Beauty and Personal Care: Quarterly Statement Q1 2017

Strategy Briefing

About This Report

Mar 2017

The Forecast Model’s Q1 2017 update cuts industry growth over 2015-2020 by US$5 billion, when compared to the Passport Baseline. Consumers are spending more rationally, and no longer equate high price with high value. With a cluttered marketplace, the competitive forces are harsher. However, newer market entrants continue to post robust sales reaped through novel product experiences. Legacy brands need to scrutinise the success drivers of smaller rivals, and reinvent their offer to compete.

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Beauty and Personal Care: Quarterly Statement Q1 2017

Global beauty industry outlook weakens after third successive growth downgrade in the Industry Forecast Model

The beauty and personal care industry experienced a further downgrade in Q1 2017, with the forecast CAGR over 2015-2020 now standing at 2.7%, down by 0.2 percentage points, as absolute gains were slashed by US$5 billion. This scenario results from uncertainty in core markets, namely the US and UK, and previously hopeful markets such as Saudi Arabia, where growth is faltering.

Premium BPC outlook remains stronger than mass segment despite US$1 billion reduction in absolute gains

While the premiumisation trend gains traction, the premium segment has seen a US$1 billion cut to its absolute growth forecast. While forecasts remain better than the mass segment (3.8% vs 2.6%), the magnitude is greater for the premium segment due to its smaller size relative to mass beauty and personal care, making the premium competitive landscape harsher to operate in.

Russia restores its place among key industry prospective markets

Russia is witnessing a recovery, posting a healthy performance in 2016, and an upgrade to its CAGR over the forecast period. Among the winners were local players and direct sellers, which adapted strategies that were in tune with rational buying behaviour, such as pricing and buying local.

Niche start-ups proliferate, challenging legacy brands

With premium beauty facing an uphill struggle to keep demand intact, legacy brands such as Mac face slowing sales, not only due to market slowdown, but niche labels making a hit, as well as mass-positioned mainstream brands, such as Kiko Milano offering near-premium benefits at affordable price points.

Dynamism in colour cosmetics pushing previously smaller brands into the mainstream

Kiko Milano, Nyx and Urban Decay are among the make-up labels making leaps and bounds, driven by store network expansion, as they become the new mainstream. While their success is to be lauded, newer disruptive entrants would play their game to grow. Reinvention is key to avoid their demise.

Beauty and personal care: Quarterly Statement Q1 2017

Key findings
Executive Summary
GDP Forecasts: Revisions Over Last Quarter

Forecast Update

Beauty industry outlook tepid as global uncertainty escalates
US$1 billion off premium beauty and personal care outlook
Political volatility in the US and UK expected to tarnish growth
Riding the beauty wave vital amid uncertainty in UK and US
Middle East and Africa retracting
Pack sizes and refillable options crucial in times of tight budgets
Russia restores its place in beauty’s growth league
India’s rising digital purchases to overcome demonetisation impact
Beauty players seizing opportunities in robust growth markets
India, Shiseido’s dilemma…and opportunity if well-mastered
Niche and start-up labels shape M&A direction in an uncertain world

Expanding the Scope of Green Beauty

New angles on sustainability in colour cosmetics
Shiseido’s MatchCo suited to UK’s swamped make-up market
Russia’s direct seller strength spells YOUnique prospects for Coty
Coty’s new social selling asset a likely edge over rival direct sellers
Kiko and Nyx in timely store network growth to seize opportunities
Fast expansion must be accompanied with timely brand reinvention
Innovate and reinvent amid global uncertainty

What Does it mean to the Beauty Industry?

About Euromonitor International’s Industry Forecast Model
Soft drivers and the Industry Forecast Model
Key applications for Industry Forecast Models