The Tale of Two Markets in Prestige Beauty

The NPD Group, Inc., a global information company, reports the global prestige beauty market experienced mixed results in the first half of 2013. The US prestige beauty industry posted an 8 percent gain, generating $5 billion in the first six months of the year. In Europe, the U.K. gained 6 percent, generating £803 million in prestige beauty sales, while France, Italy, and Spain continued to face challenges in this industry.

“Our expectation for 2013 was that the global prestige beauty industry would look similar to 2012, and the results thus far are proving this to be true, as economic uncertainties continue to weigh heavily on the European markets,” said Karen Grant, vice president and senior global industry analyst, The NPD Group, Inc.

Skin care and makeup were the primary drivers behind US growth in the first half of 2013, with $1.8 billion, and $2 billion in sales respectively. Fragrance performance was positive as well (+4%), at $1.1 billion, but at a slower pace than seen in the first six months of 2012 (+8%). In all three categories, premium-priced products contributed to increases in sales so far this year.

Despite declines in many countries, fragrance continues to account for the largest share of prestige beauty sales in Europe (U.K: 43%, France: 62%, Italy: 40%, Spain: 51%). However, makeup was the star performer, with strong gains in the U.K., and a slight uptick in Spain. In terms of market share, Italy is the most level playing field, with each category representing close to a third of sales in the first half of the year.

“The similarities in retail distribution, brand assortment, and product mix in the US and U.K. continue to help both markets capitalize on positive trends.  Though the results for these countries, compared to those in the Euro zone, look like ‘the tale of two markets’, there is one common thread: investment spending continues. The markets in the Euro zone face greater challenges but, with the exception of Spain, most markets are continuing to show increases in average selling price across all categories.  This tells us that while consumers may be cutting back in spending they are continuing to invest in value, even when that may be at higher prices,” said Grant.