The majority of customers associate “beauty” with fitness, grooming, and skin comfort. For effective solutions at a premium price, some customers turn to dermo-cosmetics, products that combine beauty and science.

Key Findings –

What does “beauty” mean to you?

Despite a relatively subdued economic, political, and social environment that has manifested itself in various forms and dimensions worldwide, the beauty industry defied the odds once again in 2017 by recording close to a 5% value rise, a slight improvement previous year. This optimistic market sentiment reinforces the industry’s strong proclivity for trading up at a time when the global middle and upper-middle classes are eager to invest in new-found luxury, emerging disruptive and digital players are luring in younger customer cohorts, and ageing demographics are identifying attractiveness with new means to healthier ageing and a more youthful appearance.

Premium is still delivering.

A thriving premium segment outpaced its mass counterpart and the overall industry in terms of growth. Except for Eastern Europe, the Middle East, and Africa, all other regions experienced higher premium beauty growth than the previous year. 

Although China and the United States continued to accelerate, the premium market in France, Russia, South Korea, and the Gulf countries proved difficult. Skincare and colour cosmetics provide the most exciting opportunities in the luxury room (7 per cent and 9 per cent growth in 2017, respectively). These are the two categories with the highest rate of disruption and creativity.

Colour cosmetics is experiencing its fastest growth in a decade.

Colour cosmetics outperformed all other categories internationally, owing to increased social media appeal, a desire for self-expression, and technologically enabled make-over experiences (up by 7 per cent, the highest on record over the past decade). 

The proliferation of new brands continues to inspire with community-driven, excitement-generating stories that go beyond just beauty and make-up artistry to incorporate more purpose-driven ideas like ethnic inclusivity, environmental protection, and cruelty-free labelling. 

Whether luxury or mass, many legacy brands will continue to reinvent themselves through more digital story-telling, in-store experiences, and a fast-fashion approach to innovation, with the digital element of the category’s success remaining critical.

Another major boost to the premium colour cosmetics market came from China, which had a hugely good year in make-up (up by 50% for premium) and lipstick products in particular, with many luxury brands, including Dior, YSL, Estée Lauder, and MAC, all experiencing strong double-digit growth rates due to further expansion of their online presence and increased penetration among customers. Despite its current low per capita spending, China is on track to overtake Japan as the world’s second-largest colour cosmetics market after the US by 2022.

Skincare is regaining popularity as a result of increased wellness convergence.

After a few years of muted results, skincare returned to the spotlight in 2017, growing by 6% in volume, the largest rise since the pre-recession years. 

Several factors contributed to this, including an increasing focus on prevention and safe skincare as part of the pursuit of healthier lifestyles, which resulted in positive category growth for sun safety, cleansers, facial masks, and facial moisturisers, as well as a softer pro-age and health-aligned narrative in anti-agers, which doubled their premium sales.

This new ‘wellness’ positioning in skincare has boosted more adoption levels among the young, who are less concerned with anti-ageing properties and more concerned with prevention and fitness, as good as increased spending among the age-agnostic generation X and Baby Boomers, who are drawn to more benefit-focused and result-driven claims over age-defined labelling of yesteryears. 

The increased convergence of health and wellness is also driving creativity in areas such as microbiome-inspired product growth, safe and pure formulations, skin safety features (for example, air or digital pollution), and adjacent topics such as nutrition (ingestible wellness products), and mental wellbeing (e.g. benefits addressing sleep deprivation, stress, hormonal imbalance).

Aside from pure product evolution, skincare is now beginning to embrace digital activation and social media penetration in the same way that colour cosmetics have and similar levels of disruption from innovative start-up brands that challenge narrative formation, interactions, and novel formulations.

Japan VS South Korea’s.

Although South Korea will continue to be a hotspot for K-beauty inspiration, local brand expansion, and multinational acquisition interest, total beauty sales in the country in 2017 were, at best, mediocre (up by 0.9 per cent value growth). On the other hand, Japan benefited from increased domestic consumption, an increase in Chinese visitors following the Chinese government’s restrictions on travel to Korea, and increasing enthusiasm in the run-up to the 2020 Olympics.

The macro background has only been one aspect of the story. Much of the ongoing buzz surrounding K-Beauty is now coexisting with a new similarly dominant Asian power, Japanese beauty practises and rituals. The quest for simplicity and desire for perfection have their effect in beauty, just like the proclaimed ‘konmari’ home de-cluttering process in Marie Kondo’s tidying up manual. 

The rise in popularity of Japanese brands stems from their long-standing reputation in terms of effectiveness, consistency, and aesthetics – concepts are now expanding beyond China and other Asian markets to discover their new-found appeal among western consumers.

Shiro, Decorté, Three Cosmetics, Tatcha, and DHC are just a few of the brands extending their presence outside their home market. In the same way that Korean beauty will continue to entice with its innovation, on-trend, and buzzy image, the potential for adopting Japanese beauty concepts based on more sustainable authenticity and heritage will be similar, if not more important, in the coming years.

As the next frontiers, India and Indonesia are flourishing.

With a consistent pace of strong year-on-year growth, India and Indonesia’s markets will be among the top ten absolute growth contributors in the years leading up to 2022. India is expected to overtake Germany, the United Kingdom, and France to become the fifth-largest beauty market by 2022. Indonesia will be one of the top three contributors to real skincare revenue in the next five years, trailing only the United States and China. 

Although much of the current scope in both markets remain in the hands of the mass segment, as evidenced by GST reforms in India, increased middle-class consumption would favour brands that project more premium qualities, such as make-up brand Lakmé in India and L’Oréal Paris in Skincare in Indonesia, both of which grew at double-digit rates in 2017.

The unprecedented growth of local brands such as Himalaya, Patanjali, and Emami in India, as well as Wardah in Indonesia, which are becoming increasingly visible in global beauty rankings, will reinforce the significant potential for international commercialisation of traditional local concepts such as Ayurveda, herbal and plant-based ingredients in product formulations, and halal.

Cosmetics, Fragrances, Global, Premium, Skin Care

Top 5

1. Looking healthy

2. Hygiene/cleanliness

3. Being comfortable in your skin

4. Inner confidence

5. Looking presentable

Side note (Audrey Anderson) – for me, that is exactly why my skincare regimen is so important. It is to look healthy with healthy skin, it helps me being comfortable in my skin, and I am confident from the inside to outside.