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Higher-end products and fast-growing subcategories including suncare and deodorant are driving the growth of much of the world’s beauty market, according to Kantar data shared exclusively with Vogue Business that surveyed countries within Europe, Asia, Latin America and Africa — markets totalling $99 billion in 2022.
Suncare sales are up 7 per cent globally against 2021, while fragrance, haircare products and deodorants have also grown. Inflationary effects are contributing to the industry’s continued growth, as many shoppers are simply absorbing higher prices, while others continue to trade up, seeking out more luxurious experiences or high-performance products. That’s been a boon for the premium beauty category.
While beauty has historically been a resilient category through periods of economic downturn — a trend exemplified by the growth for the premium sector — consumers are also more selective and educated than ever before, and have high standards for efficacy, as well as environmental values. For skincare, that’s a high benchmark for brands to achieve, as consumers seek out particular trending ingredients and potency but also crusade against superfluous packaging, and with makeup and fragrance, younger shoppers in particular want to feel that they’re able to express themselves through their beauty routines, and that brands celebrate their individuality.
“The emotional ties [consumers have] to beauty products make it more difficult for consumers to reduce spending,” says Maria Salcedo, senior vice president of marketing for multi-brand retailer Ulta Beauty. “We’re also seeing a growing desire for premium cosmetics, especially among Gen Z consumers and those willing to pay more for quality goods such as luxury beauty items and designer fragrances.” Salcedo adds that this shift spurred the business to launch the ‘Luxury at Ulta Beauty’ offering in February of this year, which includes higher-end brands such as Chanel, Dior and Hourglass. “We expect momentum for luxury beauty will continue as consumers prioritise efficacious formulas, quality ingredients and premium packaging that allow one to look and feel luxurious,” adds Salcedo.
A return to form
The success of fragrance is broad, up 3 per cent globally, 10 per cent in the Latin American market and 4 per cent in Europe, while it has dropped 11 per cent in Asia, likely due to the effects of China’s slower recovery from Covid-19. Makeup is down 6 per cent globally, but up 10 per cent in Europe and 13 per cent in LATAM as consumers in these regions continue to attend in-person events and play with cosmetics. “Customers continue to flock to makeup as the innovation in the category has been exceptionally strong in recent years,” says Margaret Mitchell, chief commercial officer at personal care and beauty retailer Space NK. “We’re seeing customers flock to cream formats in blush, lip, highlighter and eyes; hybrid skincare-makeup complexion products; and lip tints in oil and balm formats,” she notes, adding that a softer “no makeup” look is very popular.
The resurgence of fragrance and makeup has been reflected in the earnings of conglomerates including Estée Lauder Companies, who saw fragrance growth in every region in the third quarter of 2023, as well as high performance from Le Labo and Jo Malone, while L’Oréal cited it as the “most dynamic” growth category. For ELC in particular, fragrance and makeup were bright spots against an otherwise disappointing quarter, with the Tom Ford brand posting double-digit growth in net sales. Ulta’s Salcedo says they see “strong momentum” across all cosmetics, with engagement exceeding pre-pandemic levels.
Hair is another strong sector, with products other than shampoo and conditioner (such as styling products and scalp treatments) up 5 per cent globally, and 20 per cent in LATAM. Shoppers are interested in hair products that cater to the “skinification” of hair, i.e products that treat the scalp as skin with ingredients and formulas designed to calm irritation and improve hair growth, while bond-building products from the likes of Olaplex, Wella Professionals and K18 are enduringly popular as consumers seek to improve hair health.
The luxury experience
Grocery stores and drugstores were big winners throughout the Covid-19 pandemic as they were often the sole retailers open during lockdowns, and many brands flocked to add big box retailers including Target and Walmart to their distributor network. However, sales at supermarkets and hypermarkets are down 1 and 2 per cent respectively, while drugstores are up 9 per cent. Cash and carry or club-style discount stores have seen the biggest growth, up 19 per cent, as cash-strapped consumers search out better deals on their favourite products. E-commerce slowed slightly as consumers continue to split their spend in-store and online.
As beauty becomes more of a luxury during financial hardship, consumers want a more specialised shopping experience. Speciality retailers, such as Ulta, Sephora and the UK’s Space NK, offer brand-agnostic expert advice as well as a more indulgent environment and experience, often with complimentary in-store services. Kantar’s research points to the idea that the designated shopping trip for beauty has become more alluring, rather than a habitual add-on to grocery shopping, and that the rise in the fragrance category may also be linked to specialty retail, as consumers prefer to try before they buy. In January, visits to Ulta were up 55.6 per cent year-on-year, according to foot traffic software firm Placer.ai.
Suncare in the spotlight
Suncare is the fastest-growing category in terms of recruiting buyers in all regions, with a combination of increased travel and outdoor activities and growing awareness of the importance of sun protection fuelling this growth.
Globally, Kantar estimates the sector at $2.7 billion, up 7 per cent from the previous year. Suncare has also seen a slew of new entrants as the category has become less functional, with consumers expecting more sophisticated, pleasurable textures and formulas. Indie brands such as Ultra Violette and Supergoop! have proven popular, while cosmetics companies such as Tower 28 and Saie have added SPF offerings to their line up.
“Suncare is a year-round category now, and is a staple in our customers’ skincare regimens, not just a summer or holiday add-on,” says Space NK’s Mitchell, who adds that Ultraviolette Supreme Screen has been a top 10 overall bestseller, even in January. “Suncare and skincare are synonymous today,” she adds.
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