Rapid industrialization, changing standards of living coupled with the rising awareness regarding personal grooming products is leading to expansion of the customer base for premium cosmetics products. According to Trading Economics Statistics on United States Disposable Personal Income, the disposable personal income in the U.S. averaged US$ 5200.2 billion in 1959, reaching an all-time high of US$ 15,742.81 billion in November 2018.
The global premium cosmetics market is projected to surpass US$ 92,959.5 million by the end of 2027 in terms of revenue, growing at CAGR of 6.4% during the forecast period (2020 to 2027).
The growing awareness about premium ingredients and their positive effect on the skin has led to a shift in consumer preference from traditional or mass produced cosmetics to premium cosmetics. Moreover, there is rising concern among consumers about various skin care problems such as aging spots, acne, and pigmentation which is driving the adoption of premium skin care cosmetics.
Regionally, Asia Pacific dominated the global premium cosmetics market in 2019, reporting 34.7% market share in terms of revenue, followed by North America and Europe, respectively.
Figure 1. Global Premium Cosmetics Market, Revenue Share (%), By Region, 2019
The availability of counterfeit cosmetic products and stringent government regulations on cosmetics is expected to hamper the growth of the global premium cosmetics market during the forecast period.
Key players are focusing on launching new products in the premium cosmetics market to create growth opportunities at a global level. For instance, in September 2018, Chanel launched its first makeup collection for men in South Korea. The collection includes a tinted, fluid, and matte moisturizing lip balm, and eyebrow pencil.
Moreover, in 2016, Chanel launched a new range of nail polish; Le Vernis Longwear Nail Colour. The new collection has 16 variants, and is dibutyl phthalate, formaldehyde, camphor, and toluene free. These product launches are expected to attract a larger consumer base during the forecast period and help the company in increasing its market position.
Figure 2. Global Premium Cosmetics Market – Opportunity Analysis
The growth of the premium cosmetics market is driven by the direct influence of digitization. Moreover, the penetration of internet and social media has helped the companies in boosting brand awareness.
The availability of information on cosmetics through online sources is driving demand for personalization of cosmetic products to meet individual needs and lifestyle. For instance, L’Oreal Paris launched an augmented reality (AR)-powered beauty app, Make up Genius, which turns the screen of the iPhone into mirrors to over-lay make-up onto the user’s face. Through this app, the users can try and test the premium cosmetic products before they buy. This helps the company in offering greater value for consumers by solving common problems such as finding the right shade or type of foundation.
Figure 3. Global Premium Cosmetics Market, Revenue Share (%), By Product Type, 2019
Based on product type, the premium cosmetics market is segmented into skin care, hair care, fragrances & perfumes, sun care, baby care and others. In 2019, the skin care segment accounted for 38.6% of the revenue share.
Premium Cosmetics Market - Impact of Coronavirus (Covid-19) Pandemic
The global premium cosmetics market is expected to witness a declining growth in 2020 owing to the severe impact of Covid-19 pandemic. Segments such as skin care are expected to grow during the forecast period. However, color cosmetics and fragrances & perfumes, among other products are expected to witness a declining demand. Further, the brick and mortar stores are expected to witness decline their sales with increasing demand for online stores during the pandemic as well as in the near future.
Key players operating in the global premium cosmetics market are Avon Products Inc., Chanel S.A., Coty, Inc., KAO Corporation, L'Oréal S.A., LVMH, Oriflame Cosmetics Global SA, Revlon, Inc., Shiseido Company Ltd., and The Estée Lauder Companies Inc.
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