Have we reached the peak of the Cosmetics market?

skincare peak

It is estimated that the global beauty care (cosmetics) industry is worth about 532 billion USD globally as of 2019. The market value is expected to reach $805 billion by 2023, though this may need to be adjusted with the Corona Crisis. In 2008 the industry CAGR slowed down but kept growing despite the overall crisis. So, we can safely assume it will follow a similar pattern with 2020 slowing down to then pick back up a few years later.

There are many confusions are to how the industry is structured, how it is split by product or geographically. Hence, I wrote this article is an attempt to clarify different points.

Geographical breakdown:

In terms of geographic region breakdown, Asia Pacific has the largest market share, in the past 10 years, it grew from 31% to 41%. China being the driving force, while the new emerging countries like South East Asia (Thailand, Vietnam, Indonesia, Philippines) should be soon having a bigger impact on the market.

Respectively, the other markets like Europe, North America, Latin America, Africa do not look like they’re growing as fast, or rather they’re shrinking in comparison.

The focus will more likely remain on Asia for the upcoming future.

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Product segmentation:

Within the beauty industry you will find the following product categories with their relative market share:

–       Skincare (30%): Improve the appearance and feel of the skin. Products such as anti-aging cream/serum, cleanser, toner, masks.

–       Haircare (25%): Self-explanatory here. It will mostly be Shampoo and Conditioners. This can be broken down with specific product taking care of the scalp (overlap between skincare and haircare here).

–       Color cosmetics (20%): this is what most people think when thinking about beauty care. Color cosmetics aim at changing the look of the skin mostly. This will include products like foundation, mascara, lipsticks, eyeliner, blushes and many more.

–       Personal care products (15%): This is a bit of wider groups and include products such as deodorants, toothpaste, mouthwash etc…

–       Fragrances (10%): One of the oldest categories, its main goal being to change the body odor. As you might guess perfumes, eau de toilettes.

This segmentation is not set in stone and there are multiple subcategories within. For example, at Eblouir, we focus on skincare, but within the skincare category, we are looking at proactive skin regeneration, organic and fragrance free.

There are many niche products, but we don’t have time to go over this for now.

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Distribution channels:

In terms of distribution channels, it can be broken in the following categories:

–       General Retail

–       Cosmetics Retail

–       Online Retail

–       Boutique/B2B: Spas, Skin Clinic, Skin Centre, Salons, Private Hospital

–       Direct Selling : Via social media or network marketing (Avon, Nu Skin, Mary Kay etc…)

Biggest Market players:

There are a few major companies covering the beauty care industry, 7 of them owning 182 companies.

Some are conglomerates with a more diversified exposure Procter & Gamble, Unilever, Johnson & Johnson. Then you have the more traditional corporations focused on the industry such as L’Oreal, Beiersdorf, Coty, Shiseido, Estee Lauder.

Most of these companies’ recent growth was done by acquiring other smaller brands to expand their portfolio. As per the acquisition of Drunk Elephant by Shiseido last year.

With the advent of digital marketing, the largest corporations struggle to catch up with more personalized and flexible niche brands.

Conclusion:

There are plenty of opportunities for dynamic niche brands to get market share as the industry is growing.

Dermo-cosmetics, i.e. skincare with pharmaceutical and medically proven are still relatively untapped.

The future of the industry will rely on who can master both offline and online channels while being able to capture the Asia-Pacific market with the skincare category as this is the fastest-growing.

Should you be interested in achieving 85% repeat business with Swiss-made niche skin repair, please feel free to contact us.

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