Luxury Cosmetics Market Analysis

Vanity can be very profitable. How else could the global luxury cosmetics market become one of the fastest-growing markets in the world? It is expected to reach up to USD 37.52 billion in the year 2027, rising as a compound annual growth rate of 6.24% CAGR during the forecast period of 2021 to 2027. Cumulative growth opportunity presented by the global luxury cosmetics market has been predicted to be around USD 225 billion between 2021 and 2027. That figure, alone, ought to convince one that its luxury cosmetics are a force to be reckoned with in the global economy.

Before we delve into the matter further, let us first understand what luxury cosmetics are. These mainly cover skincare, haircare, makeup and fragrances, etc., that are typically manufactured by large-scale multi-nationals (MNCs) and comprise of organic, premium quality ingredients. To make up for the high production costs, they are sold at much higher prices in relatively ‘higher-end’ retail outlets, as compared to their drugstore counterparts.

Historically, luxury cosmetics were meant for the wealthy elite, seeing as how the rest could barely afford them. Of late, however, things have changed. Rising disposable income amongst the urban populace in developed economies and growing health-consciousness have spurred demand. These new customer patterns have driven growth of luxury cosmetics around the world.

Interesting Facts about Luxury Cosmetics Industry

• Women share in high income population has been remained above 50% for quite a long time
• Leading Luxury Cosmetics markets in the world include U.S., UK, Japan, Brazil and France
• U.S. and UK hold the largest share in global Luxury Cosmetics market
• Women spent over average USD 250 thousand on cosmetics during lifetime
• Men spent over average USD 150 thousand on cosmetics during lifetime

Up till 2020, skincare was the biggest contributor to the market, thanks to increased awareness and the emergence of social media beauty influencers. The higher consumer purchasing power in developed regions like Europe and North America has rendered the already successful luxury cosmetics market all the more lucrative here. Europeans, in particular, are very keen on skincare and prefer dermatologically-approved, premium-quality products only, no matter how expensive. Demand in the Asia-Pacific region has been increasing steadily at a rate of 8% per annum as well.  

Asian countries are not far behind. Korean beauty products, for instance, are all the rage these days, in and out of Korea. Rising disposable income has made luxury cosmetics attractive in vast markets like India and China as well. Suffice it to say, anyone anywhere is eager to spend on products that will enhance the appearance of their skin, hair and nails, etc.

Counterfeit products to Remain Major Challenge for Companies

Counterfeit products pose a real threat to the sale of luxury cosmetics. First-quality replicas of almost every major luxury fashion or makeup brand can be found anywhere in the world, some of them going for shockingly high prices. Another challenge faced by the industry is the need for constant evolution: As makeup trends change, companies operating in the industry must instantly adapt to maintain relevancy. The catch is that makeup trends change all too frequently.

e-commerce to Grow Over the Course of Forecast Time

Of course, the internet has only exacerbated this, with e-commerce promoting the scaling of luxury cosmetics online. Online shopping is fast, easy and offers a wide assortment of products and services to choose from. Amid stronghold of traditional distribution channels such as Supermarket/Hypermarket, Specialty stores and Monobrand stores, online channels are anticipated to make its space.

Halal Luxury Cosmetics Can be the Next Growth Avenue  

Firms in the global luxury goods market ought to take note of the burgeoning demand for Halal cosmetics. These are meant solely for Muslim women as they comprise of ingredients not forbidden by Islam. For instance, many Muslims avoid certain lipstick brands as they include animal fats. Breathable nail colours also fall in this category.

Halal cosmetics are gaining immense popularity in Muslim-majority regions like the Middle East. This is a great opportunity for manufacturers to expand their operations.

Classification of the Luxury Cosmetics Industry

Conventional Luxury Cosmetics and Organic Luxury Cosmetics are major types of luxury cosmetics industry. As the organic trend is rising, conventional is still playing major role. Skincare, Haircare, Makeup, Fragrances and others are major products in luxury cosmetics market. Skincare products are all set to keep their dominance over the analysis period. While end-user category is likely to be dominated by the women.

While, tackling the counterfeit products, key players are focused on to develop high quality products to be suitable for end-users across the world. Some of the leading brands or companies in luxury cosmetics industry include, L’Oréal, Shisiedo Company Ltd, Christian Dior, Puig, Coty Inc, Kao Corporation, REVLON INC, Estee Lauder Companies International, INC, Oriflame Cosmetics AG, KOSE Corporation, Unilever PLC, The Proctor & Gamble (P&G) Company, Pat McGrath Cosmetics LLC and Ralph Lauren Corporation.  

Frequently asked questions about global Luxury Cosmetics industry