For several decades, why beauty giants had to relearn how to make tough choices? Size has been the best insurance for beauty groups. Accumulating brands, categories, and geographic locations allowed them to spread the risks: when makeup slowed down, skincare compensated; when the mass market lost momentum, prestige supported margins; if Europe weakened, Asia or North America could take over.
This portfolio architecture built the power of L'Oréal, Estée Lauder Companies, Shiseido, Coty, LVMH , and Puig. It gave them an unparalleled ability to negotiate with distributors, secure their supplies, finance research, invest in media, and launch products simultaneously on multiple continents. But the equation has changed.
The beauty market is still growing, but it has become more polarized, faster, and more demanding. It's concentrated on certain categories, a few iconic franchises, highly engaged communities, and channels capable of instantly converting attention into sales. In this environment, owning more brands no longer guarantees success. True strength now lies in the ability to choose where to invest, what to simplify, and which promises to deliver.
Diversification is no longer an automatic protection
The historical logic of conglomerates was based on a principle inspired by finance : not to depend on a single segment. A company could spread its investments across perfume, makeup, skincare, hair care, dermocosmetics, professional products, and consumer goods. This model remains relevant, but only when the portfolio remains transparent.
According to estimates published by L'Oréal, the global beauty market will exceed €290 billion in 2025, with growth of approximately 3.5%. The sector therefore remains resilient, but its pace has slowed after the strong growth observed between 2021 and 2024.
In a less euphoric market, each brand, each product line , and each launch must better justify its place. The portfolio can no longer function as a simple accumulation of assets. It must become a strategic architecture in which each brand fulfills a specific function.
This evolution explains why merger, acquisition, and divestiture discussions are now being watched with such close attention. The ultimately abandoned project between two major players, analyzed in our article on the lessons learned from the Estée Lauder-Puig merger, illustrates a key issue: a financial transaction only creates value if it clarifies the portfolio, strengthens a strategic category, or brings in expertise that is difficult to develop internally. Size remains an advantage. Complexity, however, can become a liability.
A market polarized around a few strong categories
all beauty categories are progressing at the same pace. Premium perfumes retain their strong desirability. Dermocosmetics benefit from the pursuit of efficacy, scientific validation, and professional recommendations. High-end haircare is gradually establishing itself as a true realm of prestige. Certain hybrid products, blurring the lines between skincare and makeup, are also finding an audience thanks to their immediately understandable promise.
The figures published by FEBEA on French exports in 2025 clearly illustrate this dispersion of trends. While total cosmetics exports declined slightly by 0.1%, to €22.4 billion, perfumes grew by 1.9% and shampoos and hair care products by 5.5%. Makeup and facial care, which represent nearly half of exports, decreased by 2.1%. Therefore, there is no longer a single growth driver in the beauty sector, but rather several markets evolving at different speeds.
This polarization is also found within brands. A few flagship products can concentrate the bulk of brand awareness, online searches, in-store traffic, and sales. Around them, dozens of secondary products sometimes remain, which nevertheless require stock, merchandising, content, and sales time.
The success of luxury beauty brands that manage to dominate attention rarely stems from the breadth of their product range. It more often relies on an instantly recognizable identity and a few products that have become culturally iconic.
From the anti-cycle portfolio to the curated portfolio
The new strategic skill of beauty groups lies in editorializing their portfolio. In a magazine, not every topic can appear on the cover. Some form the main feature, others enrich the issue, while several proposals are dropped to maintain overall coherence.
A brand portfolio should be managed in the same way. A hero brand is not simply a brand generating significant revenue. It embodies a vision, an aesthetic identity, distribution power, and international development potential. It can become the group's benchmark in a clearly defined territory.
A hero product , on the other hand, embodies the brand's promise. This could be a signature fragrance, a serum, a lipstick, a hair mask, or a cream whose benefits, texture, and overall feel are immediately recognizable.
The hero product facilitates several essential dimensions: brand understanding, advertising memorability, recommendation by advisors, demonstration on social networks, message repetition, recruitment of new customers, development of coherent variations.
The real challenge, therefore, is not to mechanically reduce the number of brands. It lies in determining which ones should become global leaders, which ones will remain regional specialists, which ones will be incubated, and which ones no longer have sufficient potential.
Digital technology makes dispersion much more expensive
Digital technology hasn't just created an additional sales channel. It has compressed time. A trend can emerge on TikTok, spread to Instagram, cause stock shortages, be imitated by dozens of competitors, and then lose some of its appeal within a few months. This acceleration contrasts sharply with the industrial processes of large corporations: formulation, stability testing, regulatory approval, production, packaging adaptation, negotiations with distributors, and international rollout.
The more brands, markets, and product lines an organization manages, the more complex its decision-making becomes. Teams must choose which launches to accelerate, which platforms to prioritize, and which trends warrant sustained investment.
The problem lies not in the existence of multiple brands, but in the fragmentation of resources. When a group spreads its budget across too many new products, each receives enough investment to exist, but rarely enough to become indispensable.
By 2025, L'Oréal reported that its e-commerce was growing at a double-digit rate and now accounted for over 30% of its sales. This growth demonstrates how crucial digital visibility, content quality, product availability, and conversion efficiency have become in the beauty industry.
Brands are no longer just competing for shelf space. They're also vying for: a spot in search results, a few seconds of attention in a video, a credible recommendation, a place in a routine, and enough repetition to become memorable. In this world, media concentration becomes a competitive advantage.
Too many new things can weaken a brand
The first symptom of a poorly prioritized portfolio is often an excessive number of launches. A brand launches a serum because the category is growing, a mist because the format is going viral, a hair care line to broaden its customer base, and a limited edition to support its sales calendar. Each project may seem defensible individually. Taken together, they can obscure the value proposition.
Too wide an assortment produces several negative effects: the references cannibalize each other, readability on the shelf decreases, advisors have less control over the benefits of each product, stocks become more difficult to manage, communication budgets are dispersed, and strategic products lose visibility.
Novelty doesn't automatically create desire. It can even become mere noise when it's not linked to a clear brand vision. The most disciplined groups will therefore no longer simply focus on launching new products. They will strive to build franchises capable of enduring, reinventing themselves, and accumulating value over time.
SKU rationalization becomes a strategic lever
Reducing the number of product references, or streamlining SKUs, is often perceived as a purely financial exercise. However, it constitutes a brand choice.
Removing a low-selling shade, a redundant format or an insufficiently differentiated variation frees up: industrial capacity, components and raw materials, store space, marketing budget, training time, creative resources, cash tied up in inventory.
Successful rationalization is not about cutting uniformly. It involves analyzing the real contribution of each item: organic growth, margin, repurchase, international potential, consistency with positioning, industrial compatibility, and ability to support the price.
Some low-volume products can remain strategic because they reinforce a company's expertise or image. Others, despite decent sales, can dilute brand perception. The right question, therefore, is not "How much does this product sell?" but "What role does it play in value creation?"
Luxury beauty demands proof, not just a story
Contemporary beauty combines desirability and demonstration. In perfume, storytelling, the quality of the ingredients, the bottle, and the olfactory signature all contribute to building perceived value. In skincare, the brand must also provide evidence: instrumental tests, clinical studies, usage protocols, formula stability, and consistency of claims.
Dermocosmetics illustrates this trend. In 2025, L' Oréal's Dermatological Beauty division posted comparable growth of 5.5%. The group claimed a 25.8% market share in dermocosmetics and three brands exceeding one billion euros in revenue: La Roche-Posay , CeraVe , and SkinCeuticals .
This performance is not based solely on communication. It relies on specialized brands, relationships with healthcare professionals, and a clearly identifiable performance promise.
The next decade of beauty should therefore value the players capable of combining formulation, sensoriality and credibility, an evolution developed in our analysis on the beauty of the next ten years.
The word "clean" alone is no longer enough. Consumers are looking for precise information: the origin of the ingredients, the function of the active ingredient, observed results, tolerance, recyclability, and refillability. Brands must replace general promises with understandable and verifiable information.
Retail, DTC and social commerce: there is no single model
Large groups have historically built their power through retail: department stores, selective perfumeries, pharmacies, trade shows, travel retail and specialized chains.
The rise of direct-to-consumer then promised a relationship without intermediaries, more customer data, and greater control over the experience. Social commerce now adds a third element, based on discovery, demonstration, and immediate purchase. These channels don't necessarily have to be in opposition. They should be prioritized according to the nature of each brand.
A heritage perfume house does not have the same needs as a skincare brand based on repurchase, a viral makeup line, or a young hair care brand built around tutorials.
LVMH's first half of 2026 illustrates this difference in dynamics. Sales of Perfumes and Cosmetics remained stable on an organic basis, while selective distribution grew by 5%, supported in particular by Sephora.
The retailer is therefore no longer just a point of sale. It is becoming an influencer, a media outlet, a data producer, and sometimes an incubator. The launch of the Sephora Prize, dedicated to emerging beauty brands, demonstrates how retail is now seeking to identify and support concepts capable of becoming the future drivers of product assortment.
A omnichannel strategy does not mean being present everywhere in the same way. It consists of assigning a specific mission to each channel: the store allows testing and reassurance, the official website develops the universe and the relationship, social networks create discovery, content platforms provide proof, specialist distributors give access to a qualified audience, travel retail develops international visibility.
Influence rewards consistency and repetition
Beauty , and products can become part of easily replicable routines. But the proliferation of content doesn't guarantee impact.
A brand wins when it repeats a consistent promise across multiple creators, formats, and cultural moments. It loses when its campaigns constantly change their message, target audience, or aesthetic territory.
Theinfluence of luxury and beauty brands in France shows that the most visible brands aren't always those that publish the most. They are often the ones that best orchestrate their messaging through ambassadors, branded content, events, and community engagement. The content creator shouldn't be seen as simply a media outlet. They become an interpreter of the product promise. The clearer this promise, the more easily it can be adapted without losing its identity.
Strategic focus therefore also improves influence performance: fewer competing messages, more repetition and better memorization.
The supply chain transforms complexity into risk
The beauty industry is an image industry, but also an industry of materials, components and precision. Glass bottles, pumps, caps, pigments, alcohol bases, oils, preservatives, biotechnological actives, cases and decorative elements depend on a supply chain that is often international.
Each additional product reference may require: new tooling, small production runs, compatibility testing, specific packaging, regulatory adjustments, separate demand forecasts, and additional storage. As the portfolio expands, economies of scale can be offset by a surge in complexity.
Industrial teams sometimes end up making decisions based on the availability of a pump, bottle, or filling line, rather than on brand priorities. The promise of responsiveness then clashes with operational reality. In a sector where a stock shortage can negate the benefits of a viral trend, simplicity becomes a form of speed.
Pricing power reveals a brand's consistency
The ability to raise prices does not depend solely on inflation or the cost of raw materials. It measures the value that the consumer places on a brand.
A perfume can justify a high price through its composition, bottle, signature, exclusivity , and the experience surrounding it. Premium skincare must combine effectiveness, sensory appeal, trust, and quality of service.
When the product portfolio becomes too fragmented, pricing loses its logic. A single brand can offer numerous promotions, limited editions, trial sizes, and upgrades without the consumer truly understanding the hierarchy.
Premiumization about indiscriminately raising all prices. It requires choosing which brands and franchises have sufficient legitimacy to justify a price increase. The others can continue to play a vital role in terms of accessibility, purchase frequency, and value for money. The two models can coexist within a group, provided they are clearly separated.
Choosing geographies rather than expanding everywhere
The major beauty markets do not evolve at the same pace or according to the same rules.
Europe remains a historical foundation. North America values innovation, proof of concept, recommendations , and strong community-based brands. The Middle East offers fertile ground for fragrance and luxury experiences. China retains significant potential but requires a nuanced understanding of its platforms, uses, and cultural references.
Data from FEBEA illustrates this fragmentation. In 2025, French cosmetics exports to the United States fell by nearly 19%, while those to the European Union increased by 4%, those to the United Arab Emirates by 8%, and those to China by 1.2%. A company can therefore no longer apply the exact same launch plan everywhere.
It must decide: where to overinvest, where to consolidate its positions, where to favour selective distribution, where to rely on partners, where to adapt products and content, where to accept not being immediately present.
This geographical discipline is particularly important in Asia, where trends evolve rapidly and local brands are becoming increasingly sophisticated. Our report on luxury and beauty in China in 2026 analyzes this need to combine international desirability with cultural relevance.
Acquisition or incubation: two paths, one same requirement
To enter a growing category, a group typically has three options: acquire a brand, create a new one, or transform an existing asset. Acquisition brings an already established community, products, team, and legitimacy. It allows for acceleration but creates a risk of integration. An emerging brand can lose its uniqueness when it is subjected too quickly to the processes of a large group.
Internal incubation offers greater control but requires time, experimentation, and a tolerance for failure. Reviving an existing brand can be a middle ground. It leverages a name, archives, or a well-known franchise while refreshing the products and messaging.
In all cases, one rule should prevail: every investment must clarify the portfolio. An acquisition that adds a brand without a clearly defined role increases complexity without strengthening the strategy.
An arbitration framework for beauty groups
To regain momentum, conglomerates need to put in place a governance capable of making difficult decisions.
Identify the truly differentiating assets
Each brand must be evaluated according to its desirability, credibility, margins, growth potential and compatibility with the group's skills.
Build an explicit hierarchy
Leaders need to distinguish between global engines, regional specialists, incubations, and assets to be streamlined.
Focus investments
Some strong franchises need to receive sufficient resources to build a sustainable presence: research, sampling, retail, influence, events and proprietary content.
Reduce redundant references
Removing SKUs should free up capacity without diminishing brand identity or expertise. Adapting channels to each model: Not all brands are suited to the same balance between retail, DTC, pharmacies, trade shows, travel retail and social commerce.
Aligning creation, industry and distribution
An idea is only valuable if the product can be manufactured, distributed, and replenished at a time when attention is at its peak.
Measure the cumulative value
Investments should reinforce a consistent narrative over time, rather than funding a succession of campaigns without continuity.
What will separate the beauty leaders?
In the short term, the most successful groups should reduce the noise: fewer opportunistic launches, more powerful relaunch campaigns, better exploitation of iconic products, and a concentration of budgets around identifiable territories. The ability to synchronize creativity, production, influence, and distribution will become crucial. A highly visible campaign creates no value if the product remains unavailable. A remarkable innovation cannot take hold if it does not receive sufficient media coverage.
In the longer term, portfolio governance will distinguish the leaders. Groups capable of standing by their choices will be able to invest more heavily in R&D, content, retail experience, and personalization technologies. Those that remain in limbo risk multiplying initiatives without producing a cumulative effect.
The market will not necessarily penalize size. It will penalize indecision.
Diversification must become legible again
The question isn't about choosing between diversification and specialization. It's about determining how several brands can coexist without diluting their resources, messaging, and desirability. In the beauty industry, value is built by repeating a credible story. A portfolio only protects the company when it has a clear direction, defined priorities, and a genuine hierarchy.
Beauty giants must therefore relearn how to make decisions: between brands to accelerate and those to rationalize, between passing trends and lasting transformations, between widespread presence and chosen distribution.
Power will no longer come from the ability to run in all directions. It will come from the ability to move faster where a mark can become obvious.
FAQ: Beauty Group Strategy
Why are large companies reducing the number of product lines?
Streamlining product references reduces industrial complexity, improves inventory management, and allows marketing investments to be focused on products with the greatest potential.
What is a hero product in the beauty industry?
A hero product is a flagship product that clearly embodies a brand's promise. It often accounts for a significant portion of the brand's reputation, sales, and media visibility.
Is diversification still useful for cosmetics groups?
Yes, provided that each brand and category plays a clearly defined role. Diversification without hierarchy can scatter resources and slow down decision-making.
Why does premiumization promote concentration?
A premium positioning requires sustained investment in formulation, proof, design, distribution, and communication. These resources are most effective when concentrated on a few strong franchises.
What is the role of retail in the strategy of beauty brands?
Retail allows for product testing, providing advice, reassurance, and reaching a qualified audience. Specialized distributors also play a role as influencers and brand discoverers.
Official French sources
- L'Oréal Finance – 2025 Annual Results
- LVMH – Accelerated growth in the second quarter and 2026 half-year results
- FEBEA – French cosmetics exports in 2025
