Prestige Beauty Update

The US prestige beauty industry sales were $18.8 billion in 2018, a 6% sales increase over 2017, according to The NPD Group. The skin care category grew 13% and contributed 60% of the industry’s total gains, while makeup, the industry’s largest category based on sales, grew just 1% percent (for more on this category, see p. 48). NPD said fragrance sales rose 4%. Hair was the smallest, yet fastest growing category with a 25% increase in sales.

“If I had to use one word to characterize the state of the US beauty industry today, it would be disruption. Whether we look at categories, brands, or retailers, there are sweeping changes taking place to the market landscape,” said Larissa Jensen, executive director and beauty industry analyst at The NPD Group. “New retail concepts and technologies are changing the way we create, market, purchase and use beauty products. Brands and retailers must not only be cognizant of these transformations and act upon them, but identify new white space opportunities to captivate consumers and further differentiate themselves from the crowd.”

Skin care sales were $5.6 billion for the year, and natural brands remain a top contributor to growth. Natural skin care accounted for $1.6 billion or more than one-quarter of annual sales, up 23% versus last year. The fastest-growing segments within facial skin care were lip treatments, toners/clarifiers, and all other face (which includes products like facial sprays and alphabet creams, among others). Skin care for the body grew, as well as sun products including sunscreen and self-tanners. 

Fragrance sales totaled $4.3 billion, driven by juices, which grew 8%. Artisanal fragrance was the fastest growing segment within the category. Growth in home scents slowed compared to last year.

“Given the high adaptability of the beauty industry, I expect growth to continue in 2019, though it may be at a slower pace given the current economic uncertainties,” said Jensen. “I expect we’ll see an amplification of trends and themes that have already taken shape, including brand transparency, heightened importance of companies taking a stance on key social issues, as well as the evolution of experiential retail and pop-up concepts.”