What next for the UK Beauty industry after Brexit?
01/07/2016 by The Red Tree
One week on.
Brexit is sinking in as a reality, but still there is a huge amount of uncertainty, politically, economically and commercially. How UK beauty companies respond in the coming weeks, months and years, will be testament to their ability to adapt.
In this article, Imogen Matthews reflects on a hyper-political week out of the ordinary for the UK, and asks fellow industry members for their thoughts on the likely impact of Brexit.
Here, we assess the future landscape for the UK beauty industry with views on what likely changes cosmetic brands and retailers can expect once the UK exits the EU.
Britain Out of EU Negotiations
Chris Flower, Director General, CTPA, is concerned that if we are out of the EU, we won’t be party to discussions over the future of the Cosmetics Products Regulation.
“Sadly, I can foresee years of trying to rebuild that which we have currently been enjoying and yet seem determined to cast aside,” he warns.
“Given all that is happening regarding product development and innovation, I find that a very uncomfortable position to be in after so many years of the UK being seen as a practical, pragmatic and constructive contributor to all the past negotiations.”
His concern is that rather than being present by right on the EU market, UK companies will have to compete with all other countries for entry.
“The complexity of managing business, at the same time as dealing with the minutiae of regulatory changes, to comply with EU legislation, when we are no longer a member, and therefore do not have EU addresses, for example, will divert attention from innovation.”
Pai Skincare Contemplates its International Future
In April 2016, sensitive skincare brand Pai won a Queen’s Award for Enterprise for international trade for its growth programme in Scandanavia, Canada and mainland Europe.
“Pai was actively engaged with the EU, lobbying for a legal definition of organic cosmetics,” explains Ed Saper, director Pai Cosmetics.
Founder Sarah Brown took part in a recent European Economic and Social Committee meeting in Nottingham on the European Personal Care Industry.
“At the meeting, Sarah argued for the removal of tariff barriers, such as local language requirements,” he comments.
Now, he expects that once the UK is outside the EU, there will be a gradual erosion of the level playing field that UK companies have enjoyed, even with a good trade deal.
Ed also anticipates the need for a European office – Pai is considering Amsterdam – particularly if it becomes difficult to recruit EU nationals in sales and marketing roles. He anticipates other UK brands also requiring a European office.
The silver lining for Pai should come in the future if the promised free trade deals happen. “It should become easier to sell and ship to stores and consumers in other wealthy markets, such as Japan, Canada and USA.”
Kevin Price, director, interim management professionals company Frattempo, makes the point that cosmetics businesses selling in pounds could enjoy the benefit of relatively cheaper goods in the overseas market.
“For smaller brands using distributors this can provide a boost of price advantage, as along as the price reflects onto purchasing rate of sale on shelf.
“However, if the regulatory environment changes (e.g. import tariffs are imposed) then those advantages could easily melt away. For now, no one knows.”
He adds: “It is important exporters remain proactive and responsive to do business with and clearly communicate continued commitment to work with any European partner, so their business can prosper and grow. It is very important to retain the confidence of export trading partners.”
London will Remain a Creative Centre
For Stirling Murray, founder of The Red Tree Consultancy, the Referendum result goes against everything he stands for. But as far as working with beauty brands is concerned, it will be business as usual and he will continue to invest more than ever in marketing.
“Creative brands will continue to be successful. London is a centre of entrepreneurship, it’s dynamic and that isn’t going to change,” he believes.
“We have sufficiently creative and corporate brands that will find new ways of doing business. The beauty industry will cope.”
On his part, Charles Kessler, chairman, Kesslers International, maintains that the Referendum was held without a reason and that the result to leave the EU cannot be for the wellbeing of the UK economy. However, London has achieved global success, which cannot be ignored. “People are welcome here and we will continue to build on what we have achieved.
“We need to keep our outward-looking focus. There is a danger if we become too inward-looking.”
For now, the UK remains in Europe and the impact of the Brexit vote is far from clear. All possible options for a new relationship with our EU neighbours will be explored but we are in for big changes in the future?
The Red Tree is the UK’s leading international beauty brand consultancy and a powerhouse of ideas, insight and inspiration. For an informal discussion on how we might help you, please contact us.
Middle East Beauty Hub
Explore our series of articles uncovering the intersection of tradition, innovation, and regulation within the nuanced Middle Eastern beauty markets.
Female Founders: The Lip Gloss Gap
Our series of articles highlighting how the UK beauty industry plays a vital part in closing the female fundraising gap.
New to the beauty industry? Our Founder Hub series brings together an array of articles covering topics from the costs of starting a new brand, to our recommended branding agencies.
Meet The Team
Get to know each of The Red Tree team members with our interview series. From our favourite campaigns to tips on how to enter the beauty industry.
Our series of articles exploring our fitness test for beauty brands. The unique RaceFit™ questionnaire allows you to quickly review the 7 building blocks crucial to brand success.
The Beauty Accelerator™
Read our series of articles focusing on The Beauty Accelerator™, which sees one emerging independent beauty brand receive equity investment plus the knowledge and expertise of The Red Tree.
Is RaceFit™ for me?
Is RaceFit™ right for my brand?
RaceFit™ assessment is beneficial to any brand at any stage of their journey. If you are: - A start up looking for direction and guidance - An established brand seeking an overall ‘health check’ - A brand in crisis urgently seeking direction on priorities - An international brand looking to expand into the UK market - A brand ready to take their ‘next step’ looking for guidance in preparation for growth, international expansion or expanding distribution then RaceFit™ is for you!
What if I am unsure of how to answer a question?
You should answer honestly and instinctively. Very often your initial response will be the most accurate. If you don’t understand a question, or are having difficulty knowing how to answer questions please do get in touch.Contact Us
I am based outside of the UK, can I complete RaceFit™?
Yes, the RaceFit™ self-assessment programme is entirely virtual so you can get started straight away, no matter where in the world you are.
Any company entering The Beauty Accelerator™ competition must be based and registered in the UK.
The scheme by which investment into the winning brand will be made is the Seed Enterprise Investment Scheme (SEIS). You must be eligible for SEIS to enter The Beauty Accelerator but you do not need to be registered for SEIS. You can be in the process of applying for SEIS and receiving Advanced Assurance from HMRC, which is free of charge to obtain and certifies to investors that the criteria necessary to qualify for SEIS have been met by the company at the time of the application. You do however need to be SEIS registered at the point of investment.Click here For further information about SEIS
As is the case with all equity investments, the winning brand must be willing to provide equity stakes for both SFC Capital and The Red Tree. In addition, the winning brand might be required to pay a monthly fee for the duration of the 12 month period of assistance from The Red Tree. The size of the equity stakes for both SFC Capital and The Red Tree are unknown at this stage and will be based on the valuation of the business at the time of investment. The value of the monthly fee to The Red Tree will be determined by the scope of work required by The Red Tree and will be agreed in consultation with the winning brand. The equity stake, monthly fee and scope of work will be discussed in further detail with short listed brands during the interview stage.
Brands that applied for The Beauty Accelerator™ 2022 can apply for The Beauty Accelerator™ 2024.
Applicant brands should ideally have proof of concept – the business should ideally be in operation with at least one product currently retailing on the market, an existing website in operation and a number of months of trading.
Under exceptional circumstances, brands that are at concept stage will be considered.
There should be a team in place or a willingness to take on a co-founder at an early stage.
A business plan must be in place and submitted as part of your application to demonstrate the revenue that can be delivered.
The business should not be valued at more than £1,000,000.
All R&D should be completed as funds invested will only be used for marketing and commercial activity.
If you are short listed, you must be available to attend the virtual shortlist interview. It is likely that short listed brands will be required to attend more than one virtual interview.
If you are a Finalist, you must be able to attend The Beauty Accelerator™ Final, either virtually or in-person.
You cannot apply for or already be in the process of applying for another accelerator or incubator during the period December 2023 to December 2024.
If you are selected as a finalist, and if you go on to win The Beauty Accelerator™, you must agree to exposure of you and your brand through The Red Tree’s, SFC Capital’s and Freeths online and social channels and a possible marketing campaign.
Confirmation of the winning brand is subject to SEIS eligibility confirmation, agreement on equity stake and The Red Tree fee, and completion of due diligence.
"*" indicates required fields