Growth in the beauty and personal care industry reached a decade high last year and will continue unabated in 2019 and beyond, facilitated by new models of aspiration such as self-optimization and tailored experiences. Our latest report World Market for Beauty and Personal Care explores Euromonitor’s latest Beauty and Personal Care data to tell a story of unprecedented growth.

Asia-Pacific and Latin America drive industry forward

Global beauty and personal care recorded dynamic 6% value growth in 2018, which was the strongest for over a decade. Even in real terms (excluding inflation), 2018 still stands out as a strong year for the industry, reaching highs not seen since 2015, despite Western Europe’s flat performance.

The robust results largely reflect Latin America’s sustained resurgence following an economic crisis, as well as Asia Pacific’s continued strong growth. Asia Pacific accounted for one-third of global industry value in 2018 and is anticipated to generate over half of the total USD68 billion in absolute growth over 2018-2023.

China alone is predicted to account for USD21 billion of the industry’s growth over the forecast period – more than North America and Latin America combined. Sluggish consumption continues to plague the industry although volume growth did increase notably in 2018, to reach 3%. Volume sales declined in North America, whilst Latin America saw growth of 8%.

A mass comeback

Premium beauty outpaced the mass segment for the fourth consecutive year in 2018. However, whilst premium was the standout story of 2017, 2018 was the year of the comeback for mass products. Mass improved on its previous performance in all regions in 2018, with the exception of Eastern Europe.

Most notably, the mass segment almost doubled its growth in North America year-on-year, with a 3% increase in 2018. Western Europe recorded 2% growth in mass beauty and personal care in 2018, and for the first time since 2012, premium and mass grew almost in tandem in the region – a real breakthrough for the mass segment, with the advent of a new digital era providing a breeding ground for new premium values, aspirations and products.

Wellness aligned categories continue to profit

Skin care remains unchallenged as the largest beauty and personal care category, accounting for over one-quarter of value. Sales of skin care grew by 8% in 2018 helped by alignment with health and self-care, as well as being the locus of the shift to “cleaner” formulations in the industry, contributed to its strong growth in 2018.

Other categories able to align with these new consumer values also reaped rewards, including baby and child-specific products and make-up with skincare benefits. Recent stalwart categories of insurgent activity, notably colour cosmetics and fragrances, have lost momentum as they struggle to adapt to long-term shifts in trends. A cooling off of social media and particularly the Instagram aesthetic has been of severe detriment to colour cosmetics, as this formed the basis of many brands’ core strategies.

Online accounts for 10% of all beauty and personal care sales

In 2018, the percentage of beauty and personal care products sold online reached double digits for the first time, accounting for 10% of all sales and registering growth in excess of 20% year-on-year.

On a global scale, this is significant, considering that it is the first time sales online overtook sales through direct sellers such as Avon and Natura. Online is considered the closest competitor to direct sellers in the direct-to-consumer environment.

Beauty specialist retailers continue to dominate the landscape, with sales of almost USD73 billion in 2018 and a 4% CAGR over 2013-2018. Online sales of beauty specialists, such as Ulta, Sephora and Space NK, and brand websites are buoyant, highlighting the importance of omnichannel retailing. Multi-brand retailers are experiencing a revival both online and offline, as the power of the brand declines and the brand-led format of department stores and mono-brand retailers weakens. Multi-brand retailers can instead merchandise on function, positioning or ethos rather than brand, and this is paying dividends.

Insurgent brands drive industry fragmentation

The top five companies in the key regions of Western Europe, North America and Asia-Pacific are experiencing erosion of their combined share, notably in skin care and colour cosmetics, as these categories become more fragmented.

Whilst insurgents rise quickly to disrupt the status quo, continued innovation and renovation are required to stay ahead. In the past few years, brands in the fickle and trend-led make-up space, such as NYX, ELF and The Estée Edit, have experienced rapid rises and falls. NYX, for example, was posting triple-digit growth rates at its peak, which slowed to single digits in 2018.

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