Latest news with #Bain
Forbes
5 hours ago
- Business
- Forbes
Prices To Rise For Prestige European Consumer Products, Making U.S. Brands More Competitive
A "Made in France" label on red acrylic fabric indicating that product is manufactured in france and ... More representing a France map with tricolour flag featuring three vertical bands coloured blue, white, and red. Prices on a wide array of European consumer products are set to rise beginning Aug. 1, now that a EU-U.S. trade deal is in place, including a 15% tariff duty on EU exports to the United States. From food to fashion, watches to wine and autos to appliances, few product categories are spared. What unites them is that European brands carry old-world prestige. These heritage-rich brands have long commanded a price premium, and now that premium will come with an even a higher price tag. On the flip side, it's going to make made-in-USA brands more price competitive, all part of President Trump's America First agenda. Depending upon how much of the 15% price premium is passed along to consumers, it could reset demand for European brands, leading to slower sales in the U.S. What's for certain is that these premium Euro brands can't take their previous high status for granted and must continue to invest in their prestige value to maintain their market position. Tariff Blow To Luxury Fashion Brands Many major European luxury brands learned that lesson after boosting prices on average 33% from 2019 to 2023 with no discernible improvement in quality, according to UBS. After that, Bain reports that some 50 million luxury consumers exited the market and the personal luxury market contracted 2% in 2024. It is facing up to a 5% decline this year, as well. UBS doesn't expect luxury brands to make the same mistake twice. Luxury goods brands are expected to pass along only about a 2% price increase in the U.S. and 1% globally to avoid taking a 3% hit to earnings before interest and taxes. 'Brands are treading carefully with further price hikes to avoid alienating younger and occasional shoppers,' said Digital Luxury Group's managing director Jacques Roizen. European luxury brands hold a 70% global luxury market share and account for some 11.5% of total EU exports, according to an analysis by Bain and the European Cultural and Creative Industries Alliance. Some of the leading EU luxury brands include LVMH-owned Louis Vuitton, Dior, TAG Heuer and Fendi, Kering's Gucci and Saint Laurent, Richemont's Cartier and Van Cleef & Arpels, Swatch Group's Omega, Longines and Harry Winston, Hermès, Chanel, Prada, Moncler, Dolce & Gabbana, Valentino and Giorgio Armani. Further down the fashion food chain, Zara out of Spain, H&M from Sweden and Primark from Ireland are likely to be hit by tariff price increases, as are Germany-based sportswear brands Adidas and Puma. Rejiggering Engineered Products After pharmaceuticals, medications and other medical products, automobiles and motor vehicles are the third largest category of EU exports. And according to the latest Cars Commerce report, U.S. unit sales of new vehicles rose 3.9% from January through June as consumers picked up the pace on purchases ahead of tariff price increases. Leading luxury automobile brands are going to take a big hit as the 15% EU tariffs take hold. According to the European Automobile Manufacturers' Association, some 22% of EU vehicle exports land here. Brands in the crosshairs include BMW, Mercedes-Benz, Volkswagen, Audi, Porsche, Fiat, Volvo and Peugeot. These luxury auto leaders faced a global slowdown from 2023 to 2024, dropping a reported 5%. Automobiles are the luxury market's largest segment, totaling $668 billion last year compared to $419 billion in the personal luxury goods market. Consumer appliance brands are also facing tariff challenges. Bosch, Electrolux, Miele, Philips, Braun and De'Longi are leading brands in this sector. For example, the largest of those brands, Bosch generated some 20% of global sales in the Americas last year and it was the only market that grew, up 5%, while Asia-Pacific (31% of sales) was flat and Europe (49%) fell 5%. Beauty Makeover With $50 billion in sales last year, Paris-based L'Oréal is the world's leading beauty company with 37 brands in its portfolio under four divisions: consumer products (e.g. L'Oréal Paris, Maybelline, Garnier), luxe (Lancôme, Kiehl's, Aësop, IT Cosmetics), dermatological beauty (La Roche-Posay, CeraVe, SkinCeuticals) and professional products (Kératase, Redken, Matrix). And within the luxe division, it is also the beauty partner of numerous luxury brands, including Yves Saint Laurent, Armani, Ralph Lauren, Valentino, Prada and Mui Mui. Last year, some 27% of sales were made in North America, its second largest market after Europe at 33%. In dollar terms, the 15% tariff will hit the higher-end of its range – 36% of sales are in luxe, followed by 16% in dermatological beauty and 11% professional products. However, those brands' more affluent target market may be more willing to accept a price hike as compared to the 37% of sales in its more affordable consumer products range. Other EU beauty brands under pressure include Beiersdorf (Nivia, Eucerin and La Prairie), Clarins, Yves Roche, Chanel and Dior. Gourmands Will Pay More American consumers, who've acquired a taste for more premium European foods, wine and spirits, are likely to suffer sticker shock the most as tariffs push prices above previous levels. Statista reports high-quality, artisanal European food imports have grown from $16.5 billion in 2021 to $20 billion in 2023, a 21% increase. Popular EU brands include sparkling water (Evian Perrier, Pellegrino brands), chocolates (Ferrero Rocher, Lindt, Godiva, Toblerone, Nestlé), Lavazza coffee, Barilla pastas and sauces and Goya Foods. Specialty regional-specific olive oils, cheeses, wine and spirits brands will also take a hit. LVMH's wine and spirits segment is already 8% underwater in the first half of 2025, and it can ill afford having its brands' already premium prices go up another 15% in the U.S., the business group's largest market, accounting for 35% of revenues. The Italian Unione Italiana Vini winemaker's trade association figures the 15% tariff will cost exporters $371 million, noting that a bottle of Italian wine that previously retailed for $11.50 per bottle will cost $15 going forward. American Consumers To Reconsider Place Of Origin Whether Americans will be both willing and able to absorb the growing premium on European imports is an open question. What is likely is that consumer demand will cool, making the U.S. a less attractive trading partner for many brands. And with falling demand, the 15% tariff price hike will ultimately have less impact on inflation. At the same time, with no shortage of domestic alternatives, American-based brands are well-positioned to capitalize on the change. As shoppers prioritize price/value over prestige, it could give U.S. brands a much-welcomed competitive edge and much-needed boost. See also:
Mint
14 hours ago
- Business
- Mint
Why it has never been better to be a big company
For all the unwieldiness it entails, scale has always brought enormous benefits in business. Fixed costs are set against more revenue, raising profits and supporting investment. Heft brings greater bargaining power with suppliers and financiers. From the early 2000s, the advantages of scale became even more pronounced. Intangible assets, including software and intellectual property, gave the upper hand to companies that could afford to invest in them. Globalisation provided big companies with more room to grow, as well as access to larger—and cheaper—pools of labour. In America, the gap in profitability between big and small firms widened (see chart 1). Economists began to speak of 'superstar" firms racing ahead of the competition. Now size is conferring advantages in new ways. Artificial intelligence (AI) is reinforcing the dominance of big firms over small ones. So is the presidency of Donald Trump, which has raised the importance of resilience and political sway. Yet these same disruptions could spell danger for America's corporate giants. Already companies from Apple to Walmart are discovering how their size can make them a target of Mr Trump's wrath. Start with AI. You might imagine that lumbering leviathans would be too tied up in bureaucracy to make use of the technology. In fact, their scale allows them to invest far more in it than smaller rivals. According to a survey in December by Bain, a consultancy, American companies with more than $5bn in revenue had an average annual budget for generative-AI projects of $27m, five times the level in the preceding February. Those with between $500m and $5bn in revenue, by contrast, had set aside $9m, up by two-thirds over the same period (see chart 2). JPMorgan Chase, America's biggest bank, says it has rolled out AI tools to most of its 320,000 employees. UnitedHealth, the country's biggest health insurer, claims to have 1,000 different applications for the technology. Sanjin Bicanic of Bain notes that getting AI to work well is proving more expensive than for other types of digital technology, as it requires companies to organise their data and tinker with models. Big firms have the added advantage of larger data sets that can be used to refine the AI systems they build. It is not only technology, but politics, too, that is making it even better to be big. Although many of Mr Trump's tariffs now face legal uncertainty, those that remain will hammer sales and profits for businesses. Big firms, though, tend to be more resilient to such shocks. Among listed American firms, those in the top quintile by revenue have fatter operating margins and a healthier ratio of debt to operating profits (before depreciation and amortisation) than the average, and hold a lot more cash, too. That means they are less likely to get into financial trouble during a downturn. It also allows them to bounce back more quickly, as happened following the covid-19 pandemic. We examined the profitability of listed American companies, as measured by their return on invested capital, in nine non-financial sectors before and after the pandemic. For seven of the nine, the biggest firms—those in the top quintile by revenue—were, on average, more profitable across 2023 and 2024 than they were across 2018 and 2019. The bottom quintile, by contrast, became less profitable in the same number of sectors. Bigness tends also to bring increased supply-chain resilience—just as important in a trade war as it was amid covid-19. 'During the pandemic, I kept getting calls from small and medium-sized businesses saying that they could not get shipping capacity. The big companies were, by and large, at the front of the queue," says Philip Damas of Drewry, a shipping consultancy. Such prioritisation pays when companies are rushing to import products into America before tariff deadlines. It helps, in addition, that big companies tend to have more suppliers in more places. A study by the World Economic Forum and Kearney, a consultancy, found that firms which grew their market share in the wake of the pandemic were more likely to have back-up suppliers in a variety of countries for a significant share of the products they procured. Last, with scale comes an increasingly valuable asset: political capital. We examined data from OpenSecrets, a non-profit organisation, on the lobbying activities of American firms in the S&P 500 index. The median company in the smallest half of the index by revenue spent nothing on lobbying in 2024, relying solely on groups such as the US Chamber of Commerce to champion its interests. The median firm in the top quartile, by contrast, spent $3.3m on lobbying, five times as much as for the next quartile and twice as much as a share of operating expenses (see chart 3). It also hired a greater number of lobbyists relative to its number of employees. Mr Trump likes to talk directly with the bosses of many of America's largest companies. In April those of Home Depot, Target and Walmart, three retail giants, met the president to discuss their concerns over tariffs. Smaller retailers have received no such attention. Mr Trump seems particularly receptive to firms that promise to invest large amounts in America. 'So many companies want to come to the White House...[They offer] $10bn or more and I am there," he said in a speech in February. Such direct access is even more important than usual, notes Jorge Guajardo of DGA, a political-advisory firm, because many mid-level positions in the administration have still not been filled. All this helps explain why, since Mr Trump's inauguration, the Russell 2000 index of America's smallest listed companies is down by 11%, compared with a drop of only 3% in the S&P 100 index of America's largest firms. Yet the shifting business landscape also presents dangers for corporate giants. As with all new technologies, incumbents that are too timid in using AI will be exposed to newcomers that have built themselves around it. Then there is the risk that Mr Trump's tariffs result in a lasting reversal of globalisation which limits companies' access to foreign markets. That scenario would hit big companies harder than small ones. America's top quintile of listed non-financial firms by revenue derive 23% of their combined sales abroad, compared with just 7% for the bottom quintile. More attention from politicians may not always be welcome, either. Walmart recently angered Mr Trump by suggesting on an earnings call that it would need to raise prices in response to higher tariffs. Or consider Apple. In April the iPhone-maker won a partial reprieve from tariffs on Chinese-made smartphones. Two weeks later it said that it would shift the production of its America-bound iPhones to India. Mr Trump was not pleased. On May 23rd he threatened a tariff of 'at least 25%" on iPhones sold in America but made elsewhere. Even if the courts make Mr Trump's tariff threats toothless, he has plenty of other means at his disposal to make life difficult for companies. America's corporate giants have enjoyed super-sized advantages. They should be prepared for some super-sized headaches, too. To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter.
Web Release
17 hours ago
- Business
- Web Release
New Bain & Company Analysis Details How Buyers Can Unlock Full Value from Carved-Out Businesses
New Bain & Company Analysis Details How Buyers Can Unlock Full Value from Carved-Out Businesses Bain & Company's latest insights, You've Decided to Buy a Carved-Out Business. Now What?, examine how acquirers can harness the full potential of divested businesses, while avoiding the common pitfalls that jeopardize success. Buying a divested business can be a strategic way to reshape your portfolio and jump-start growth. Whether the objective is to expand into new markets, fill gaps in a product portfolio, or gain quick access to revenue, customers, operational capacity, and talent, carve-outs can create significant value for acquirers. But too many buyers focus only on getting to Day 1 and overlook the need for a solid integration thesis linked to the deal thesis and key value drivers. Bain's M&A Practitioners 2025 Outlook Survey reveals that cultural differences and process and technology issues are the biggest challenges in integrating carve-outs—followed by negotiating transition service agreements (TSAs), talent issues, and defining the carve-out perimeter. These issues must be proactively addressed from the outset. The most successful carve-out acquisitions start with due diligence that identifies both the carve-out-specific elements and the value creation plan required to underwrite the deal. They develop a solid integration thesis linked to essential value drivers and carve-out components. Here's Bain's advice for buyers to address these issues: Use cutting-edge diligence to assess the carve-out situation (e.g., perimeter, entanglements, standalone costs) and its impact on value creation. It's essential to dig deep into people, systems, and assets—including contracts and IP—and identify areas where TSAs or a build-out/integration plan are needed for Day 1. Diligence should also highlight commercial implications, such as distributor gaps or risk from comingled contracts. It's essential to dig deep into people, systems, and assets—including contracts and IP—and identify areas where TSAs or a build-out/integration plan are needed for Day 1. Diligence should also highlight commercial implications, such as distributor gaps or risk from comingled contracts. Accelerate process and systems decisions. In a carve-out, critical interactions such as invoicing customers, paying employees, and ensuring product availability must continue seamlessly on Day 1. This requires early decisions on cross-functional processes and systems to be kept, cloned, built, integrated, or retired. In a carve-out, critical interactions such as invoicing customers, paying employees, and ensuring product availability must continue seamlessly on Day 1. This requires early decisions on cross-functional processes and systems to be kept, cloned, built, integrated, or retired. Plan and utilize TSAs strategically. While TSAs are an important mechanism for continuity on Day 1, buyers and sellers have different motivations for a TSA's scope and duration. Instead of operating on general rules of thumb like, 'We need longer TSAs' or 'We need to negotiate the best possible service,' buyers should look at TSAs as a bridge to achieve the integration priorities. While TSAs are an important mechanism for continuity on Day 1, buyers and sellers have different motivations for a TSA's scope and duration. Instead of operating on general rules of thumb like, 'We need longer TSAs' or 'We need to negotiate the best possible service,' buyers should look at TSAs as a bridge to achieve the integration priorities. Set the tone on people and culture. Buyers often has limited visibility into the talent and the capabilities needed to operate. In addition, carve-out employees may feel undervalued, and sellers may be reluctant to let the buyer interact with acquirers work with the seller early to identify key talent, define talent movement metrics, and establish a compelling future vision. They activate leadership to ensure employees feel valued and aligned. Buyers often has limited visibility into the talent and the capabilities needed to operate. In addition, carve-out employees may feel undervalued, and sellers may be reluctant to let the buyer interact with acquirers work with the seller early to identify key talent, define talent movement metrics, and establish a compelling future vision. They activate leadership to ensure employees feel valued and aligned. Plan for and execute Day 1 in a way that mitigates risk and prepares for the future state. While many acquirers see a smooth Day 1 as a win, the best carve-out acquirers prepare for cutovers at TSA exits with detailed plans to deliver synergies and future growth. Carve-outs can be attractive acquisitions that represent unique growth opportunities. But unlike full company acquisitions, carve-outs can break on Day 1 if things are not planned and managed well.
Forbes
a day ago
- Business
- Forbes
Why Your Brand Is Your Only Defense Against AI's Sea Of Sameness
How does your brand show up in AI? Imagine discovering that 40% of your potential customers never see your website, never click your ads, never even know you exist because an AI answered their question first. This isn't fiction, it's happening today: traffic to company sites has dropped up to 30% as consumers skip Google for ChatGPT. But here's what separates tomorrow's market leaders from today's casualties: In a world drowning in AI-generated sameness, your brand becomes the life raft. When machines evaluate options for humans, only brands that have prepared for an AI-first world will thrive. The rest become invisible. The AI opportunity most brands are missing Yes, Google's market share dipped below 90% for the first time since 2015. Yes, AI chatbots processed 55.2 billion visits last year. But here's what most people aren't realizing: AI doesn't replace brand value - it amplifies it. The data confirms this opportunity: A recent Bain report sited that while 80% of consumers use AI for search, conversion rates through AI-powered discovery are already 2x higher than traditional Google search for certain categories. Adobe reports AI-referred traffic to retailers exploded 1,200% between July 2024 and February 2025. According to Adobe, traffic to U.S. retail websites from Generative AI sources jumped 1,200 percent. Why strong brands win the AI algorithm game Here's the counterintuitive truth: As AI generates more content, brand differentiation becomes more valuable, not less. Why is that? Large language models trained on billions of web pages naturally develop preferences for established, trusted brands. When asked for recommendations, ChatGPT doesn't randomly select options - it synthesizes patterns from authoritative sources, reviews, and expert opinions. Strong brands dominate these training datasets. Companies will increasingly get new customers directly from AI-driven recommendations. A brand's success won't happen by chance, but rather the result of deliberate brand-building strategies that work with AI, not against it. The playbook for AI brand dominance Forget keyword stuffing. AI models value: Brands implementing comprehensive schema markup will see higher inclusion rates in AI-generated responses. Traditional SEO metrics become secondary to new KPIs: Develop content explicitly designed for AI consumption: Instead of generic chatbots, create AI representatives that embody your brand: The future isn't just AI talking to humans - it's AI marketing, negotiating, selling, and servicing with AI: Measuring success in the AI-first world Traditional metrics need AI-era upgrades. Instead of just tracking organic search rankings, click-through rates, and time on site, start measuring the AI metrics that matter such as AI recommendation frequency, brand authority score in LLM responses, AI agent-assisted conversion rates, cross-platform AI mention sentiment, and zero-click value capture. Now is the time to start your brand's AI-readiness plan. The choice is binary: Either your brand becomes the default AI recommendation in your category, or your competitors will. In a world where content is AI-generated and there's a sea of sameness, your brand isn't just your differentiator - it's your survival strategy. The companies investing in AI brand dominance today will own the customer relationships of tomorrow.
Zawya
2 days ago
- Business
- Zawya
New Bain & Company analysis details how buyers can unlock full value from carved-out businesses
Middle East – Bain & Company's latest insights, You've Decided to Buy a Carved-Out Business. Now What?, examine how acquirers can harness the full potential of divested businesses, while avoiding the common pitfalls that jeopardize success. Buying a divested business can be a strategic way to reshape your portfolio and jump-start growth. Whether the objective is to expand into new markets, fill gaps in a product portfolio, or gain quick access to revenue, customers, operational capacity, and talent, carve-outs can create significant value for acquirers. But too many buyers focus only on getting to Day 1 and overlook the need for a solid integration thesis linked to the deal thesis and key value drivers. Bain's M&A Practitioners 2025 Outlook Survey reveals that cultural differences and process and technology issues are the biggest challenges in integrating carve-outs—followed by negotiating transition service agreements (TSAs), talent issues, and defining the carve-out perimeter. These issues must be proactively addressed from the outset. The most successful carve-out acquisitions start with due diligence that identifies both the carve-out-specific elements and the value creation plan required to underwrite the deal. They develop a solid integration thesis linked to essential value drivers and carve-out components. Here's Bain's advice for buyers to address these issues: Use cutting-edge diligence to assess the carve-out situation (e.g., perimeter, entanglements, standalone costs) and its impact on value creation. It's essential to dig deep into people, systems, and assets—including contracts and IP—and identify areas where TSAs or a build-out/integration plan are needed for Day 1. Diligence should also highlight commercial implications, such as distributor gaps or risk from comingled contracts. Accelerate process and systems decisions. In a carve-out, critical interactions such as invoicing customers, paying employees, and ensuring product availability must continue seamlessly on Day 1. This requires early decisions on cross-functional processes and systems to be kept, cloned, built, integrated, or retired. Plan and utilize TSAs strategically. While TSAs are an important mechanism for continuity on Day 1, buyers and sellers have different motivations for a TSA's scope and duration. Instead of operating on general rules of thumb like, 'We need longer TSAs' or 'We need to negotiate the best possible service,' buyers should look at TSAs as a bridge to achieve the integration priorities. Set the tone on people and culture. Buyers often has limited visibility into the talent and the capabilities needed to operate. In addition, carve-out employees may feel undervalued, and sellers may be reluctant to let the buyer interact with acquirers work with the seller early to identify key talent, define talent movement metrics, and establish a compelling future vision. They activate leadership to ensure employees feel valued and aligned. Plan for and execute Day 1 in a way that mitigates risk and prepares for the future state. While many acquirers see a smooth Day 1 as a win, the best carve-out acquirers prepare for cutovers at TSA exits with detailed plans to deliver synergies and future growth. Carve-outs can be attractive acquisitions that represent unique growth opportunities. But unlike full company acquisitions, carve-outs can break on Day 1 if things are not planned and managed well. -Ends- To arrange an interview or for further information, please contact: Christine Abi Assi – christine@ About Bain & Company Bain & Company is a global consultancy that helps the world's most ambitious change makers define the future. Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Our 10-year commitment to invest more than $1 billion in pro bono services brings our talent, expertise, and insight to organizations tackling today's urgent challenges in education, racial equity, social justice, economic development, and the environment. We earned a platinum rating from EcoVadis, the leading platform for environmental, social, and ethical performance ratings for global supply chains, putting us in the top 1% of all companies. Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry.
