In a climate where almost everything is going up in price and more and more consumers are tightening their spending there seems to be one unicorn that’s remained unaffected by the change. The premium beauty category seems unhampered by rapidly rising energy costs or inflation and has in fact had a 13% spending rise according to Barclaycard.
"How can this possibly be?! Why are consumers willing to stretch their already limited budgets for better premium cosmetics when some are turning off their fridges at night to save on electricity?"
American beauty giant COTY has just revealed that premium cosmetics represented 61% of their net sales in Q3 of 2022 or an eye-watering $88.3million - $53 million more than for the same period in 2021!
How can this possibly be?! Why are consumers willing to stretch their already limited budgets for better premium cosmetics when some are turning off their fridges at night to save on electricity? The perfect storm of increasing sustainability awareness and a general decrease in overall disposable income has meant that gone are the days of complex multi-step routines, and consumers are opting to spend more money on fewer products. In the eyes of the consumer, premium products are simply seen as performing better, therefore, making them a better investment. Gifting for premium beauty has also shot up seemingly contributing to the global narrative of indulging in some ‘treat’ style beauty moments. The stats seem to back this up. Mintel reported that 35% of adults believe that premium lasts longer than other beauty and personal care brands and 24% believe that premium products offer better results in the long term.
However, not all prestige brands are included in this fairy tale. Kendo-owned Bite Beauty recently announced its closure after 10 years of trading so clearly simply being involved in ‘the club’ isn’t enough to guarantee success. There are also several nuances within the category itself, with makeup being a category that is the slowest to recover from the pandemic. The makeup market has changed dramatically since the pandemic mainly due to people continuing to work from home (or a hybrid model) and with more natural looks becoming popular on social media. People are simply using less on a daily basis which is reflected in sales.
Clearly investing in or being part of the premium beauty sector is the place to be if you are willing (and able) to keep up with the big dogs.