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Skin Care Market Radiant for Foreseeable Future

By: Nicole Tyrimou, Euromonitor International
Posted: August 28, 2012, from the September 2012 issue of GCI Magazine.
  • Facial care is expected to account for 86% of the skin care market’s projected $16.3 billion gain.
  • North America bounced back in 2011 with healthy growth of almost 4%, with the lion’s share from the premium anti-aging category, which grew by 14% in 2011 to reach $3.3 billion.
  • Premium anti-agers, with the strongest growth rates, have benefited from the incorporation of extra benefits such as SPF and continuous use of stem cell innovation to help add value and justify higher prices.
  • The growing popularity of anti-aging devices has given rise to a new category within beauty.
  • As competition intensifies, new ingredients and technologies establish unique selling points.
  • The blurring between categories is a trend set to continue, with skin care benefits incorporated in other categories, such body sprays with moisturizing and skin toning properties.
  • As skin care becomes increasingly saturated, personalized and targeted products will become more popular.

The skin care category has been the cornerstone of beauty and personal care for the past 15 years. It even grew during the global recession, adding a further $15 billion between 2007 and 2011 to reach a value of $96.5 billion, according to Euromonitor International. Healthy growth of 4.4% in 2011 is expected to continue, with the category forecasted to see absolute growth of $16.3 billion to 2016. The lion’s share of this added value will come from the category’s star performer, facial care, which is set to account for 86% of the $16.3 billion gain. The other categories in skin care are still fairly small in comparison. Body care grew by a weaker 3.9% in 2011 compared to 4.2% in 2010 to reach $16 billion while hand care posted a healthy 5.6% gain to reach $2.5 billion.

Asia-Pacific Dominates Skin Care Market

Even though Asia-Pacific accounted for a 43% share of total skin care value sales in 2011, it is its unstoppable growth that is the most impressive. Almost 70% of total skin care growth over the next five years will derive from the Asia-Pacific region, equating to $11 billion in real terms.

The importance of the region is reflected in recent product launches. From Chanel and Christian Dior to Crème de la Mer, brands—especially premium ones—have been launching products to cater for the needs of Asian populations. The popularity of brightening/whitening products and BB (blemish balm) creams, which are now widely available in Western Europe and North America, is just one of the trends from Asia-Pacific that has had an impact on the wider skin care market.

North America Pays Any Price for Youthful Skin

The North American region bounced back in 2011 with healthy growth of almost 4%, close to double the 2% gain achieved in 2010, according to Euromonitor International. The lion’s share of this came from the premium anti-aging category, which grew by 14% in 2011 to reach $3.3 billion. Beauty brands have been responding to demand with an array of anti-aging products that don’t simply target wrinkles but are part of an overall anti-aging equation consisting of uneven skin tone, hyperpigmentation, dark spots, dryness, sun damage and expression lines. Multifunctional products that target all the signs of aging better suit the hectic lifestyles of North Americans—as well as provide better value for money, allowing consumers to trade up.

Premium Anti-agers Continue Impressive Growth

Since bouncing back from relatively low 3.8% growth in 2009, premium anti-agers have registered the strongest growth rates in the skin care category. The robust 7.7% increase seen in 2011 is set to continue, with annual value growth of around 7% predicted over the next five years, according to Euromonitor International. China will be the biggest contributor to the $2.7 billion absolute growth predicted by 2016, adding $1.2 billion, followed by the U.S., which will contribute an impressive $425 million.

An increase in unit prices across all regions has helped counteract slackening growth in Western Europe, which, despite the deepening eurozone crisis, still grew by 3%. The incorporation of extra benefits, from SPF and brightening, and the continuous use of stem cell innovation, glycans and omics, all helped add value and justify higher prices.

The Demand for Radiance

The Asia-Pacific region has been pivotal in setting trends in skin care. The recent growth in brightening products, whether incorporated into anti-agers or on their own, is clear evidence of the influence of the region on the category.

The demand for brighter/more radiant skin has now arrived in Western Europe and North America, with the 2010 launch of Clinique’s Even Better Clinical Dark Spot Corrector in the U.S., sparking a craze. Asia-Pacific and the Middle East outperformed the global growth rate of 9.4% for whitening anti-agers with double-digit figures, while the struggling Western European and North American markets still registered healthy growth rates of 7% and 9%, respectively. Chanel’s Le Blanc, L’Oréal’s Youth Code and Shiseido’s White Lucent are among the brands that have launched lines to cater for this demand.

Demand Rises for Holistic Skin Care

Fueled by consumers’ lack of time and the need to offer value for money, beauty brands have been launching more holistic products. SPF, hydrating, anti-wrinkle and evening out skin tone are just a few of the features now present in many skin care products.

The popularity of BB creams is set to continue, particularly as brands add more shades to their ranges. The launch of Lab Series’ first BB cream for men and Sleek MakeUp Be Beautiful BB Cream for dark skin in the U.K. are an indication of the increasing diversification of the category, and it is only a matter of time before its known if such products cannibalize sales of tinted moisturizers or even eliminate them altogether.

Specialization and Sophisticated Technology

The impressive growth of premium anti-agers has partly been fueled by the increasing number of launches in specialized serums, as well as creams for specific skin care issues. Etat Pur, for example, offers a range of individual doses of active ingredients to be used together with a cream to target a specific skin care issue such as pigmentation, redness or deep wrinkles. YSL’s Youth Liberator, which uses glycobiology; Lancôme’s Absolue L’Extrait with more than two million rose stem cells; and La Prairie’s Skin Caviar Liquid Lift, which uses a glucose-based polymer, are just a few of the recent premium high-tech launches in serums.