Procter & Gamble Expands Its Prestige Beauty Presence In The Travel Retail Market

by Trefis Team
-19.46%
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Procter & Gamble
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Procter & Gamble’s (NYSE:PG) prestige beauty division has recently opened a new travel retail store for its brand Dolce & Gabbana The Make Up, at the London Heathrow Terminal 5. This will help the company in capture a larger share of the blossoming travel retail market as well as contribute to the sales of it beauty division, which accounts for over 20% of our price estimate for the company.

The beauty division represents products of iconic brands like Dolce & Gabbana, Gucci, Hugo Boss and SK-II, making it a major competitor in the world prestige beauty and fragrance market. With over $20 billion in revenues, the division contributed about 25% to the company’s total revenue in 2012. [1]

Procter and Gamble is a market leader in the consumer products industry, especially in the beauty category. The company takes pride in owning billion dollar brands like Head & Shoulders, Olay, Pantene, SK-II and Wella within its beauty category. Olay is Procter and Gamble’s top facial skin care brand with approximately 10% global market share. In retail hair care market the company owns nearly 20% global market share with its Pantene and Head & Shoulders brands. ((Annual Report, 2012))

See our full analysis for Proctor & Gamble

License Agreement With Dolce & Gabbana

Procter & Gamble entered into a license agreement with Italian luxury fashion house Dolce & Gabbana in 2006, to market and distribute its existing fragrance portfolio along with developing new variants. [2] The agreement was in line with Procter & Gamble’s global strategy to strengthen its core businesses and focus on high margin and high growth divisions. The brand’s make up division is inspired by the beauty vision of fashion designers Domenico Dolce and Stefano Gabbana.

Expands Dolce And Gabbana The Make Up In The Travel Retail Market

Procter & Gamble has opened the Dolce & Gabbana The Make Up collection’s travel retail store at London Heathrow Terminal 5, in partnership with the World Duty Free Group (WDFG) and aims at capturing the booming travel retail market. [3] This is the second travel retail store for the brand, with the first opened a couple of weeks ago at the Beirut Duty Free.

This shows the company’s growing focus on travel retail channel to expand the reach of this brand, as it has been growing in double-digits for the last few years. Present in seven countries, Dolce & Gabbana The Make Up collection has shown spectacular triple-digit growth since its introduction.

Procter and Gamble will continue focusing on the travel retail channel as the number of passengers travelling in premium seats has shown significant growth since the 2009 global recession. A recent IATA report indicated that international premium travel grew at about 9% yearly, as business confidence picked up in 2012. [4] The company’s expansion into travel retail is in line with its strategy to enhance D&G The Make Up’s currently small global footprint, less than 200 stores worldwide. Procter & Gamble also operates other travel retail stores to promote its other brands like SK-II and Gucci.

We currently have a $70 Trefis price estimate for Procter & Gamble.

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Notes:
  1. Annual Report, 2012 []
  2. Dolce & Gabbana and Procter & Gamble – Perfume Partners, December 2005 []
  3. Dolce & Gabbana The Make Up makes European travel retail debut, May 2013 []
  4. Premium Traffic Monitor, March 2013 []
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