1、EUROPE|Food&HPCEquity ResearchSeptember 16,2025 DavidHayes*|Equity Analyst+44(0)20 7029 8230|MollyWylenzek*|Equity Analyst44(0)20 7029 8564|FengZhang*|Equity Associate+44(0)20 7029 8491|ThomasRandall*|Equity Associate+44(0)20 7029 8440|Global Cosmetic Growth to Normalise at 4%paWe assess our beauty

2、names based on 2 premises:a/structural globalcategory growth is(healthy but contained)at c4%pa,with short termdeviations only arising from abnormal external events&b/sub-categoryebb&flows rely on substitution from each other.In other notes today,wedowngrade LOreal(Hold to Underpeform)&Beiersdorf(Buy

3、 to Hold).Wefear perceptions of midterm growth rates for these names will fade in thecoming qtrs,threatening derating.How does your beauty garden grow?We looked back at the events that have impacted theglobal beauty category over the last 25 years and outline why we think the medium term rateof grow

4、th will be c4%per annum(c2%vol/mix and c2%price).This is predominately drivenby the gradual increase in the addressable market,those consumers with enough income toenter the category.In the period,we have seen abnormal events trigger some short-lived(1-2years)of variation.However,occasionally a sequ

5、ential series of events can create an illusionof a structural growth rate shift.Such a series of events occurred between 2017-2023;Chinasalignment of wealth acceleration with cheaper cosmetic availability,the COVID related increasein time&money for cosmetics&then the 2-year input cost led price spik

6、es.It is this(prolonged)period of positive deviation in growth(averaged 5.9%pa ex COVID years of 2020/21)that wethink investors rely on to justify often heady valuations for the beauty names.As the marketremains at a normalised growth rate of c4%,we think there will be a discount applied to currentm