Beauty and personal care multinationals have predicted continued cost increases in 2023, further increasing the price of finished goods. Companies are developing multifaceted strategies to remain competitive, often combining approaches to cover multiple eventualities for both short- and long-term impacts. Consumers are being more conservative in their discretionary spending as the cost of household essentials rises, contributing to a deceleration in certain beauty and personal care categories.
This report comes in PPT.
The major beauty and personal care multinationals have reported that input and raw material costs will keep increasing in 2023, further driving up the price of finished goods. Price rises may, however, not be as substantial in 2023 as they were in 2022. However, the baseline of prices is still notably higher in most categories compared to 2019, and is likely to either remain steady or increase further.
In response to rising costs, beauty and personal care companies are raising unit prices, adjusting package sizes by offering more miniatures or refills, revising raw materials in favour of reduced/cheaper ingredients or components, streamlining SKU range and variety, and implementing targeted price point management that maximises the bottom line. Promotions help offload excess inventory in the short term; however, beauty players must adapt to a more discerning consumer who is expending more effort on finding the best value.
Since the cost-of-living crisis is driving the majority of expenses upwards, consumers are being more conservative in their discretionary spending, which is contributing to a deceleration in certain beauty and personal care categories. Private label is experiencing renewed consumer interest in ingredient-led skin care. Categories and brands whose main strategy has been focused on price increases should be attentive to the slowing down of purchase frequency, which may negatively affect volume.
Today’s beauty consumers spend more time educating themselves about products and ingredients, and they take this same approach to finding retailers that offer the best value for their preferred brands. As price sensitivity rises, point-of-sale touchpoints are key to demonstrating the value of a beauty purchase through competitive pricing or showcasing experiences, especially for discretionary categories (eg fragrances and high-end skin 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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