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Special edition: Beauty from within

Beauty From Within turns ugly for L’Oréal and Nestlé

By Shane Starling+

17-Mar-2015
Last updated on 26-Mar-2015 at 21:42 GMT2015-03-26T21:42:26Z

Poison pill?
Poison pill? "Innéov was too technical. It didn’t have that emotional connection. That pleasure connection.”

It promised so much – the globe’s biggest cosmetic and food players L’Oréal and Nestlé applying serious marketing, research and NPD clout to drive a nascent category into the mainstream public consciousness. It was going to make beauty from within (BFW) or nutricosmetics a mainstream proposition.

Unfortunately for them and by association the sector, the brand they created – Innéov – flopped. Well, at least by their mega-brand standards. Maybe a €50m, marginally profitable brand in a sector many view as having a lot of potential would have fared better under the reins of a start-up, but such figures did not impress the food-cosmo megaliths.

Inneov: Born 2002. Died 2014.

Last November L’Oréal and Nestlé drove the nail. In a joint statement they said Innéov had not “met the development expected by both partners.”

Game over. JV dissolved. Both parties putting a positive spin on it by saying they had gained “benefits of the research and intellectual property as well as the developments achieved which could be potentially used in their respective fields.”

Perhaps this means Nestlé will go it alone and evolve Galderma – the Swiss derma-pharma firm it paid €3bn to L’Oréal for a 50% stake – into BFW applications. Time will tell.

L’Oréal told us the Innéov brand would not be sold to private equity or another bidder. "Selling Inneov as a whole was not considered," said L’Oréal head of external communications Stéphanie Carson-Parker.

But why did Innéov fail? Pundits have suggested health claim rejections in its core European markets as a major factor.

In the EU a claim proposing Innéov ‘Helps to improve dry skin condition’ was rejected by the European Food Safety Authority (EFSA) in 2010 despite a 29-study dossier backing the blackcurrant seed oil, fish oil, lycopene, vitamin C, and vitamin E-based capsule blend.

EFSA concluded the dossier did not show “a significant improvement in skin dryness”. The dossier included a pilot study with a targeted sub-group of 40 elderly nuns.

Niches, benefits, regions…

That rejection stung but market analyst Julian Mellentin said blaming health claim fails for the demise represented a failure to understand the broader business context in which Innéov existed.

“Rejected health claims did not help obviously but this brand may have been considered a success in other’s hands – BFW is a niche category and this was a niche product with sales of €50m. Many would have been delighted with those numbers but it was not on the radar at L’Oréal and Nestlé,” Mellentin told us.

 

Inneov's (once)-vital stats

Countries entered

  • Belgium
  • Germany
  • Spain
  • France
  • Italy
  • Netherlands
  • Austria
  • Poland
  • Portugal
  • Russia
  • Switzerland
  • Mexico
  • Brazil
  • China

Softgel blend

  • Blackcurrant seed oil (920 mg)
  • Fish oil (920 mg)
  • Lycopene (2 mg)
  • Vitamin C (60 mg)
  • Vitamin E (10 mg)

Mellentin said the fundamental niche-bursting problem for Innéov and BFW was more topical.

“Beauty pills have a disadvantage as you don’t feel the benefit of using topical creams – sitting in front of the mirror and applying it – it’s part of the skin health ritual and cosmetic lotions are huge because of this. They also keep the science light and fluffy – it’s just there as a reassurance. Innéov was too technical. It didn’t have that emotional connection. That pleasure connection.”

Euromonitor International beauty and personal care analyst Nicholas Micallef agreed it is almost undeniable that topical applications will remain unchallenged.”

That said, Mellentin viewed the marketing and high-end, premium-priced pharmacy distribution plan as well thought out.

“The strategy was fine – it was just the expectation that was wrong. Some of these bigger companies are struggling to accept that the age of the super-brand is over. Things are too fragmented now in food, in cosmetics, in most industries.”

Micallef said the claim situation mattered in markets like North America: Nutricosmetics are also challenged in heavily regulated markets such as the US and Canada where beauty-related claims are profoundly scrutinised and scientific proof is required, which is not necessarily cost-effective given the cost and length of the regulatory approval process.” This cannot of helped Innéov establish there.    

Looking at other actions he suggested, “Collaboration with skin care specialists as product endorsers could also be a strategy to instill stronger consumer trust.”

Inneov launched products targeting men in Germany and elsewhere

Innéov evolved in its 12-year life. Originally targeting women it moved into weight management, offering a 35-day weight loss programme that included personal coaching, nutrition and exercise advice with little success. It also released products targeting men.

Regional reach

Others have wondered why greater efforts were not made in Asia and latin America. Euromonitor figures show Brazil was its strongest market by last year – growing to about €11.5m in sales and much greater than the next biggest market – Russia at €7m. France was third at €4.6m in annual sales.

Asia – the biggest BFW market albeit often in beauty drinks due to tight regulations in some countries – was not entered at all except for a short-lived venture in China that "did not develop as expected".

Asia: Innéov withdrew from region after shortlived Chinese venture failed

Could Eurocentrism of two global brands have played a role here? For L’Oréal and Nestlé not to have seriously attempted to enter Asia is puzzling.

Were national spin-offs considered? Other markets included Mexico and Germany among 14 countries entered.

At the moment the companies aren’t saying too much. But stagnant sales since 2008 (except Brazil) told enough. Innéov was over.

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