The November 2018 Q4 update reveals a marginally improved picture in beauty and personal care (BPC), as the economic outlook for most countries remains unchanged. The forecast value CAGR was upgraded slightly, resulting in an increase in the anticipated CAGR from 2.7% to 2.8%. Events such as Brexit, the growing probability of a US-China all-out trade war and negative political and economic developments in MEA all contribute to uncertainly in the BPC market.
Premium BPC is expected to add USD738 million, which is twice as much as mass, with the Q4 update. At the same time, the premium segment is subject to higher uncertainty, especially in developed markets, from where the majority of sales come and where sales rely on GDP to a greater extent. Thus, in a pessimistic scenario, the CAGR might lose 0.6 p.p. while mass BPC would remain more resistant, losing just 0.3 p.p.
During the Q4 update, skin care experienced the strongest upgrade globally, gaining USD977 million. As consumers increasingly associate beauty with looking healthy, with very few linking stereotypical associations such as glamour and status with the definition of “beauty”, companies are looking to health-align their portfolios to address the needs of health-conscious consumers.
Men’s grooming has been upgraded by USD268 million in Q4, which translates into a 0.1% addition to the baseline CAGR of 1.8% over the next five years. While the usage of skin care and colour cosmetics remains low, brands are looking for ways to educate men about the need to use these products on a daily basis in order to realise the high unmet market potential of the men’s grooming market.
Mass BPC is expected to see almost half the growth of premium BPC in the forecast period, as consumers will continue to prioritise quality over quantity, investing in premium products. However, mass BPC is still expected to account for the biggest proportion of BPC sales by 2022, and companies are looking for strategies to reinvent growth in the mass segment, launching new ranges that focus on premiumisation and natural beauty offers.
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