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 at a compound annual growth rate of 6.24% CAGR from 2021 to 2027. The 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.

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Before we delve into the matter, let us first understand luxury cosmetics. These mainly cover skincare, haircare, makeup, fragrances, etc., typically manufactured by large-scale multinationals (MNCs) and comprise organic, premium quality ingredients. To compensate for the high production costs, they are sold at much higher prices in relatively 'higher-end' retail outlets than their drugstore counterparts.

Historically, luxury cosmetics were meant for the wealthy elite, as 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 has spurred demand. These new customer patterns have driven the growth of luxury cosmetics worldwide.

Interesting Facts about Luxury Cosmetics Industry

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

Up till 2020, skincare was the most significant 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 booming 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. 

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 also made luxury cosmetics attractive in vast markets like India and China. Suffice it to say, anyone anywhere is eager to spend on products that will enhance the appearance of their skin, hair, 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 the industry faces is the need for constant evolution: As makeup trends change, companies operating in the sector must instantly adapt to maintain relevancy. The catch is that makeup trends change all too frequently.

e-commerce to Grow Throughout Forecast Time

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

Halal Luxury Cosmetics Can be the Next Growth Avenue 

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

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

Classification of the Luxury Cosmetics Industry

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

While tackling counterfeit products, key players are focused on developing high-quality products suitable for end-users worldwide. Some of the leading brands or companies in the luxury cosmetics industry include L'Oréal, Shiseido 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