Beauty and Personal Care: Half-Year Update 2022

January 2023

The Q4 2022 update for beauty and personal care shows an upgrade for 2022 compared to estimates made in Q3 2022, but a downgrade from April 2022 baselines. China’s recent changes in zero-COVID policies foretell future optimism for the second largest beauty and personal care market. Inflation continues to generate shifts in consumption that will be felt in 2023. Skin health, personalisation, digital engagement, and value creation play key roles in H2 2022 business activity.

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Key Findings

Q4 2022 forecast shows upgrade in global beauty for 2022, but downgrade from baseline

High commodity prices and supply chain disruptions caused by the war in Ukraine and shutdowns in China amid its zero-COVID policy continue to set the global economy on a course of slower growth and high inflation. As a result, the Q4 2022 update shows an upgrade for 2022 from Q3, but a notable downgrade compared to a more optimistic baseline projected in April 2022. China’s recent changes in zero-COVID policies foretell future optimism.

2022 and 2023 growth notably driven by habit persistence

In 2022 and 2023, habit persistence will account for a notable segment of growth, particularly affecting hair care, skin care and fragrances—suggesting that consumers are sustaining their pandemic-induced routines. However, players in other categories where habit persistence is less of a driver (eg colour cosmetics and sun care) can leverage “skinified formulas” and anti-ageing benefits to overcome these challenges.

Rising inflation adds pressure on discretionary spend, while price changes suggest a peak, for now

Although median online price changes indicate consumer price inflation is reaching a peak, tightening consumer spending, due to high inflation, rising costs of essential goods and energy, may chip away at post-COVID-19 gains in beauty and personal care. Survey results and pricing analysis suggest that the inflation impact varies across markets, categories and tiers. Opposing motivations (eg post-pandemic indulgence to spend more vs trading down to private label) suggest that the inflation impact is not a straightforward issue.

Skin health a key part of H2 2022 business activity, while wellness demand expected to accelerate in Q4 2022

AmorePacific’s acquisition of Tata Harper, Church & Dwight Co Inc’s acquisition of Hero Cosmetics, and Kosé’s focus on personalisation highlight the continued attractiveness of clean beauty and wellness-positioned brands. Wellness and self-care will be top of mind as we move into Q4 2022 amid a backdrop of worsening macro, pricing, and supply chain conditions.

About this briefing
Scope
Key findings
Q4 2022 forecast shows 2022 upgrade in global beauty vs Q3, but downgrade from baseline
Habit persistence notably accounts for 2022/2023 growth as consumers continue routines
China registers largest downgrade, but changes in zero-COVID policies foretell future optimism
Q4 2022 update readjusts forecast made in Q3 to be more optimistic for Russia and Ukraine
The many drivers of inflation within beauty and personal care
Rising inflation adds pressure on discretionary spend; price changes suggest a peak, for now
Survey confirms to what extent inflation is impacting beauty players’ 2022 sales so far
Skin care registers best forecast, but price fluctuations and consumer sensitivity are challenges
Wellness claims trend upwards and foretell stronger self-care messaging in 2023
Beauty salon occupancy is back for hair treatments
H2 business activity underscores skin health, personalisation and clean beauty
AmorePacific’s acquisition of Tata Harper aligns with global trends that favour efficacy
Discontinuation of The Ordinary’s colour cosmetics outlines challenges of pricing and expansion
Luxury players tap into value creation through multifunctionality and limited editions
Beauty players use partnerships to capture more detail in diagnosis stage
Key findings
Global growth outlook continues to worsen amid rising recession risks
Persistent and broadening inflation significantly reduces consumer spending power
Real GDP annual growth forecasts and revisions from last quarter
Beauty and personal care data and reporting timeline

Beauty and Personal Care

This is the aggregation of baby and child-specific products, bath & shower, deodorants, hair care, colour cosmetics, men's grooming, oral hygiene, fragrances, skin care, depilatories and sun care. Black market sales and travel retail are excluded.

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