The NPD Group presented the beauty industry’s first look at 2014 global year-end results for makeup, fragrance, and skin care at their 18th annual “Hot Off The Press” event at the Union League Club in New York on January 29, 2015. CEW partnered to host the event for the third consecutive year.
At the event, NPD shared that the U.S. prestige beauty* industry reached $11.2 billion and grew 3% in dollar sales in 2014, compared to 2013. Makeup experienced the healthiest gain, 6%, while fragrance dollars grew 2% and skin care increased by 1%.
“The beauty industry had a solid annual performance in a somewhat difficult retail environment, but there’s still plenty of room for improvement and development,” said Karen Grant, global beauty industry analyst, The NPD Group. “We saw that fewer consumers, especially beauty shoppers, cut spending in 2014.
"At the same time, 2014 reported the fewest number shopping for beauty in six years. This tells me that beauty shoppers are happy, but some may be seeking happiness elsewhere. This ‘elsewhere’ is in other products and services, as well as experiences; consumers today are not just pursuing ‘products for me,’ so much as they are seeking ‘experiences for us.’ The challenge for the beauty industry, therefore, doesn’t lie solely in the products, but in fulfilling this sense of experience, and having both play together in harmony.”
The prestige market outpaced the U.S. mass** channel, where sales remained flat for total beauty in 2014, versus 2013, as per Nielsen. The skin care category, with 2% growth, buoyed the overall market, while fragrance and makeup experienced dollar declines, by 4% and 1%, respectively.
“Beauty today is all about the base,” said Grant. “Understanding how the consumer base has changed in population and lifestyle. Each category reflects this dynamic. Before consumers apply their makeup, they want a soft, unblemished, anti-aging face. They want to feel confident about their ‘I woke up like this’ look, and are being proactive rather than reactive about their beauty choices. There continues to be growing popularity in products that are more organic and offer advanced benefits, from natural, clinical and alternative brands to artisanal scents. While consumers look at craftsmanship and point of difference, they continue to seek instant gratification, from facial masks and bronzers that offer radiance, to bold lips and a mood-boosting scent.”
Prestige makeup, skin care, and fragrance in the U.S. all experienced 2 to 4% growth in average price. The lip segment was key to makeup’s growth, driven by lip color. Of the top 100 new shades on counter in 2014, pink surpassed red as the leading color, bringing in 23% more dollars. Sets and kits drove the growth for skin care, with anti-aging sets serving as the catalyst. Fine fragrance experienced the largest increase for women’s fragrance, while it was fragrance gift sets posting the largest growth for men.
“Beauty is an industry where consumers are willing to spend, and where the majority of them—more than 80% of U.S. women alone—invest,” added Grant. “While there is brand loyalty, consumers at the same time are always on the hunt for products that will perform better, and are willing to add to their routine if a product proves worthwhile. The industry is at an advantage in the U.S.—at a crossroads, where world beauty comes together in one place, and the innovation and types of products that connect with consumers and satisfy their needs and desires show themselves in a natural light.”
Source: The NPD Group, Inc./BeautyTrends report
*Prestige Beauty: Products sold mainly in U.S. Department Stores
**Source: Nielsen, Food/Drug/Mass (516) 625 2203