True Views: the beauty sector.
With the Beauty sector enjoying a period of growth True takes a look at the top themes powering this upward trend and the themes set to drive even further growth.
Natural & efficacious products
With the global vegan beauty market estimated to be worth $12.9bn and growing almost 6.5% p.a. through to 2025 – the rise of clean beauty is set to continue at pace. This move is in line with consumers wanting to reduce the societal and environmental impact of their consumption habits more generally. Additionally, shoppers are also becoming more knowledgeable and concerned about the impact of certain ingredients, on their health, adding further fuel to the fire.
Demonstrating this trend, several naturally focused product businesses were acquired in the first half of 2018, including Snowberry, The Organic Pharmacy and Cake Beauty. Multiple independent brands focused on disrupting the natural category also raised sizable sums of money including Youth to the People and True Botanicals.
However, across both cosmetics and skincare, efficacy and visible results remain vital and will continue to do so. Brands that can combine high levels of product effectiveness, alongside a more transparent ingredient list, and a link to naturally derived ingredients will flourish.
Product innovation & social media
The fast-fashion ethos has been incredibly disruptive in the apparel sector, so much so, that mass and masstige cosmetics brands are looking to follow suit and replicate similar successful models. Winky Lux, which raised an additional $6m in funding in May is one such example – it focuses on getting products from concept to market in 45 days, so dropping traditional seasonal launches in the process. Across companies of all shapes and sizes, teams have been mobilised to speed up production times to capitalise on the success of trend lead lines.
Companies that launched and operate via social media have an inherent head start in keeping customer driven innovation ideas at their fingertips. And, innovation will continue to remain critical in enabling brands to grow. However, brands must also look for more ways to connect directly with their consumers and ensure the social media behemoths don’t control the dialogue with their customers.
The Asian market
The interest from Asian consumers in skincare continues to grow, giving rise to over three billion potential consumers in one of the fastest growing beauty markets in the world. The use of Western brands is seen as somewhat of a status symbol in this market, driven in part by the distrust of local products, following reports of harmful reactions. With its growing middle class and an assumption that a per capita cosmetics spend will rise to a level in line with that of other Asian countries, China is expected to become the largest global market for cosmetics in the next couple of years. Currently Chinese spend per capita is five times lower than consumers in adjacent markets – and a rightsizing of this would provide a significant boon to the Chinese beauty market.
Making the correct decision regarding distribution channels in these markets is key, with e-commerce expected to make up over 30% of total cosmetics sales in the coming years. Growth in e-commerce and speciality bricks and mortar stores has predominantly come at the expense of beauty purchases made in the grocery channel, which have suffered due to counterfeit and trust issues. For Western brands on the other hand the online channel offers significant potential to enter or expand in this market given the advantageous cross-border regulatory terms offered in comparison to entering Chinese bricks and mortar retail so the Asian market remains strategically important for international distribution.
Beauty & wellness from within
The divide between wellness and skincare has become significantly smaller in recent years and this trend is expected to continue with consumers having a stronger desire to start their beauty regime from within. Businesses such as Hum, Wild Nutrition, Care/of and VITL have achieved strong distribution gains both online and offline with Hum and Care/of raising significant funding to execute this in the last 12 months. In the first half of 2018 Unilever took a majority stake in Equilibra, which is the leader in natural nutritional supplements in Italy, demonstrating its confidence in this growing area of health and beauty.
Interest in internal health and wellbeing has grown partly because of the rise of natural beauty products in general, combined with growing numbers of consumers desiring to be more conscientious about diet, skincare ingredients and general wellness.
Currently skin care supplements now command the largest share of the beauty supplements market and account for more than 35% of the total market. Meanwhile the global supplements market is forecast to double in size by 2025 underlining the fact that the gap between internal and external wellness is significantly narrowing.