Beiersdorf’s double-digit growth propelled by Nivea as China’s “daigou” culture eats into luxury brands sales

03 Aug 2023 --- Beiersdorf reports “good growth momentum” driven by high consumption of sunscreen supplied by core Nivea brand during these summer months. Citing “high profitability” in the first six months of this year, the German multinational personal care giant hit sales of €4.9 billion (US$5.4 billion), which were up by 12.3% in organic terms.

Meanwhile, the company reported disruptions primarily within its luxury brand segment as a knock-on effect of the growing phenomenon of “daigou” shopping culture in Asia. Daigou shoppers purchase goods abroad on behalf of domestic customers, offering these customers tax and price advantages over domestic retailers.

Beiersdorf flags “considerable disruption” in its Asian travel retail markets caused by the daigou phenomenon.

Beiersdorf flags considerable disruption in its Asian travel retail markets attributed to the “daigou” shopping culture (Image credit: Beiersdorf).This impact left an evident mark in the performance of luxury brand La Prairie, which recorded a 9.9% fall in sales in the first six months. Nominal sales dropped by 10.5% to €294 million (US$321 million) from the previous year’s €328 million (US$358 million).

“Beiersdorf, therefore, welcomes the recent government measures to reduce daigou business in China, even though this negatively affected the luxury cosmetics business in the second quarter,” states the company.

Shares jump forward
The group saw its shares leap by almost 4%. Alongside positive results by Nivea, the business highlights a spike in sales of dermatological brands Eucerin and Aquaphor by 26.1%. 

Beiersdorf forecasts organic sales for the group and its consumer business to grow by a “high single-digit to low double-digit percentage range,” compared to a previous prediction for “mid-to-high single-digit growth.”

“We not only continued our growth path but also significantly increased our profitability in the first half of the year,” comments CEO Vincent Warnery. “Our Consumer Business outperformed the market in terms of growth. Both Nivea and the Derma brands grew strongly in all regions and categories and more than offset the weaker performance of our luxury business.”

“These positive results give us confidence for the next months, even though we still expect headwinds in some areas. We are, therefore, increasing our sales forecast for the Consumer Business Segment and the group.”

Nivea and Derma brands boost group sales
Organic sales in Beiersdorf’s Consumer Business Segment grew by 14.9% in the first half of the year. In nominal terms, sales therefore rose by 12.9% to €4.1 billion (US$4.5 billion), from last year’s €3.6 billion (US$3.9 billion).

The core brand Nivea – including Labello – grew in all regions and categories by 18.4% year-on-year in organic terms. Nominal sales at Nivea climbed by 15.1% to €2.7 billion (US$3 billion) from the previous year’s €2.3 billion (US$2.5 billion). 

All skin care categories posted double-digit growth in the first half of the year. This was led particularly by the sun protection and lip care business. 

“Nivea also successfully completed all price negotiations in Europe, thereby ensuring stable conditions for the brand,” highlights Beiersdorf.

The Beiersdorf Derma business segment, comprising brands Eucerin and Aquaphor, posted organic sales growth of 26.1% (Image credit: Beiersdorf). The Derma brands Eucerin and Aquaphor continued posted organic sales growth of 26.1%. In nominal terms, the overall Derma category’s sales grew by 26.0% to €663 million (US$724.8 million) from the previous year’s €526 million (US$575 million).

Demand for sun protection was “exceptionally high,” particularly in North and Latin America. 

Beiersdorf also further expanded its market share for its Derma business segment brands, especially in the anti-aging, body care and sun protection categories. In June, Beiersdorf unveiled Nivea Sun and Nivea Lip Care with a reduced carbon dioxide footprint following World Environment Day.

Given the positive sales trend and above-market growth in the first half of the year, Beiersdorf has slightly increased its sales forecast for 2023 as a whole.

Beiersdorf expects organic sales growth at group-level to be in the high single-digit to low double-digit range. Its consolidated EBIT margin from ongoing operations, excluding special factors, is expected to be slightly up on the previous year’s level.

Edited by Benjamin Ferrer