Investing.com -- Berenberg expects the global beauty market to face slower growth in 2025, with the pace likely to fall short of L'Oréal’s projections. Amid this challenging backdrop Berenberg listed its top performers that include Beiersdorf (ETR:BEIG), Coty (NYSE:COTY), Galderma, and Unilever (LON:ULVR).

Growth in developed markets is expected to cool, while China is likely to stabilize in the first half of the year before seeing a modest recovery later. 

Emerging markets, where companies are increasing investments, are expected to grow at a stronger pace. 

Berenberg upgraded Coty to Buy, expecting its upcoming investor day in June 2025 to serve as a catalyst for renewed interest. 

The firm expects Coty to lay out its strategy to drive sales growth, improve margins, and return more cash to shareholders. 

Puig was initiated at Hold due to concerns about its operational flexibility, despite its strength in the prestige segment.

L’Oreal SA (EPA:OREP) was downgraded to Hold, with Berenberg noting that rising competition in mass beauty and dermatological segments could limit its market outperformance in 2025.

Beiersdorf remains Berenberg’s top pick, with the firm highlighting its promising pipeline of innovative products and ongoing geographic expansion. 

Beiersdorf is well-positioned to outperform in a more competitive environment, thanks to its strong product launches and consistent execution.

Beyond 2025, Berenberg sees risks emerging from younger, more digitally engaged consumers who are less loyal to traditional brands. 

By 2035, these younger cohorts, Generation Z, Alpha, and Beta, will make up half of the global workforce. While they are highly engaged with beauty products, their willingness to switch brands poses challenges for established companies, raising concerns about growth stability and brand loyalty.

Another shift reshaping the industry is the rise of beauty technology. 

Consumers are increasingly turning to at-home beauty tech, non-invasive medispa treatments, and advanced procedures like laser and injectables. 

Galderma is seen as a key beneficiary due to its expertise in injectable aesthetics, while dermatological skincare is also expected to gain from this trend. However, traditional beauty categories, especially prestige products, may face longer-term risks as consumers adopt these new technologies.

Berenberg expects the global beauty market to grow by 3.7% in 2025, below L'Oréal’s management forecast of 4-4.5%.

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