How beauty brands are using marketing to stand out in a crowded market

Consumer spending may be rattled by the current economic climate, however the burgeoning beauty industry is forecast to grow. The Growth Agenda reports on how marketers aim to cut-through in a crowded market.

Niche fragrance brand Creed was brought to the Australian market by Agence de Parfum

Competition in an increasingly crowded beauty sector is reaching fever pitch, as the global beauty market is forecast to reach $580bn in retail sales by 2027, growing by 6 per cent each year, across fragrance, skin care, makeup and hair care, according to a new McKinsey report.

Amid the fierce competition that comes with such growth, differentiating both product and marketing is key to starting up and scaling, according to some marketers in Australia.

The creative components of high-value brands have come into the spotlight recently. When Melbourne-founded skincare brand Aesop was sold from Brazilian parent, Natura & Co, to L’Oreal in April for US$2.5bn, the news swept both the media and LinkedIn feeds, where individuals applauded the record-breaking deal.

Richard Henderson, founder and chief executive at Melbourne-based brand identity company R-Co Brand posted: “A stunning validation of the power of a brand that has retained its authentic humanistic values of goodness with a consistency of imaginative expression.”

According to Euromonitor data in McKinsey’s report, in recent years few beauty brands have scaled sufficiently to reach the upper echelons of global “success” in terms of retail sales.

In 2017, 46 beauty brands founded in 2005 or later made $50m-$200m in sales.

By 2022, just five brands cracked $250m in sales, including The Ordinary, Adolph, Harry’s, Winona and Fenty Beauty.

The report suggests that to overcome the challenge of overcrowded markets, geographic and channel expansion are key drivers for brands looking to attain longer-term growth and scale.

The fragrance category alone is expected to reach nearly $100bn by 2027. Mass segments are forecast to wane, as the demand for “premiumised” and niche fragrance brands were identified as growth categories.

In recent decades, niche fragrance brands from overseas have entered the Australian market in droves, and along with them, a need to localise their marketing tactics to connect with consumers here.

Over the past 15 years, Agence de Parfum, a fragrance distributor founded by Nick Smart, has led this charge, bringing luxury fragrances such as Creed, Ormonde Jayne and Amouage to the Australian market from overseas for the first time.

Niche fragrance brand Creed was brought to the Australian market by Agence de Parfum

Agence de Parfum also owns Libertine Parfumerie, the retail arm of the business that often uses its digital channels first to test consumer demand for new brands looking to enter the market.

The distributor also brought heritage candle-maker Trudon and Italian beauty brand Santa Maria Novella to the Australian market, initially via digital channels. Both brands now have bricks-and-mortar shops in Sydney.

While brands that are classified as a “niche” fragrance already, by definition, signposts an inherent brand “differentiation”, Libertine Parfumerie marketing and brand manager Alexane Mongreville said there were more nuanced considerations when it came to driving distinctiveness in Australia.

Of fragrance brands that have global ambitions, she told The Growth Agenda that marketing seasonally relevant fragrances in the market can affect sales.

“It’s better to have evergreen content and even an evergreen scent,” Ms Mongreville said. “Or if you really want to keep seasonality in your scents (and) in your product development, make sure that you will have some delay when you launch a new project in the market. This can be for makeup and cosmetics as well.”

She said in the current economic climate, consumers were still spending on niche perfumes but purchasing smaller bottle sizes. “Even more when it’s niche perfume. People who didn’t think twice before purchasing a $500 bottle are now thinking twice.”

Ms Mongreville saw the rise in niche fragrance linked to a consumer desire to use perfume to express themselves via scent. “You have this trend going up because people want to feel special and exclusive and different from other people,” she added.

In skincare, locally born Australian brands have similarly found growth via outward-bound expansion to other markets and developing a distinctive brand along with product formulation.

Go-To Skincare was founded by former beauty editor Zoë Foster Blake in 2014 and launched into the market with a recognisable pale-pink packaging and a distinctive conversational brand tone-of-voice.

According to Go-To’s chief marketing officer Leonie Faddy, brand differentiation in the beauty industry is more pronounced, not only because it is competitive, but because “it’s such a personal decision to buy into skincare and beauty”.

“People really need to have a sense of trust and allegiance with a brand to actually opt in and be long-term brand loyal.

“I think that brand is incredibly important. Whether that’s a cult product that leads to brand equity, or whether it’s building a suite of products and working it the other way around is probably less important. At the end of the day, people have to have that trust in their skincare brand, more so than other segments of the cosmetics market.”

That trust in Go-To has been instilled from the outset by its founder, Zoë Foster Blake, and her industry expertise of more than 15 years as a beauty editor prior to founding the brand.

“That has really given us a head start in terms of brand positioning,” Ms Faddy said.

“But then you’ve really got to be true to the promise. You’ve got to educate. You’ve got to ensure that you’ve got quality products that deliver results, because at the end of the day, that’s what’s really going to drive trust.

“Where we drive that brand-led marketing strategy – that might be a little bit different to some other brands – is around that community-led marketing. That’s been a focus for us. Our loyal customer and the engagement that we have with them is really key to Go-To’s success.”

That customer engagement comes in the form of reviews, testimonials, word-of-mouth and fostering community conversation on its channels. Go-To’s community, according to Ms Faddy, is key. “They’re our unsung heroes.”