Redefining Premium Beauty

November 2019

As new consumer values shift towards more meaningful consumption, priorities are being reassessed, paving the way for new “luxury” attributes beyond a higher price tag and other traditional premium perceptions. With both mass and premium brands looking to adopt new aspirations for ethical, experiential and authentic qualities, the lines between the two segments continue to blur and the “masstige” space is further reinforced.

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Key Findings

Premium continues on growth trajectory but mass regains relevance

Although premium beauty outpaced the mass segment in growth terms for the fourth consecutive year in 2018, a significant narrowing of the growth gap between the mass and premium segments occurred.

The gap between value and price widens

Technology lowered manufacturing costs, while the advent of the internet, and more specifically social media, diluted the power of the brand. Barriers to entry have fallen and allowed small brands and mass products with low margins to improve their value offer.

Efficacy is the height of luxury; ingredient-led stories win

More than any other trait, when consumers define what makes a beauty product “premium”, they cite proven efficacy and benefits. Indeed, for many consumers the brand name itself matters less than not only efficacy, but also natural and premium ingredients when categorising a “premium” product.

Regional nuances in consumer values

In North America, Australia, Western Europe and parts of Asia, the premium beauty industries are undergoing the most visible shake-ups. In Eastern Europe, the Middle East and Africa, and Latin America, the luxury codes remain largely more fixed.

How to build premium strategies of the future?

For brands both mass and premium, a 3-pronged strategy focusing on product performance, services that help and evocative story-telling has the best shot at success, especially if seeking to charge a premium in an era where luxury is less defined by price.

Introduction

Scope
Key findings
Premiumisation: a global consumer megatrend
The meaning gap between value and price widens
Consumer perceptions of premium fragments
The luxury beauty brand loses its allure
Direct-to-consumer brands indulge diverse priorities
Efficacy is the height of luxury
A willingness to pay for tailored results
Ingredient-led stories pay dividends

Interplay Between Premium and Mass

Both volume and value experience notable growth in 2018
Premium share of the beauty market remains unchanged
Large low-income emerging economies prevent a global shift
Online sharing culture put premium purchases in the spotlight
Timeline of shift towards premium make-up reflects social boom
New solution-orientated priorities create opportunities in mass
Mass market fragmentation hastening
Skin care is fertile ground for burgeoning masstige segment
Blurring of pricing spectrum greater in products linked to health
The decline in the power of the brand
Who are the winners and losers?

Premiumisation in Context

Certain beauty strongholds embody new values more than others
E-commerce levels the playing field
The US is leading the redefinition of premiumisation in beauty
Social media pressure breeds a new luxury in the West
but Asia remains more steadfast in its luxury codes
Chinese consumers most prepared to trade off with price
Is the “ Skintellectual ” the new luxury seeker?
Diverse premium perceptions in other beauty strongholds
Colour cosmetics most rooted in traditional premium perceptions
Youngest generations are the catalysts for change
The young redefine ethics as a luxury benchmark

Building New Premium Strategies

Premiumisation strategies must be consumer centric
Smarter, more personal, more meaningful
Products that perform: skin health is wealth
Atolla : skin health system
Stories that evoke: tapping into private moments and taboo topics
WooWoo : care down there
Services that help: a connected consumer is a premium consumer
MAC: Shanghai Experience Center
The next frontier: mapping a new path to premium
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