Beauty brands face several key legal challenges as we head into 2024.
Competition in the industry is fierce, with around 12,000 new brands entering the global market annually. High barriers to entry and underestimated marketing spend make it difficult for new brands to break through the 'noise'.
Recent growth has been driven by digital and marketing trends, including platforms like Instagram, YouTube, TikTok, and direct-to-consumer models. However, the celebrity beauty brand trend is on the decline, and the direct-to-consumer model, which ballooned during the pandemic, is now receding.
M&A made possible by 'cheap' capital has also driven growth, but now brands are having to assess whether their portfolios are optimised for a very different market. Non-core brands are being quietly divested as companies scale back operations and reposition to focus on their key strengths, and it's estimated that up to 700 beauty-related companies will be up for acquisition in the next few years.
Companies are being affected differently. Prestige beauty is growing at twice the rate of mass beauty, reflecting a shift towards premiumisation. Mass market brands are struggling to stay afloat, leading to consolidation, layoffs and insolvencies.
Brands also face challenges with their products. Counterfeit goods are a never-ending battle, with the growing number of online marketplaces available making it increasingly difficult for brands to monitor and control the authenticity of their products. Regulatory bodies are also cracking down on product safety and labelling, demanding accurate ingredient lists and adherence to safety standards.
To help you address this variety of challenges, we've recorded a video series covering recent developments in the beauty industry and the legal actions you can take to protect your business.
Over the next few weeks, we'll be covering:
- Managing redundancies and senior exits.
- Tackling counterfeit goods.
- Market trends and M&A developments.
We hope the insight provided is useful – if you need any assistance, please reach out to one of our team.
Market trends/M&A developments
The beauty industry has seen its fair share of ups and downs over the past few years. While there have been some major deals announced, they're generally seen as outliers, and a number of brands are divesting their beauty divisions as they review strategies. In this video, Bella Thornton-Clark looks at the M&A trends shaping the market and what might be next for brands.
Managing redundancies and senior exits
The current economic environment is unfortunately leading to layoffs across the beauty industry. Any situation involving employees needs to be handled sensitively, but when people are being made redundant, special care and thorough planning are especially important. In this video, Millie Kempley covers what you need to think about if you are carrying out a redundancy exercise, discussing legal obligations, communications, and managing senior exits.
