Beauty and Personal Care: Quarterly Statement Q3 2017

Strategy Briefing

About This Report

Aug 2017

Q3 saw negligible but positive changes to the top line projected growth of the beauty and personal care industry. Markets which, as recent as 2016, held much hope for the industry’s immediate future, including Saudi Arabia and China, have tapered off and some core developed markets, including Japan, have been buoyed on the back of revisions. Meanwhile India could present itself as one source of promise for mass industry players in the long term on the back of its Goods and Services Tax reform.

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Beauty and Personal Care: Quarterly Statement Q3 2017

Q3 update paints a brightening picture but complacency should not set in

The industry’s forecast value CAGR through to 2021 was upgraded in Q3, although by less than 0.1%. This equates to a USD934 million absolute gain, on a USD472 billion growth projection. While GDP improvements are buoying some developed markets, the growth road ahead has the potential to be volatile, especially in 2018 in the UK and the US.

Discretionary categories lead upgrades

Skin care, colour cosmetics and fragrances dominate Q3 absolute upgrades, as favourable economic headwinds boost the industry’s core and largely developed markets. On the other hand, oral care and baby and child-specific products were hit by downgrades arising from Saudi Arabia, China and the US.

Core markets pull it back but potential is capped

Significant upgrades in Q3 came from the likes of Japan and Spain. While the outlook has improved in the short term in these core countries, market saturation is clearly indicating a ceiling on growth. The negligible unmet potential value growth though to 2021 of between USD2-4 billion each in Japan and Spain pales into insignificance when compared with China’s USD112 billion potential.

Emerging heavyweights stall in the short term

Markets which, as recent as 2016, held much hope for the industry’s immediate future, including Saudi Arabia and China, have tapered off on the back of Q3 economic forecast revisions. Saudi Arabia was the recipient of the most significant downgrade, with its influential fragrance market bearing the brunt of the impact.

India’s GST reform beneficial for staple personal care

India could present itself as one source of promise for players in some staple categories, on the back of its Goods and Services Tax (GST) reform. The new tax system will lower the prices of basics, such as toothpaste and hair oils. On the other hand, it will push up the prices of luxuries, such as colour cosmetics and skin care.

Q3 Macroeconomic Update

Key findings
Executive Summary
GDP Forecasts: Revisions Over Last Quarter
Global risk scenarios
Major macro risks for the beauty and personal care industry

Q3 in Beauty and Personal Care

Beauty and personal care industry enjoys some respite
Premium’s prospects best but less of a certainty
Discretionary spending picks up
Skin care in Japan gets short-term lift but market potential is capped
The industry must not put all its eggs in men’s baskets
L’Oréal benefits from colour cosmetics’ deep but diverse prospects
Unilever a beneficiary of Brazil’s bounce back?
Natura looks beyond Brazil with The Body Shop
Middle East and Africa harbours bad news
Fragrances: Saudi Arabia’s double-edged sword
Colour cosmetics in the US ride the digital lag
The Trump effect could bite globally…
…likewise a China hard landing
Impact of India’s GST tax reform
Colgate to benefit from GST reform in oral care
A potential Colgate-Palmolive takeover
Q3 key takeaways

Appendix

About Euromonitor International’s Industry Forecast Model
Soft drivers and the Industry Forecast Model
Growth decomposition explained
Significance and applications for growth decomposition
Key applications for Industry Forecast Models