Neutrogena's Decline: Pandemic Fallout and CeraVe's Rise

Neutrogena's sales declined 4.5% in the latest quarter, marking its third straight quarter of declines, and losing its title as dermatologists' No. 1 recommended skin care brand to CeraVe. The decline is attributed to pandemic-induced ingredient shortages, slow response to social media trends, and lack of innovation and advertising efforts.

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Bijay Laxmi
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Neutrogena's Decline: Pandemic Fallout and CeraVe's Rise

Neutrogena's Decline: Pandemic Fallout and CeraVe's Rise

Neutrogena, a skin care brand owned by Kenvue Inc., has seen its sales decline by 4.5% in the latest quarter, marking the third straight quarter of declines. This decline has resulted in the brand losing its title as dermatologists' No. 1 recommended skin care brand to CeraVe.

Why this matters: The decline of a major skin care brand like Neutrogena has significant implications for the beauty industry as a whole, as it can lead to a shift in consumer behavior and market trends. Furthermore, this story highlights the importance of adaptability and innovation in the face of changing consumer preferences and market conditions.

The decline is attributed to pandemic-induced ingredient shortages, which led Neutrogena to focus on getting core items on shelves and discontinue some customer favorite creams and cleansers. Additionally, the brand was slow to respond to the shift in consumer behavior towards social media, particularly TikTok, where CeraVe has been actively marketing its products since 2020.

Neutrogena has also been criticized for its lack of innovation and reduced advertising efforts. The brand pulled back on advertising and innovation, and its marketing budget decreased significantly, with only $51 million spent on national TV ads in 2022, less than half of what it spent in 2020. "I forget about them. I have to admit. They're not top of mind," said Patricia Oyetakin, a dermatologist. "What makes Neutrogena different? They're a good brand, but I'm not sure why."

Kenvue attributes Neutrogena's troubles to the pandemic fallout and has announced a turnaround plan, which includes investing in marketing and innovation. However, the plan has yet to yield concrete results, and analysts are skeptical about its ability to win back customers. "Mimicking the playbook of rivals isn't a bad idea. But that's the minimum needed just to keep from falling further behind," said Korinne Wolfmeyer, a Piper Sandler analyst.

CeraVe, owned by L'Oreal SA, has taken advantage of Neutrogena's decline and has become the top skin care brand among dermatologists and consumers. CeraVe has cornered nearly 29% of skin care sales dollars across the nation in 2023, while Neutrogena has slipped in the rankings. CeraVe began marketing its products on TikTok in 2020 and has since become the top skin care brand among teen girls.

Neutrogena's skin care market share has plummeted to less than 14% in 2023 from 23% in 2019 in the US beauty market valued at $42 billion. The brand has introduced more than 100 new products in the last five years, but it remains to be seen if these efforts will be enough to regain its lost market share and reclaim its position as the top recommended skin care brand among dermatologists.

Key Takeaways

  • Neutrogena's sales declined 4.5% in the latest quarter, marking its third straight quarter of declines.
  • CeraVe has surpassed Neutrogena as dermatologists' No. 1 recommended skin care brand.
  • Pandemic-induced ingredient shortages and slow response to social media trends contributed to Neutrogena's decline.
  • Neutrogena's lack of innovation and reduced advertising efforts also hurt its performance.
  • CeraVe now holds 29% of skin care sales dollars in the US, while Neutrogena's market share has plummeted to 14%.