Premium Beauty and Personal Care in Australia

PRE-COVID-19 PERFORMANCE

Premium segment threatened by mass market developments

The clean beauty movement continued to gain traction at the end of the review period, as rising health- and environmental-awareness encouraged a growing number of shoppers to seek out products that were free from toxins and other harmful ingredients. While the use of clean and natural ingredients was previously almost entirely limited to niche and high-end products, the trend moved into the mainstream in 2019.

Supermarkets’ expanding beauty and personal care offer increases the encroachment on premium ground

The increasing blurring of the distinctions between the premium and mass segments was accelerated by the efforts of retailers such as supermarkets to expand their beauty and personal care offer and compete more directly in this arena with beauty specialist retailers and drugstores. Supermarkets focused on developing their private label beauty and personal care offer at the end of the review period.

Significant activity amongst retailers

Estée Lauder held a narrow lead over L’Oréal Australia in premium beauty and personal care in 2019. Meanwhile, beauty specialist retailer, Sephora, continued to grow in Australia, extending its store network nationwide, including opening its fourth store in Queensland and the first Sephora store in South Australia.

2020 AND BEYOND

COVID-19 impact

Sales of premium beauty and personal care products are expected to grow by 3% in 2020 in 2019 constant value terms. This growth rate is lower than any year-on-year growth seen during the review period in 2019 constant value terms.

Affected products within premium beauty and personal care

For all the factors undermining demand for premium products, the premium beauty and personal care segment is continuing to register growth. Premium skin care is performing particularly well, as consumers pay increasing attention to skin health and demand products offering enhanced functionality, often using natural ingredients.

Recovery and opportunities

The longer-term economic impact of efforts to curb the spread of COVID-19, including significant job losses, will act as a notable constraint on the development of premium beauty and personal care during the forecast period. Furthermore, the segment’s capacity to prevent consumers from trading down to more affordable alternatives and to lure back consumers who have moved away will be impeded by the development of an increasingly sophisticated mass beauty and personal care offer that targets many of the demand trends through which premium products have previously differentiated themselves, including the use of natural and organic ingredients.

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