The recovery that the industry anticipated after a challenging 2020 was reflected in a solid rebound in 2021. Driven by wellness, skin care led while colour cosmetics and fragrances regained momentum. E-commerce slowed, but increased penetration in certain categories, like skin care. Rising cost of goods and inflation casts uncertainty on economic gains. Price sensitivity due to market volatility in 2022 will heighten demand for multi-functional and affordable beauty and personal care.
Evolving priorities around health and safety are created demand for beauty based on substantiated scientific claims. Brands that have science-backed credentials and proven efficacy are poised to do well in the forecast period, especially dermocosmetics. The rise of ingredient-led beauty searches also gives lesser known brands an opportunity to attract consumers interested in brand discovery and experimentation. Active ingredients that support skin health, especially those with moisturising and skin barrier protection benefits, with sustainably-sourced ingredients, will perform well.
Because beauty tech encompasses a wide range of technologies, beauty players are experimenting to see what strategy fits best for their target consumers. Beauty brands, especially premium and luxury brands, will continue to debut in the metaverse with a virtual store presence and NFTs. However, consumers are eager to return to stores, so players and retailers must re-envision how a bricks-and-mortar store can still complement phygital experiences. Personalisation will be a major part of beauty discovery, with hyper-personalisation momentum faster in super-premium and premium products.
Given 2021 and 2022’s high inflation rates, continued supply chain disruptions, geopolitical uncertainties and rising energy prices, consumers globally want brands that deliver the best value and optimal benefits. Multifunctional products thrive during periods of uncertainty, which was the case during the Financial Crisis, and that same pattern is expected in the forecast period. Prices are climbing across fmcg industries, and beauty players may need to revisit their profit margins, which will impact unit prices and pack sizes.
In 2022 and beyond, the self-care narrative will be renewed, due to the current economic environment and geopolitical events. Beauty will increasingly be seen as a long-term investment in one’s health. Beauty-adjacent categories will also benefit, such as air care (eg home fragrance launches from fine fragrance players), ingestibles that leverage the “beauty from within” link between gut health and skin health, and beauty devices that mimic spa-level experiences. Fragrances’ association with emotional wellness is likely to endure in the forecast period, with emotional wellness as a key driver.
Though “clean beauty” is still growing, conscious beauty is led by a “people over profit” mentality. Newer digitally-native and indie brands are being developed with social causes, waste reduction and circular systems in mind, which give them an advantage over other brands. Beauty brands that highlight the importance of mental health, universal design (eg braille, easy to open for consumers with differing levels of ability, etc) and positively benefit the environment will be in high demand. Packaging waste reduction will still be key, as companies aim to meet their sustainability commitments.
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