Global beauty, home and personal care - A review of purposeful branding and digital efficacy - RBC Wealth Management
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Global beauty, home and
personal care
A review of purposeful branding
and digital efficacy
EQUI T Y RE S E A RC H | 3 SEPTEMBER 2020
For required non-U.S. analyst and conflicts disclosures, please see page 31.
Disseminated: September 3, 2020 00:15ET; Produced: September 2, 2020 21:34ET
Global Consumer Staples: a review of purposeful branding and digital efficacy
RBC Europe Limited
Emma Letheren Global Consumer Staples: a review of purposeful branding and digital efficacy
(Equity Analyst)
+44 20 7002 2100 Beauty, home and personal care
Emma.letheren@rbccm.com
Our view: We consider the ESG credentials and digital efficacy of 66 beauty and HPC brands in this follow up to our report Global Consumer Staples:
James Edwardes Jones a review of digital efficacy which reviewed the digital capabilities of 58 food brands. We have looked at the use of purposeful marketing at the brand
(Equity Analyst) level and used Refinitiv for company-level judgements. Our conclusions: 1) a brand’s online ‘buzz’ seems minimally correlated to its purposefulness,
+44 20 7002 2101
james.edwardesjones@rbc.com
at least for now; 2) with the exception of Unilever, high corporate ESG scores are not reflected in positioning at the brand level. We believe that it
will take time for purposeful marketing to influence brand equity and expect to see brand purpose become increasingly relevant to consumers as we
RBC Capital Markets, LLC carry out further iterations of this analysis. We think our coverage companies’ failure to extend corporate-level ESG efforts to positioning and
Nik Modi marketing of individual brands presents a potential opportunity for those so inclined.
(Equity Analyst)
(212) 905-5993
nik.modi@rbccm.com The online consumer isn’t recognising ongoing ESG efforts. - Unilever has found evidence that
Digital Leaders Digital Laggards
Steven Shemesh purposeful communication leads to better growth. However, we have found little evidence that Avon Air Wick
(Equity Associate) brand purposefulness boosts online consumer sentiment and only some to say it results in ‘buzz’ (a Dermalogica Ariel
(212) 428-2390 high volume of social media posts about the brand). This link may become more evident over time
steven.shemesh@rbccm.com
Estée Lauder Banana Boat
as purposefulness drives brand equity and consumers increasingly appreciate ESG. Fenty Beauty Cascade
Mehra Romezi With the exception of Unilever, corporates scoring well in terms of ESG are not using purposeful Kylie Cosmetics Cillit Bang
(Equity Associate)
marketing consistently at brand level. – There is a disconnect between investor and consumer MAC Domestos
(212) 266-4099 NYX Downy/Lenor
mehra.romezi@rbc.com communication. This could be an opportunity: we have not found evidence that consumers are
Olay Mr Muscle
recognising brands’ purposefulness but expect this to change over time given the importance of ESG Seventh Generation Oral-B
Sara Mahaffy
(US Equity Strategist)
considerations to many consumers. Tarte Rexona/Degree
(212) 618-7507 Disruptors are showing the way. As we found in our food edition, the smaller, more agile disruptors Urban Decay
sara.mahaffy@rbc.com
are significantly more digitally competent than their incumbent peers. These include Dermalogica,
Seventh Generation and Kylie Cosmetics.
Little correlation between purposeful branding and online strength
Priced as of market close on 1 September 2020 Acquiring the winners: expensive and not necessarily replicable. -
(unless otherwise stated).
Many of the digitally impressive disruptors have been acquired by
All values in EUR unless otherwise noted.
the larger companies we cover. We see little evidence that the
incumbents have managed to extend these capabilities to the rest
of their business with the exception of L’Oréal and Estée Lauder.
Lockdown woes. Buzz and sentiment fell during lockdown. We
haven’t found any correlation between brand performance in
lockdown and digital capabilities pre-lockdown. We infer that
consumers were too distracted for existing digital marketing and e- Purpose rankings
commerce efforts to pay off. 1 – low purpose
2 – moderate
Cosmetics brands enjoy the best digital capabilities. Sources: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
3 – strong purpose
3 September 2020 2
Global Consumer Staples: a review of purposeful branding and digital efficacy
Table of contents
Acceleration in the shift to digital ......................................................................................................................................................................................... 4
ESG factors rising in importance ........................................................................................................................................................................................... 5
Methodology ......................................................................................................................................................................................................................... 6
Does purposeful marketing matter? ..................................................................................................................................................................................... 7
Category summary ................................................................................................................................................................................................................ 8
Cosmetics .............................................................................................................................................................................................................................. 9
Skincare ............................................................................................................................................................................................................................... 10
Hair Care.............................................................................................................................................................................................................................. 11
Personal Care ...................................................................................................................................................................................................................... 12
Oral Care ............................................................................................................................................................................................................................. 13
Home Care (1) ..................................................................................................................................................................................................................... 14
Home Care (2) ..................................................................................................................................................................................................................... 15
Company analysis ................................................................................................................................................................................................................ 16
Beiersdorf (Sector Perform, price target EUR 98) ............................................................................................................................................................... 17
Edgewell Personal Care (Outperform, price target USD 36) ............................................................................................................................................... 18
Estée Lauder (Outperform, price target USD 240) .............................................................................................................................................................. 19
L’Oréal (Sector Perform, price target EUR 203) .................................................................................................................................................................. 20
Procter & Gamble (Sector Perform, price target USD 128) ................................................................................................................................................. 21
Reckitt Benckiser (Underperform, price target GBP 64) ..................................................................................................................................................... 22
Unilever (Underperform, price target EUR 42/GBP 37) ...................................................................................................................................................... 23
Henkel, Church & Dwight, Clorox and Colgate-Palmolive ................................................................................................................................................... 24
Valuation summary ............................................................................................................................................................................................................. 25
Appendix: Methodology ...................................................................................................................................................................................................... 26
Appendix: Purpose rankings I .............................................................................................................................................................................................. 27
Appendix: Purpose rankings II ............................................................................................................................................................................................. 28
Elements.............................................................................................................................................................................................................................. 29
Required disclosures ........................................................................................................................................................................................................... 30
3 September 2020 3
Global Consumer Staples: a review of purposeful branding and digital efficacy
Acceleration in the shift to digital
It is no secret that technology has dramatically changed the way we select, purchase Exhibit 1: Worldwide marketing spend is shifting to digital from traditional
and consume goods. According to eMarketer, digital advertising now represents 50%
70% 600
of total media spending and is projected to reach 61% by 2023. E-commerce is also Digital ad spending (USDbn)
Global digital advertising spend (USDbn)
becoming increasingly prevalent and represented 16% of US retail sales in 2019. % of total media spending
550
65%
500
The COVID-19 pandemic has accelerated this shift to digital. Not only were many
% of total media spend
traditional methods of advertising limited in lockdown (billboards aren’t too 60% 450
effective if no one walks past them) but many traditional points-of-sale were closed.
400
In the UK, online sales rose 18% in April according to ONS, sending the proportion
spent online to its highest on record. In the US the e-commerce channel experienced 55% 350
the same amount of growth over 10 weeks of lockdown that it had enjoyed over the
300
previous 10 years (L’Oréal CEO, Deutsche Bank Consumer Conference, 9 June 2020). 50%
250
Although this shift should partially reverse as retailers re-open and safety concerns
45% 200
are alleviated, we think it is unlikely that this recent shift will ever completely 2019 2020E 2021E 2022E 2023E 2024E
unwind. Consumers new to e-commerce have been exposed to its convenience and
choice. Those trying new brands due to strong online advertising during lockdown Source: eMarketer June 2020 report, RBC Capital Markets
may never revert back to their old choices.
Our first edition in this series endeavoured to gain insight into 58 food brands’ digital Exhibit 2: E-commerce penetration of the retail channel has accelerated due to lockdown
capabilities. The conclusion was clear - the smaller, more agile disruptors were
significantly more digitally advanced than their incumbent peers. In this edition, we 30%
have focused on 66 beauty, home and personal care brands. These categories have
25%
US e-commerce penetratoion
been particularly affected by the ongoing pandemic due to: 1) accelerated focus on
of the retail channel, %
hygiene, and 2) temporary closure of the physical retail channel. In this report, we
not only draw a similar conclusion to our food edition, namely that many of our 20%
covered companies have lots of catching up to do, but also that the store closures
15%
and marketing cuts during lockdown materially affected sentiment and buzz online,
even when a brand had strong digital capabilities pre-lockdown. Lastly, relative
10%
positioning stayed pretty much constant – digital winners pre-lockdown also had
strong sentiment and buzz during lockdown. 5%
0%
2012 2013 2014 2015 2016 2017 2018 2019 Apr-20
Source: L’Oréal Group, RBC Capital Markets
3 September 2020 4
Global Consumer Staples: a review of purposeful branding and digital efficacy
ESG factors rising in importance
It is well documented that ESG has become increasingly important to investors in Exhibit 3: Sustainable investing has increased significantly over the last 12 months
recent years. Our ESG Strategist, Sara Mahaffy, notes that inflows into her universe
of dedicated ESG funds (Morningstar tracked global, US, and sector-focused equity 25,000
funds with >20% of their holdings invested in US stocks, that have a clear & heavy
Universe of Sustainable Equity Funds:
emphasis on sustainable investing practices) have been picking up over the last few 20,000
Quarterly Net Flows (USDm)
years. Inflows have been strong for both actively and passively managed ESG funds.
15,000
In 2Q20 inflows reached new highs. Performance has been an important driver of
this - actively managed ESG funds have posted better relative fund performance than 10,000
traditional actively managed equity funds in 2019 and 2020 YTD. This has
5,000
repercussions for our consumer staples coverage – US consumer staples with higher
ESG scores have been outperforming since 2014. 0
“Talking is not enough, it is critical that brands take action and demonstrate their -5,000
commitment to making a difference.” – Alan Jope, Unilever CEO, Deutsche Bank
Global Consumer Conference, 11 June 2019.
Source: RBC US Equity Strategy, Morningstar
We think ESG factors are also increasingly relevant to the consumer. Unilever claims
to have collected “extremely strong data on the link between both purposeful
communication and short- and long-term growth” (Unilever CEO Alan Jope, FY19 Exhibit 4: Sustainable funds have outperformed traditional funds
results call). Indeed in 2018 its Sustainable Living brands (‘those taking action to
support positive change for people and the planet’) grew 70% faster than the rest of 60%
Unilever’s business. Others are also waking up to the opportunity – according to
% of funds beating the benchmark
50%
Colgate’s CEO, “consumers continue to be extremely interested in purpose-driven
brands, particularly brands with a strong sustainability profile” (2Q20 call, 31 Jul ‘20). 40%
To gain some insight into each brand’s ESG capabilities we have ranked each brand 30%
on how “purposeful” their marketing is (see Appendix). We stress that this was based
on our assessment of the brands’ positioning; as financial analysts we don’t claim to 20%
be experts in purposeful marketing. We were surprised to find that those of our
coverage companies which score highly on ESG (according to Refinitiv) do not also 10%
have consistent purposeful marketing across their brands (except for Unilever). In
0%
addition, we found limited correlation between purpose and popularity with the
2017 2018 2019 2020 YTD
online audience. We expect this link to grow over time.
Active Sustainable Equity Funds Active Traditional Equity Funds
Source: RBC US Equity Strategy, Morningstar
3 September 2020 5
Global Consumer Staples: a review of purposeful branding and digital efficacy
Methodology
We set out to assess the digital marketing efficacy, online presence and purposeful Exhibit 5: The data sources used by Crimson Hexagon
branding power of key beauty, home care and personal care brands. Doubtless our
data is less comprehensive than that which the brand owners themselves have Reviews
access to. However, we do think that it has enabled us to draw some interesting 4%
Reddit Youtube
conclusions. If the brand owners disagree, we hope they will let us know. 1%
5%
We have selected 66 brands, a mixture of incumbent leaders and Forums
disruptive/emerging brands. We avoided selecting brands with names that have 10%
multiple meanings in order to ensure an accurate analysis. For example, we did not
include P&G’s Tide brand as the results would have included many irrelevant posts
relating to the sea. Tumblr
11%
In partnership with our data science team, RBC Elements, we have considered online Twitter
58%
consumer sentiment and brand buzz using social media data vendor
Crimson Hexagon. To get an understanding of purely consumer interest we only
News
included social media posts made by individuals in this analysis and removed 11%
company channels. We were also restricted to English-language posts so that we
could check our findings. E1
Source: Crimson Hexagon, RBC Elements, RBC Capital Markets
Crimson Hexagon labelled each social media post as positive, neutral or negative
sentiment. To understand online brand popularity, we calculated net consumer
sentiment: % of positive posts – % of negative posts.
In an effort to sense check our results, we have compared them with Gartner’s Digital IQ 2019
We measured ‘brand buzz’ by the overall volume of social media posts. To make US Indices (and 2020 where possible). Gartner is a business intelligence firm which ranks brands
the data comparable we weighted our volume data by brand size which we based on their digital competence in e-commerce, social media marketing and mobile platforms.
obtained from Euromonitor.
For a normalised result, we looked at sentiment and post volume over the 12 In order to gain some understanding of how each brand’s engagement is influenced by
months pre-lockdown: 1 April 2019 - 31 March 2020. We also looked at consumers’ increasing ESG focus, we have also given each brand a ‘purpose’ score: 1, 2 or 3 (3
lockdown sentiment, which we assume is the period 1 April – 30 June 2020. being the highest purpose ranking). We determined this simply by reviewing their websites and
In addition, we considered year-on-year momentum. Lockdown momentum is looking for emphasis of environmental or social/charitable purpose (our analysis doesn’t reach
the change in sentiment/ buzz from Apr-June 2019 to Apr-June 2020. the “G” in ESG). This may seem simplistic, but replicates the way a consumer would get an
impression of a brand’s ‘purpose’ in our view (assuming any purpose highlighted on the website
Our Digital Leaders (and Laggards) as presented on the front page have to screen
is mirrored in its other social media channels). From page 16 on we look at our results by
well (or badly) on both consumer sentiment and brand buzz. Sentiment must be
company and compare our purpose scores to Refinitiv’s overall corporate ESG scores. We have
above 15 (below 5) and weighted volume of posts over 120 (below 50).
organised the 16 public companies in our analysis into quartiles by their ESG score to get an idea
The data generated by Crimson Hexagon was mainly from Twitter, Tumblr and of their relative positioning (see Exhibit 7). Please see the Appendix for further detail on our
News sites, as demonstrated in Exhibit 5. methodology or reach out if you have any queries.
E
Learn more about RBC Elements on page 29.
3 September 2020 6
Global Consumer Staples: a review of purposeful branding and digital efficacy
Does purposeful marketing matter?
Given the growing importance of ESG factors to investors, we thought it would be Exhibit 6: Consumer sentiment and buzz by purpose ranking (April 2019 – March 2020)
interesting to see whether this was reflected at the consumer level. We introduce
50
the purpose rankings: we’ve ranked each brand between 1 and 3 depending on how 12 months pre-lockdown
purposeful a brand’s marketing is. For example, we rank Colgate with the highest 40
Net consumer sentiment (P-N), %
purpose score of 3 due to involvement in charitable campaigns such as ‘Bright Smiles, 30
Bright Futures’ which has given over 850 million children free dental screening and 20
education.
10
Weighted volume of posts
Of course, this does not encompass everything – we haven’t looked at the “G” in ESG 0
or the top sustainability issues for consumer goods according to SASB (product 0 100 200 300 400 500
-10
quality, design and supply chain management). This is merely our first tentative step
towards understanding our coverage companies’ ESG capabilities. Our conclusions -20
Purpose rankings
are as follows: -30 Click on the relevant data 1 – low purpose
points to go to an overview 2 – moderate
-40 of that category
Brands with strong to moderate purpose had a slightly better buzz on average: 3 – strong purpose
174 vs 158 (average weighted volume of posts for our analysis excluding Lysol Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
and Fenty Beauty whose >1000 scores distort the average).
Most brands which had really strong buzz are also purposeful. Eight brands
Given this is our first look at the ESG capabilities Exhibit 7: Corporate ESG scores
were off the chart (Exhibit 6) and five of these ranked moderate or strong.
of our coverage, we have taken Refinitiv’s
We didn’t find a link between brand purposefulness and online sentiment. corporate-level ESG scores for comparison. We Top
Colgate-Palmolive Co
We didn’t find correlation between lockdown momentum and purpose score. have access to ESG scores for the 16 public
Quartile
GlaxoSmithKline PLC
Reckitt Benckiser Group PLC
companies in our analysis and organised these Unilever NV
Either consumers don’t significantly favour brands with a strong purpose or the into quartiles.
2nd
existing purposeful positioning is yet to register with them. We think the latter is Quartile
L'Oreal SA
Procter & Gamble Co
more likely given some purposeful brands did rank very strongly in sentiment and Out of our coverage, Colgate-Palmolive, Johnson & Johnson
buzz – we can assume these brands have made a big enough deal of their efforts to Unilever and Reckitt Benckiser came out top. Yet Henkel AG & Co KGaA
the consumer. For example, Tarte cosmetics (one of our Digital Leaders) has a well- at the brand level, we only found consistent 3rd
LVMH
publicised reputation for using sustainable, vegan-friendly ingredients and purposeful marketing for Unilever –although we Quartile
The Clorox Company
processes. On the other hand, is Colgate viewed as an ethical toothpaste brand? We maintain our Underperform rating, this definitely Church & Dwight Co Inc
Shiseido Co Ltd
think it takes time and effort for purposefulness to be widely appreciated by gives us food for thought. Colgate scored well
consumers and inform part of a brand’s equity. but we only looked at one brand. We think there Bottom
Beiersdorf AG
Quartile
is an opportunity here for our coverage to better Edgewell Personal Care Co
Kosé Corp
We also conclude that purposeful marketing does not directly result in strong online reflect their ESG efforts at the brand level as we Estee Lauder Companies Inc
sentiment and buzz - there are other factors at play. For example, Dollar Shave Club do think it matters to consumers, and
lies off the chart in Exhibit 6 with a weighted volume of posts of 609. We found little increasingly so. Source: Refinitiv
purposeful marketing however its strong digital capabilities are well-documented.
3 September 2020 7
Global Consumer Staples: a review of purposeful branding and digital efficacy
Category summary
Cosmetics was the clear overall category winner. In the 12 months preceding Exhibit 8: Consumer sentiment and brand buzz (April 2019 – March 2020)
lockdown it had the strongest average buzz and sentiment around its brands.
We think this makes sense – companies like L’Oréal and Estée Lauder are
40 Click on the relevant data points to go to an
amongst the biggest spenders in marketing in our global coverage and have 12 months pre-lockdown
overview of that category
invested heavily behind their digital capabilities. It is also an exciting, colourful,
Net consumer sentiment (P-N), %
varied category, so creating a buzz amongst consumers is easier in our opinion. 30 Cosmetics
The more staple-like categories of Oral Care, Home Care and Personal Care
screened relatively poorly.
During lockdown, all categories saw a reduction in consumer sentiment relative 20
Hair Care
to the same period 12 months before. For the 66 brands covered, consumer Skincare
sentiment declined 6 percentage points yoy on average. Is this due to mentions
10
of COVID-19 skewing sentiment? With the exception of Home Care, we don’t
Oral Care Home Care
think so - we scanned through some of the negative posts and rarely found a Personal Care
COVID-19 mention. We wonder if lockdown had a general negative impact on Weighted volume of posts
0
people’s mood and this had repercussions for brand sentiment. 0 100 200 300 400 500
Home Care is very different. The huge uptick in post volume and deterioration
Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
in sentiment found was very much linked to COVID-19. For example, jokes about
President Trump’s comments on injecting disinfectant and fears over stockpiling.
We suspect that Crimson Hexagon has overstated negativity here and that the Exhibit 9: Lockdown momentum (April - June 2019 to April - June 2020)
overall momentum for Home Care was positive given elevated attention on
cleaning products during lockdown to prevent contagion of the virus. That said,
5 Lockdown
we’re unsure this momentum is sustainable long term.
For most categories, brand buzz declined yoy during lockdown. This makes sense 0
Change in weighted volume of posts
as, although consumers had more time to use social media whilst stuck at home, -40% -20% 0% 20% 40% 60% 80% 100%
brand owners were making significant cuts in marketing, many points of sale Oral Care Personal Care
-5 Hair Care
were closed and consumers had other things on their mind. Skincare
As well as Home Care, Hair Care brands saw much more positive momentum in -10
Home Care
post volume. Scanning through posts, it seems the closure of hair salons revived Cosmetics Net consumer sentiment: -5
interest in, or at least conversation relating to, the consumer hair care category. -15 Weighted volume of posts: 537%
Absolute change in
So, what does our analysis tell us about the demand outlook for the HPC net consumer
industry? We found 16m posts about 66 HPC brands in the 12 months preceding -20 sentiment (P-N), %
lockdown. During the 3-month lockdown period we found 7m. The posting rate
Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
almost doubled. We think we can infer that interest in HPC brands held up.
3 September 2020 8
Global Consumer Staples: a review of purposeful branding and digital efficacy
Brand ownership Purpose rankings
Avon (Avon Products) Estée Lauder (Estée Lauder) Fenty Beauty (Fenty Corp/LVMH) Kylie Cosmetics (Kylie Jenner Inc/Coty) 1 – low purpose
Lancôme (L’Oréal Group) L’Oréal Paris (L’Oréal Group) MAC (Estée Lauder) Maybelline (L’Oréal Group) 2 – moderate
NYX (L’Oréal Group) Tarte (Kosé Corp) Urban Decay (L’Oréal Group) 3 – strong purpose
Cosmetics
Exhibit 10: Consumer sentiment and brand buzz (April 2019 – March 2020)
As already mentioned, Cosmetics was the category winner by far in terms of
relative digital capabilities in the 12 months pre lockdown. In fact, 8 out of 11 50 12 months pre-lockdown
Tarte
of our overall “Digital Leaders” are in this category. Cosmetics continued to MAC
Net consumer sentiment (P-N), %
lead throughout lockdown as well with the category enjoying the best Kylie Cosmetics
40
consumer sentiment and second best buzz out of all the categories. Fenty Beauty
Net consumer sentiment: 31
Urban Decay
In terms of overall digital prowess pre-lockdown (Exhibit 8) Kylie Cosmetics, 30 Lancôme Avon Weighted volume of posts: 1286
Fenty Beauty and NYX looked particularly impressive, however Tarte, Urban NYX
Decay, Avon and Maybelline as well all had above average brand buzz. In 20 L'Oréal Paris
addition, every Cosmetics brand we looked at enjoyed above average Estée Lauder
consumer sentiment. 10 Maybelline
Generally the newer, disruptive brands Tarte, Fenty Beauty and Kylie Weighted volume of posts
0
Cosmetics screened particularly favourably in this analysis relative to legacy
0 200 400 600 800 1000
brands owned by consumer staples incumbents (although Kosé Corp, LVMH
and Coty have now grabbed a piece of the action with the acquisition of Tarte Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
and stakes in Fenty Beauty and Kylie respectively). These brands have
exceptionally strong digital marketing – Fenty Beauty and Tarte scored joint
Exhibit 11: Lockdown momentum (April – June 2019 to April - June 2020)
third in Garner’s Digital IQ 2019 Beauty Index and Kylie Cosmetics is marketed
by Kylie Jenner, a top Instagram influencer. We also note Tarte and Fenty Absolute change in 20 Lockdown
Beauty’s strong purpose scores – both have strong cruelty-free branding and Kylie Cosmetics net consumer
are sponsors of various charitable causes. sentiment (P-N), % 10
Change in weighted
Lancôme volume of posts
We think there is some correlation between our purpose rankings and 0
consumer sentiment in this category with top scoring purposeful brands MAC, -60% Tarte -40% -20% Avon 0% 20% 40%
Urban Decay -10
Lancôme, Tarte and Fenty Beauty all having really strong consumer sentiment NYX Estée Lauder
scores. -20
MAC Maybelline L'Oréal Paris
During lockdown, the relative positioning of the brands did not vary much. The -30 Net consumer sentiment: -44
buzz around L’Oréal Paris increased significantly versus the period 12 months Weighted volume of posts: 117%
before however this was mostly reflected in negative press comments around -40
the time of the #Blacklivesmatter protests and disappointment with its new Fenty Beauty
-50
anti-aging products. Lancôme held up best.
Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
Our results for Fenty Beauty have been distorted by #Blacklivesmatter posts
(numerous angry posts showed up as negative) however also include some
poor product reviews.
3 September 2020 9
Global Consumer Staples: a review of purposeful branding and digital efficacy
Brand ownership Purpose rankings
Banana Boat (Edgewell Personal Care) Clinique (Estée Lauder) Coppertone (Beiersdorf) Dermalogica (Unilever)
Eucerin (Beiersdorf) Garnier (L’Oréal Group) Hawaiian Tropic (Edgewell Personal Care) Kiehl’s (L’Oréal Group) 1 – low purpose
La Prairie (Beiersdorf) La Roche-Posay (L’Oréal Group) Nivea (Beiersdorf) Olay (P&G) 2 – moderate
Shiseido (Shiseido) 3 – strong purpose
Skincare
Exhibit 12: Pre-lockdown consumer sentiment and brand buzz (April 2019 – March 2020)
Skincare had the next best overall category performance pre- and during
lockdown. Brands such as Dermalogica and Olay performed the best but 30
12 months pre-lockdown
Shiseido and Clinique also had healthy sentiment and buzz over both periods. Kiehl's
Net consumer sentiment (P-N), %
25
Clinique and Olay also scored well in Garner’s Digital IQ 2019 Beauty Index. This Nivea Olay
is impressive for such big, established brands. 20
Shiseido Dermalogica
Estée Lauder and L’Oréal’s peer-leading investments behind digital have paid Net consumer sentiment: 16
15 Weighted volume of posts: 776
off – their brands screened relatively well. We also think they have successfully Clinique
managed to extend acquired brands’ digital capabilities. Coppertone La Roche-Posay Garnier
10
We can’t say the same for Edgewell Personal Care and Beiersdorf however. It Hawaiian Tropic La Prairie
5
seems that Beiersdorf is yet to revive recently acquired brand Coppertone. Eucerin
Edgewell’s Banana Boat looked particularly weak – the only skincare brand to 0
have negative sentiment over the period. During lockdown, things continued to 0 50 100 150 200 250
decline for both these brands. Both brands also scored poorly in Garner’s Digital -5 Banana Boat Weighted volume of posts
IQ 2019 Personal Care Index: Banana Boat was ranked 68th and Coppertone 66th.
Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
We find some correlation between purposeful rankings and relative digital
winners. We found strong consumer sentiment for highly ranked Dermalogica,
Kiehl’s and Dermalogica. Banana Boat and La Prairie were the exceptions here. Exhibit 13: Lockdown momentum (April – June 2019 to April - June 2020)
Lockdown momentum in Skincare was more mixed than it has been for other Dermalogica 10 Lockdown
categories (for example Cosmetics where most brands had a negative Clinique
trajectory). It seems the category has been more resilient to the cuts in Olay 5
marketing and store closures. Given the Cosmetics occasion is usually for those Shiseido Nivea
Change in weighted
volume of posts
leaving the house, it makes sense Skincare performed better here. We note 0
those with relatively strong digital capabilities pre-lockdown managed to -70% -50% -30% -10% 10% 30% 50% 70%
maintain this in lockdown. -5 La Roche-Posay Eucerin
Nivea managed to remain stable during lockdown in terms of momentum – a Banana Boat Garnier
-10
feat only 10% of brands in our analysis managed. Hawaiian Tropic
Prestige beauty particularly suffered due to department store, travel retail and La Prairie
Coppertone -15 Absolute change in
beauty store closures. La Prairie and Kiehl’s saw strong negative momentum yoy net consumer
despite okay online positions prior to lockdown. Kiehl's -20 sentiment (P-N), %
Sun care names were particularly affected during lockdown due to travel Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
restrictions whilst the dermocosmetics names have held up.
3 September 2020 10Global Consumer Staples: a review of purposeful branding and digital efficacy
Brand ownership Purpose rankings
Elsève/Elvive (L’Oréal Group) Head and Shoulders (P&G) Kérastase (L’Oréal Groupe) Pantene (P&G) 1 – low purpose
Schwarzkopf (Henkel) Sunsilk (Unilever) TREsemmé (Unilever) 2 – moderate
3 – strong purpose
Hair Care
Within Hair Care, digital capabilities were not as strong as in other categories. Exhibit 14: Consumer sentiment and brand buzz (April 2019 – March 2020)
All brands apart from Schwarzkopf exhibited below average brand buzz (and for
40
Schwarzkopf the additional buzz was tempered by a slightly negative brand Kérastase 12 months pre-lockdown
sentiment score). We think there’s room to generate more excitement around 35
Net consumer sentiment (P-N), %
the brands with additional digital marketing given most brands have healthy 30
Pantene
sentiment scores. 25
20 Elsève/Elvive
Pantene was the relative digital winner with both strong sentiment and brand Sunsilk
buzz. We also note especially strong buzz and a healthy sentiment score for 15 TRESemmé
TRESemmé. Both brands maintained a positive consumer sentiment trajectory 10 Head and Shoulders
during lockdown although any buzz was materially diminished. In addition, of 5
the brands we looked at, Pantene and TRESemmé scored the highest in Weighted volume of posts
0
Gartner’s Digital IQ 2019 Hair Care & Colour Index. 0 50 100 150 200 250 300
-5 Schwarzkopf
As we found in Skincare, the brands which enjoyed strong digital capabilities -10
pre-lockdown were able to maintain positive sentiment momentum during
lockdown – Pantene and TRESemmé here. Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
Schwarzkopf comes across as the relative digital loser. Whilst we found a lot of
posts about the brand, the tone behind these posts was mostly negative. Exhibit 15: Lockdown momentum (April – June 2019 to April - June 2020)
Sentiment further deteriorated under lockdown. We think this brand would
Absolute change in 40 Lockdown
benefit from a portion of the increased investment set out by Henkel.
net consumer
sentiment (P-N), % Head and Shoulders
Despite being a digital laggard in the 12 months pre-lockdown, Head and 20 Net consumer sentiment: 31
TRESemmé
Shoulders gained significant momentum during lockdown. Marketing in markets Weighted volume of posts: 655%
such as the Philippines and favourable product reviews seem to have driven this. Pantene Sunsilk
0
Despite this momentum however, we note that its overall relative positioning in -100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100%
lockdown remained weak with brand buzz remaining behind the others. Schwarzkopf Change in weighted volume of posts
-20 Kérastase
We found a distinct lack of correlation between purpose rankings and digital
capabilities here. Nor was there a link between each brand’s purpose rankings -40
Elsève/Elvive
and lockdown momentum - highly scored Sunsilk and TRESemmé (note both
Unilever brands) have opposite directions of momentum. -60
We note that none of the brands we looked at made the top ten for Gartner’s Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
Digital IQ 2019 Hair Care & Colour Index. Schwarzkopf, Kérastase and Head and
Shoulders screened particularly poorly in the index at 57, 41 and 36 respectively.
We note Sunsilk and Elsève/Elvive were not featured.
3 September 2020 11Global Consumer Staples: a review of purposeful branding and digital efficacy
Brand ownership Purpose rankings
Axe/Lynx (Unilever) Bath & Body Works (L Brands) Dollar Shave Club (Unilever) Durex (Reckitt Benckiser) 1 – low purpose
Gillette (P&G) Harry’s (Edgewell Personal Care) Johnson’s (Johnson & Johnson) Old Spice (P&G) 2 – moderate
Rexona/Degree (Unilever) Schick (Edgewell Personal Care) Veet (Reckitt Benckiser) 3 – strong purpose
Personal Care
Exhibit 16: Pre-lockdown consumer sentiment and brand buzz (April 2019 – March 2020)
We found strong buzz within the Personal Care category – we had to extend the
axis further given multiple brands were ‘off the chart’ (>300 weighted volume). 30
12 months pre-lockdown
We only had to do this for 3 categories. 20% of all ‘off the chart’ brands were in Durex
Net consumer sentiment (P-N), %
personal care. 20
Bath & Body Works
Harry's
That said, net consumer sentiment was relatively low for the category - only 1% 10 Schick
on average (vs 11% for the total analysis). It seems that interest is easily Johnson's Dollar Shave Club
Veet Weighted volume of posts
generated, but enthusiasm is harder to come by. 0 Old Spice
0 100 200 300 400 500 600 700 800 900
Relative digital winners pre-lockdown include Harry’s, Bath and Body Works
and Schick which had both strong buzz and relatively good sentiment. Unilever’s -10 Gillette
Rexona/Degree and Axe/Lynx were the category’s digital laggards.
-20 Rexona/Degree
We were surprised not to find better sentiment around Dollar Shave Club
however it is positive to see the brand continue to generate a strong buzz -30 Axe/Lynx
(although we do note that compared to the previous 12 months, post volume
has deteriorated by 40%). Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
With the exception of Old Spice, the most interest and noise was for the male
grooming brands: Gillette, Dollar Shave Club, Schick and Harry’s. This was Exhibit 17: Lockdown momentum (April – June 2019 to April - June 2020)
maintained throughout lockdown as well with the male grooming brands
30 Absolute change in Lockdown
exhibiting double or triple the weighted post volume of the other brands. In net consumer
Rexona/Degree
regards to Gartner’s Digital IQ 2019 Personal Care Index, Gillette was the highest sentiment (P-N), %
20
ranked brand we looked at coming in 2nd (Garner does not take online sentiment
into account). Dollar Shave Club
Gillette
10
We found no correlation between online strength and our purpose rankings in Bath &
Old Spice Body Works
Personal Care. In fact, all the brands that exhibited overall negative sentiment 0
in the 12 months pre-lockdown had really strong purpose rankings. Either, -100% -75% -50% -25% 0% 25% 50%
Change in weighted Axe/Lynx Schick
consumers don’t care (we think this is unlikely) or any purposeful marketing and -10
volume of posts Veet
charitable efforts aren’t reaching consumers attention yet.
Harry's Johnson's
Durex was the worst performer during lockdown in terms of buzz and Durex -20
sentiment. This came across in terms of sales according to Reckitt Benckiser in Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
its HY20 results.
3 September 2020 12Global Consumer Staples: a review of purposeful branding and digital efficacy
Brand ownership Purpose rankings
Colgate (Colgate-Palmolive) Crest (P&G) 1 – low purpose
Listerine (Johnson & Johnson) Oral-B (P&G) 2 – moderate
Sensodyne (GlaxoSmithKline) 3 – strong purpose
Oral Care
Exhibit 18: Consumer sentiment and brand buzz (April 2019 – March 2020)
We didn’t find much buzz around Oral Care, as we might have expected from
such a staple-like category. Consumer sentiment was also below average 20
12 months pre-lockdown
(Oral Care scored 8% on average vs 11% for all 66 brands). This is in stark
Net consumer sentiment (P-N), %
contrast to Gartner’s Digital IQ 2020 Personal Care Index which ranked most of 15
the brands in its top 10. We think the brands have developed strong capabilities Colgate
Sensodyne
in terms of e-commerce and digital marketing, but getting consumers
sufficiently excited about toothpaste to write on social media is a challenge. 10 Listerine
No Oral Care brands made it onto our front page Digital Leaders list. However Crest
5
in relative terms, we think Colgate screened okay. Gartner’s Digital IQ 2020
Personal Care Index also ranked it highly, in 6th place (up from 9th in 2019).
0 Oral-B
We note that Colgate was also the only brand within Oral Care to which we 0 10 20 30 40 50
attributed a purposeful branding score. It is involved in charitable campaigns Weighted volume of posts
such as ‘Bright Smiles, Bright Futures’ which has helped over 850 million children -5
with free dental screening and education. We gave Colgate the highest purpose Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
ranking of 3. Colgate was able to maintain relatively strong sentiment
throughout lockdown.
Exhibit 19: Lockdown momentum (April – June 2019 to April - June 2020)
As with most of the HPC brands we surveyed, brand buzz declined during
lockdown in Oral Care. On average, weighted volume was 25% below what it 5 Lockdown
was a year earlier. Crest had particularly poor momentum and declined strongly
Oral-B Sensodyne
in terms of sentiment and buzz. The other P&G brand that we surveyed, Oral-B,
also saw a large decline in brand buzz. Given a positive share performance in the
0
period (as P&G reported on 30th July) this relative positioning surprised us. -80% -70% -60% -50% -40% -30% -20% -10% 0% 10% 20%
Change in weighted volume of posts Colgate
At first glance, Sensodyne managed to maintain the most stability under
lockdown. However, it started from a weak position and had the second lowest Crest
-5
sentiment and buzz during lockdown of its oral care peers. Gartner’s Digital IQ Listerine
2020 Personal Care Index also ranked it the lowest out of all the oral care brands Absolute change in
we looked at. net consumer
sentiment (P-N), % -10
Listerine was the only oral care brand surveyed to see positive momentum in
brand buzz during lockdown. However, importantly, posts were largely negative. Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
Net consumer sentiment over lockdown period was -12%, significantly below
average lockdown sentiment of all the brands surveyed of 6%.
3 September 2020 13Global Consumer Staples: a review of purposeful branding and digital efficacy
Brand ownership Purpose rankings
Ariel (P&G) Bounty (P&G) Cascade (P&G) Charmin (P&G) 1 – low purpose
Domestos (Unilever) Downy/ Lenor (P&G) Mr Muscle (SC Johnson & Son) Omo (Unilever) 2 – moderate
Persil (Unilever/Henkel) Seventh Generation (Unilever) 3 – strong purpose
Home Care (1)
Exhibit 20: Consumer sentiment and brand buzz (April 2019 – March 2020)
Overall, the category’s consumer sentiment was weaker than we found
elsewhere. The Home Care brands (including those on the next page) held an 30 12 months pre-lockdown
average net sentiment of 3% for the 12 months before lockdown and -2% during Persil
Net consumer sentiment (P-N), %
(vs 11% and 6% on average for all brands surveyed). We reviewed many of the 20 Seventh Generation
posts labelled ‘negative’ by Crimson Hexagon and suggest treating these results Net consumer sentiment: 37
with caution. We found several posts with exclamations about stains or spills, Weighted volume of posts: 186
expressions of fear about COVID-19 or concerns about stockpiling that, although 10 Downy/Lenor
Ariel Omo
of negative sentiment, were not talking negatively about the brand. We think Cascade
Domestos Weighted volume of posts
overall sentiment was actually more positive given greater focus on hygiene. 0
0 10 20 30 40 50 60 70 80 90 100
Buzz around Home Care was poor: 8 out of 10 of our overall Digital Laggards are Charmin Bounty
in this category. If we pushed up sentiment a bit, this would still be the case. -10
There was one stand-out digital capability. In the 12 months pre-lockdown Mr Muscle
Unilever’s Seventh Generation, one of the overall Digital Leaders in our analysis, -20
had impressive sentiment as well as brand buzz. Out of all the home care brands Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
that also scored positively in terms of sentiment, it had the strongest buzz. It
also scored a high purpose ranking. The other high scorers in terms of purpose,
Cascade, Omo and Domestos (the latter two also owned by Unilever) didn’t fare Exhibit 21: Lockdown momentum (April – June 2019 to April - June 2020)
as well as Seventh Generation.
50 Absolute change in Lockdown
Buzz around Home Care increased significantly under lockdown thanks to 40 net consumer
Downy/Lenor sentiment (P-N), % Domestos
increased attention on cleanliness in the home to reduce the spread of 30
Net consumer sentiment: 42
COVID-19. In fact, only 13 brands saw a > 50% rise in weighted volume of posts 20 Weighted volume of posts: 518%
Change in weighted
and 9 of these were in Home Care. Dettol, Domestos, Clorox, Lysol and Mr 10
volume of posts Persil
Muscle saw particularly strong momentum, exacerbated by President Trump’s 0
Bounty
-100% -10 0% 100% 200%
comments about injecting disinfectant to cure COVID-19. We expect the buzz Charmin Mr Muscle
Cascade -20 Omo
around these brands to moderate from such high levels although we expect Seventh Generation
-30
elevated attention around Home Care to continue in the near term. We note Ariel
-40 Net consumer sentiment: -41
this momentum was not due to any improvement in brand digital capabilities. Weighted volume of posts: 1380%
-50
Domestos’ positive trajectory in consumer sentiment under lockdown was -60
particularly impressive given (as explained earlier) the category’s sentiment has Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
been dragged down by non-brand specific factors.
Ariel scored particularly badly pre-lockdown and we note particularly dramatic
moves under lockdown. We found very few posts for Ariel.
3 September 2020 14Global Consumer Staples: a review of purposeful branding and digital efficacy
Brand ownership Purpose rankings
Air Wick (Reckitt Benckiser) Arm & Hammer (Church & Dwight) Bref (Henkel) 1 – low purpose
Cif/Jif (Unilever) Cillit Bang (Reckitt Benckiser) Clorox (Clorox) 2 – moderate
Dettol (Reckitt Benckiser) Febreze (P&G) Lysol (Reckitt Benckiser) 3 – strong purpose
Home Care (2)
Exhibit 22: Consumer sentiment and brand buzz (April 2019 – March 2020)
Only a few Home Care brands showed any sort of buzz in the 12 months before
lockdown. We’ve already mentioned Seventh Generation, but Lysol and Clorox 50
Bref 12 months pre-lockdown
also looked impressive. Given our pre-lockdown period does include March (so 40
Net consumer sentiment (P-N), %
some COVID-19 noise), we had a look at each brand’s buzz in the period
30
February 2019 – January 2020 to try to exclude the impact of President Trump’s
comments and COVID-19. We still found very strong brand buzz for Clorox, Lysol 20
and Seventh Generation. We don’t think it’s irrelevant that these three brands 10 Arm & Hammer
also scored highly in terms of purposeful branding. Clorox also scored the top Air Wick Dettol Weighted volume of posts
0
spot in Gartner’s Digital IQ 2019 Home Care Index. 0
Cillit Bang
100 200 300 400 500 600 700
-10 Cif/Jif
Clorox
As well as Ariel, the relative laggards in terms of digital capabilities pre-lockdown Febreze
-20
seem to be Cillit Bang, Air Wick, Arm & Hammer. Lysol
Net consumer sentiment: -16
-30
We also found hardly any buzz around Bref. This is partly a geographical problem Weighted volume of posts: 1386
-40
– Bref’s top markets do not include the US or UK (markets that our analysis of
English-language posts is skewed to). This is also the case with Omo. That said, Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
we think Henkel has been underinvesting in its brands for a long time so would
have been surprised to find anything but poor results in our analysis.
Exhibit 23: Lockdown momentum (April – June 2019 to April - June 2020)
Momentum under lockdown was much more positive in Home Care than in
other categories. As well as the factors already mentioned, we think lockdown 30 Absolute change in Lockdown
store closures were a relative advantage for the category given most Home Care net consumer
sentiment (P-N), % Cillit Bang
brands can be purchased in supermarkets, which were kept open. 20 Net consumer sentiment: 4
Weighted volume of posts: 3836%
Cillit Bang and Lysol’s lockdown momentum were the highest out of all 66
10 Lysol
brands. Dettol and Clorox also screened very highly. All have benefited from
increased attention to cleanliness in the period and this has been confirmed by Febreze
Air Wick Change in weighted volume of posts
the respective brand owners in terms of sales performance. Given all would have 0
-200% 200% 600% 1000% 1400% 1800% 2200% 2600% 3000%
been affected by the exaggerated negative skew to posts as a result of
COVID-19 noise, we think the relative positioning in terms of sentiment is -10 Arm & Hammer
Dettol
Cif/Jif
interesting. Reckitt Benckiser’s Lysol and Cillit Bang came out the most
Bref Clorox
favoured brands. -20
Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
3 September 2020 15Global Consumer Staples: a review of purposeful branding and digital efficacy
Company analysis
Exhibit 24: Consumer sentiment and brand buzz by company (April 2019 – March 2020)
Unilever Edgewell Personal Care Colgate-Palmolive
50 Reckitts Estée Lauder Church and Dwight
P&G Beiersdorf Clorox
40 L'Oréal Henkel Other
Net consumer sentiment (P-N), %
30
20
10
Weighted volume of posts
0
0 100 200 300 400 500 600 700 800
-10
-20
-30
12 months pre-lockdown
-40
Click on the relevant data points to
go to an overview of that company
Notes: Fenty Beauty, Kylie Cosmetics, NYX (L’Oréal) and Lysol (Reckitt Benckiser) are off the chart as all enjoy weighted volume of posts of over 800.
Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
3 September 2020 16Global Consumer Staples: a review of purposeful branding and digital efficacy
Purpose rankings
1 – low purpose
2 – moderate
3 – strong purpose
Beiersdorf (Sector Perform, price target EUR 98)
Beiersdorf spends about 25% of its trade and advertising spend on digital, Exhibit 25: Beiersdorf consumer sentiment and brand buzz (April 2019 – March 2020)
significantly less than the likes of Unilever and L’Oréal. We do think this percentage
30
is higher however when just looking at its Consumer division (and excluding its 12 months pre-lockdown
adhesives business Tesa) given marketing spend is skewed towards the beauty
Net consumer sentiment (P-N), %
25 Nivea
business.
20
That said, Beiersdorf screened poorly relative to many of L’Oréal, Estée Lauder and
P&G’s beauty brands. None of its brands screened well on both consumer sentiment 15
and brand buzz in the 12 months pre lockdown or saw overall positive momentum
during lockdown. Post a margin reset in early 2019 where Beiersdorf committed to 10 Coppertone
€70-80m additional investment per annum into “new markets, innovation, Eucerin
La Prairie
digitalization and up-skilling” (FY18 press release) we expected Beiersdorf to perform 5
a bit better in our analysis. It also set up a Venture Capital fund of €50m to invest in Weighted volume of posts
skin care technology, new business models and digital platforms. 0
0 50 100 150 200 250 300
We note that Nivea held up relatively well during lockdown – one of only a few Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
brands in our analysis to avoid a decline in its buzz and sentiment during the period.
We think its availability during lockdown helped here. La Prairie was particularly
affected due to its exposure to travel retail, department store and beauty store Exhibit 26: Lockdown momentum (April – June 2019 to April - June 2020)
closures.
10
Lockdown
Beiersdorf’s recent acquisition of Coppertone hasn’t revived the brand. Its pre-
lockdown scores were below average. It deteriorated significantly over lockdown,
Nivea Change in weighted volume of posts
however global travel restrictions hit all the sun care brands in our analysis. 0
-60% -40% -20% 0% 20% 40% 60% 80% 100%
In terms of purposeful marketing, we gave both Nivea and La Prairie high purpose Eucerin
scores. Given Nivea is 50-60% of the business, we think this reflects positively on
Beiersdorf. This is in contrast to the company’s overall ESG score calculated by La Prairie -10
Refinitiv. Beiersdorf was placed in the bottom quartile of the companies for which Coppertone
Absolute change in
we have looked at ranked ESG scores (we note we didn’t have any access to ESG net consumer
scores for private companies therefore this just includes the 16 companies presented -20 sentiment (P-N), %
on page 7). Beiersdorf’s Environmental score compared reasonably but it was
Source: Crimson Hexagon, RBC Elements, Euromonitor, RBC Capital Markets
dragged down by its Governance score which is not reflected in our consideration of
its brands’ purpose.
3 September 2020 17You can also read
