely recognized among young consumers in China in recent years, and its leading advantages in composition and technology are not outstanding. With the development of e-commerce, domestic brands have quickly opened up the market for young people by relying on "good quality and affordable prices".
The "affordable domestic cosmetics", represented by Huazhi, Kelaki and Juduo, focuses on the low threshold and high repurchasing characteristics of lip, eye and powder blusher cosmetics products, and attracts users to purchase through the high cost performance ratio of less than 100 yuan with the help of the "beauty doctrine" created by the ultimate appearance.
With domestic brands increasing their investment in research and development, domestic products are no longer just a replacement. Vinona, which focuses on sensitive skin care, has achieved a repeat purchase rate of nearly 30% across all channels, with sales continuing to grow. At the same time, it has driven the revenue growth rate of its parent company, Betaine, to as high as 50%. Represented by Mao Geping and Caitang, "high-end domestic cosmetics" have broken through the beauty industry and successfully increased brand premiums through the strategy of teaching cosmetics to sell products.
According to Sandalwood's e-commerce data monitoring, in January 2024, the GMV of beauty products on all platforms increased by 40% year-on-year. Live streaming platforms replaced traditional e-commerce as the main driving force for growth, and the market share of domestic brands also further increased. The GMV performance of beauty in January also reached a new high for the same period in previous years, an increase of 26% compared to the same period in 2022 and 33% compared to the same period in 2021.
Independent financial commentator Zhou Zhengguo believes that raising prices for international beauty brands is an opportunity for domestic beauty brands. Especially for light luxury products such as Chinese cosmetics, there is a chance to defeat current second rate brands in the industry, but it is still difficult to surpass international high-end beauty brands.
