Beauty and Personal Care: Half-Year Update

2022
January 2023

© Euromonitor
© Euromonitor International
International 2021.
2022. All rights
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reserved.
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at time of publication: January 2023
Contents

Introduction

H2 beauty and personal care update

H2 2022 macroeconomic update

About our industry forecast model

© Euromonitor International
 Introduction

© Euromonitor International
 INTRODUCTION 55

About this briefing

This half-year review of Euromonitor International’s beauty and personal care data is intended to provide analysis of the biannual update to
Euromonitor’s Forecast Model (FM), alongside the quarterly update to the Macro Model, offering insight into the most important current
developments in beauty and personal care since the annual update published in April 2022.
Whilst the analysis focuses on the most relevant current events, and those of impact over the last six months, it is also forward-looking,
tying these events to mid- and long-term impacts. A key purpose of the FM is to provide detail on the drivers behind our industry forecasts,
to map scenarios, and to allow understanding of how forecasts evolve as macro factors shift. This half-year review briefing supplements the
FM, providing insight and analysis on the most recent update to our forecasts and key FM scenarios. Wherever possible, it uses the FM to
offer additional understanding to current events, such as new products, corporate announcements and major macro events.
In addition, the analysis in this report serves as a best practices guide in using the FM to support strategic decisions, map scenarios and
understand current events. Where appropriate, the FM and our revised data are used in order to illustrate key points.

© Euromonitor International
 INTRODUCTION 66

Scope
Baby and Child-specific Products – USD20.5 billion The Q4 2022 update for beauty and
personal care shows an upgrade for 2022
Bath and Shower – USD48.5 billion
compared to estimates made in Q3 2022, but
Colour Cosmetics – USD65.9 billion a downgrade from April 2022 baselines.
Deodorants – USD21.4 billion China’s recent changes in zero-COVID policies
Global foretell future optimism for the second largest
Beauty and Depilatories – USD4.7 billion beauty and personal care market. Inflation
Personal Care Fragrances – USD53.6 billion continues to generate shifts in consumption
(2021) that will be felt in 2023. Skin health,
Hair Care – USD83.4 billion personalisation, digital engagement, and value
USD529.8 billion Men’s Grooming – USD51.2 billion creation play key roles in H2 2022 business
activity.
Oral Care – USD51.6 billion
Skin Care – USD154.9 billion
Sun Care – USD12.4 billion
All values expressed in this report are in US dollar terms using a fixed exchange rate (2021). Disclaimer
Unless otherwise stated, all historic and forecast data are expressed in constant terms; Much of the information in this briefing is of a
statistical nature and, while every attempt has
inflationary effects are discounted. been made to ensure accuracy and reliability,
Forecast and scenario closing date: 31 October 2022. Euromonitor International cannot be held
responsible for omissions or errors.
Report closing date: 29 December 2022. Figures in tables and analyses are calculated
from unrounded data and may not sum. Analyses
This report analyses the beauty and personal care industry, which includes the following found in the briefings may not totally reflect the
categories. companies’ opinions, reader discretion is advised.

© Euromonitor International
 INTRODUCTION
Key findings
Q4 2022 forecast shows
upgrade in global beauty for
2022, but downgrade from
baseline
2022 and 2023 growth
notably driven by habit
persistence
Rising inflation adds
pressure on discretionary
spend, while price changes
suggest a peak, for now
Skin health a key part of H2
2022 business activity, while
wellness demand expected
to accelerate in Q4 2022
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77
High commodity prices and supply chain disruptions caused by the war in Ukraine and
shutdowns in China amid its zero-COVID policy continue to set the global economy on a course
of slower growth and high inflation. As a result, the Q4 2022 update shows an upgrade for
2022 from Q3, but a notable downgrade compared to a more optimistic baseline projected in
April 2022. China’s recent changes in zero-COVID policies foretell future optimism.
In 2022 and 2023, habit persistence will account for a notable segment of growth, particularly
affecting hair care, skin care and fragrances—suggesting that consumers are sustaining their
pandemic-induced routines. However, players in other categories where habit persistence is
less of a driver (eg colour cosmetics and sun care) can leverage “skinified formulas” and anti-
ageing benefits to overcome these challenges.
Although median online price changes indicate consumer price inflation is reaching a peak,
tightening consumer spending, due to high inflation, rising costs of essential goods and energy,
may chip away at post-COVID-19 gains in beauty and personal care. Survey results and pricing
analysis suggest that the inflation impact varies across markets, categories and tiers. Opposing
motivations (eg post-pandemic indulgence to spend more vs trading down to private label)
suggest that the inflation impact is not a straightforward issue.
AmorePacific’s acquisition of Tata Harper, Church & Dwight Co Inc’s acquisition of Hero
Cosmetics, and Kosé’s focus on personalisation highlight the continued attractiveness of clean
beauty and wellness-positioned brands. Wellness and self-care will be top of mind as we move
into Q4 2022 amid a backdrop of worsening macro, pricing, and supply chain conditions.
 H2 beauty and personal care update

© Euromonitor International
 H2 BEAUTY AND PERSONAL CARE UPDATE 99

Q4 2022 forecast shows 2022 upgrade in global beauty vs Q3, but downgrade from baseline
The recovery that the industry anticipated after a Beauty and Personal Care Total Forecast 2019-2026, Quarterly Update Q4 2022
challenging 2020 was reflected in a solid rebound % growth
in 2021. However, the latest Q4 2022 update 4%
represents a noticeable downgrade against
expectations estimated in April 2022. 3%

Other scenarios show cautiousness, compared to 2%

the April 2022 baseline. In a global stagflation
scenario—in which worse-than-expected global 1%
negative spillovers from the war in Ukraine
through uncertainty, confidence and supply 0%
constraint channels cause stagnant global
economic growth combined with high inflation— -1%
the downgrade of two percentage points is
-2%
significant. With a 22-32% probability of occurring,
global stagflation would most negatively affect
-3%
colour cosmetics, hair care and skin care.
Nevertheless, as reflected in Euromonitor’s -4%
2019 2020 2021 2022 2023 2024 2025 2026
scenario analysis, even in each of these scenarios,
the industry is expected to register higher growth April 2022 Baseline August 2022 Update
October 2022 Update Global Stagflation
in 2023 vs 2022, before decelerating in either 2024 C-19 Pessimistic C-19 Optimistic
or 2025. Source: Euromonitor Beauty and Personal Care Forecast Model, updated 31 October 2022
© Euromonitor International
 H2 BEAUTY AND PERSONAL CARE UPDATE 10
10

Habit persistence notably accounts for 2022/2023 growth as consumers continue routines
According to the October 2022 forecast Beauty and Personal Care Growth Decomposition in World, 2019-2026
update, beauty and personal care sales are
predicted to increase by 2.1% in constant
USD value terms in 2022—up from a
projection in August 2022 of 1.8% but
below the baseline in April 2022 at 3.1%.
Given that constant value strips out the
influence of inflation across the review
period, the true figure in current terms has
the potential to reach high single digits.
Higher input costs are being felt by brand
owners, packaging and ingredients
suppliers.
Along with higher energy costs and tighter Source: Euromonitor Beauty and Personal Care Forecast Model, updated 31 October 2022
labour conditions that will contribute to
difficult trading conditions for brands and In 2022 and 2023, habit persistence will account for a notable chunk of growth not only
retailers alike, beauty players will find their in overall beauty and personal care, but particularly in hair care, skin care and fragrances
profitability being increasingly squeezed. (to a greater extent in 2022 than in 2023). Habit persistence in sun care notably
increased in 2021 and 2022, compared to pre-pandemic 2019, owing to the category’s
successful repositioning from “play” occasions (eg sports, swimming etc) to daily usage
steeped in anti-ageing and preventative benefits.
© Euromonitor International
 H2 BEAUTY AND PERSONAL CARE UPDATE 11
11

China registers largest downgrade, but changes in zero-COVID policies foretell future optimism
The second largest beauty and personal care Markets Showing the Largest Absolute Revisions in 2026 Market Size (Q4 2022 vs
market, China, is projected to register the largest April 2022 Baseline)
downgrade in retail value sales in 2022. However, Retail Value Sales, 2021-2026, Constant Prices %Growth, USD Million, 2021 Fixed Year Exchange Rates
this is mainly a function of the negative impact of 2 6%
China’s zero-COVID policy that slowed down growth 1

2021-2026 CAGR (October 2022 update)

4%
for the forecast period. Because the Chinese beauty
0
and personal care market is so large (October 2022 2%
update forecasts the 2026 market size to reach -1
USD107.0 billion), a macroeconomic downgrade is -2 0%
likely to skew China to register the highest revision. -3 -2%
At the time of reporting, China is scaling back on its -4
zero-COVID policies and opening up travel, which is -4%
-5
expected to result in more optimistic projections by
-6%
Q1 2023, compared to Q4 2022. Companies like -6
Estée Lauder, Johnson & Johnson and Pola Orbis -7 -8%
have reiterated planned expansions, while Kosé, LG
H&H, and L’Occitane—which have been significantly
negatively impacted—are more cautious about
China’s recovery. Currently, forecasts are optimistic Difference in 2026 Market Size (October 2022 update vs. April 2022 baseline)
but uncertainty still remains due to current surge in 2021-2026 CAGR (October 2022 update)
COVID cases. Source: Euromonitor Beauty and Personal Care Forecast Model, updated 31 October 2022
© Euromonitor International
 H2 BEAUTY AND PERSONAL CARE UPDATE 12
12

Q4 2022 update readjusts forecast made in Q3 to be more optimistic for Russia and Ukraine
Q4 2022 Updates for Beauty and Personal Care Forecast in Russia, Q4 2022 Updates for Beauty and Personal Care Forecast in Ukraine,
2021-2026 2021-2026
Retail RSP in USD bn, Constant Prices, 2021 Fixed Year Exchange Rates Retail RSP in USD bn, Constant Prices, 2021 Fixed Year Exchange Rates
10 3
9
8 3
7
2
6
5 2
4
1
3
2 1
1
0 0
2021 2022 2023 2024 2025 2026 2021 2022 2023 2024 2025 2026
April 2022 Baseline Aug 2022 Update Oct 2022 Update April 2022 Baseline Aug 2022 Update Oct 2022 Update
Source: Euromonitor Beauty and Personal Care Forecast Model, updated 31 October 2022

Because Euromonitor's beauty and personal care (BPC) research took place before the invasion of Ukraine, the impact of the war in Ukraine
and sanctions on Russia were not factored in the baseline figures of April 2022. Researched data for BPC2022 stopped at year 2021, and
continuing research ceased for Russia and Ukraine. However, the Q4 2022 updates, which incorporated solely macroeconomic factors for
those two markets, resulted in readjusted forecasts. Beauty and personal care is projected to decline in Russia by -6% in 2022 and -6% in
2023, while Ukraine’s declines are estimated at -19% in 2022 and 3% in 2023 in constant USD rates. However, much uncertainty remains.
© Euromonitor International
 H2 BEAUTY AND PERSONAL CARE UPDATE 13
13

The many drivers of inflation within beauty and personal care

Inflation drivers specific to beauty and personal care products

Rising cost of energy/raw materials Rising cost of production/distribution

Cost-push

%
Supply Shifts Production Waste Shipping Regulations
Energy Packaging Materials Technical Exchange Rates Brand/retailer
(just in time, (machinery (reduction, (sea, land, last (GHG, pollution,
(gas, (plastic, (pulp, SAP (performance (trading, import margin
electricity) paper) chemicals) components) costs) retention just in case) automation, labour) circularity) mile) safety)
versus Supply shifts mean “now” comes at a premium as just-in-time supply chains are
Net Material Inflation for all beauty and personal care products that rely on crude, consumers’ reconfigured to maintain higher inventory levels of materials and finished products. This
palm kernel and palm oil. The price of crude oil has increased by 150% since 2017. ability to pay means more capital tied up, but it may also require expenditure on extra storage tanks,
Industry impact

Energy as an input cost is a somewhat significant cost higher up the supply chain as as inflation silos or warehouses. Purchasing activity philosophy will move to put a premium on
well as at the point of production. Currency fluctuations against the US dollar all becomes a reliability and downgrade cheapness as criteria; this is more likely to favour local
combine to produce an incredibly challenging environment which will undoubtedly full-blown suppliers removed from the vagary of international shipping. In some cases, local supply
hit supplies during H2 2022 and into 2023 without significant government-level “income chains will be strengthened by major investment to achieve vertical integration, by joint
intervention, heavy retail price increases or supply limitations, and very likely all event” where ventures with suppliers, or acquisition, or building new plants. With little in the way of
three in many of the world’s markets. The rise of input costs will bring into focus the
for some there advances to be made in increased production efficiency, beauty and personal care
need for simplification of beauty and personal care products, not least how to
is a choice or products will have to face the sustainability challenge not only in scopes 1 and 2 but also
reduce costs in production and distribution, as well as packaging, in a difficult
environment but also linked to long-standing sustainability circularity challenges the trade-off to be in the more challenging scope 3 environment, meaning that the current inflation surge is
industry faces, now and further down the line. Reformulation of products will made with closely linked to progress on the big sustainability questions facing the industry. This links
continue to focus on the emancipation from fossil fuels, both as a profit and a every act of to regulation which is only going to become more stringent and make more exacting
sustainability driver. expenditure. demands of producers in order for them to preserve their right to operate.
Severity

Note: * Traffic lights represent a qualitative assessment of driver severity, with red indicating the most severe short-term impact on the beauty and personal care industry
© Euromonitor International
 H2 BEAUTY AND PERSONAL CARE UPDATE 14
14

Rising inflation adds pressure on discretionary spend; price changes suggest a peak, for now
Price change and inflation in top 10 beauty and personal care markets
USA China Japan Brazil Germany UK France India South Korea Italy

Median price change of beauty and

personal care per SKU over January- -4.8% +7.9% +0.5% -17.0% +5.4% -2.2% -0.4% -3.9% -8.6% +3.3%
December 2022*
Inflation forecasts for 2022** 8.0% 2.3% 2.2% 10.0% 8.0% 9.1% 6.0% 6.7% 5.4% 7.4%

Inflation forecasts for 2023** 3.8% 2.5% 1.5% 5.7% 6.6% 7.3% 3.5% 5.2% 3.3% 3.5%
*Source: Euromonitor International Via data from 1 January 2022 to 7 December 2022. Note: Data cover only sales through e-commerce channels
**Source: Euromonitor International Macro Model, updated 31 October 2022. Note: Data from 2022 onwards are forecasts.

Median online price changes indicate consumer price inflation is
reaching a peak. Nevertheless, tightening consumer spending, due
to high inflation, rising costs of essential goods and energy, may chip
away at post-COVID-19 gains in beauty and personal care. Still,
there may be some differences by beauty subcategory.
In the US, for example, Euromonitor’s Via online pricing sample
recorded 7.5% median price growth of fragrances for full-year 2021
and a median average price of USD59.75—up from USD55.00 for
full-year 2020. However, even though the median average price of
fragrances rose in 2021, this did not lead to a decrease in volume.
© Euromonitor International
High levels of stress globally ushered in demand for emotional
wellness, tapping into fragrances’ role in providing comfort and
indulgence during the COVID-19 pandemic and into 2022, as
consumers consider to grapple with lockdowns and outbreaks, high
inflation, and geopolitical uncertainty. These factors did not lead to
a decrease in fragrances volumes, which in the US grew by 20-30%
in various subcategories of men’s, women’s and unisex fragrances
and fragrance sets/kits in the premium segment, and by 1-8% in
mass in 2021. The repositioning of fragrances as a self-care item
helped it become less elastic than in pre-pandemic years.
 H2 BEAUTY AND PERSONAL CARE UPDATE 15
15

Survey confirms to what extent inflation is impacting beauty players’ 2022 sales so far
According to the Voice of the Industry: Beauty and Personal Care 2022 survey results, 48% of beauty and personal care industry players
reported that they raised prices of some of their products and services in response to inflation, while 34% raised prices on all their products
and services. In 2022, global consumers stated that they are spending more on cosmetic products than two years before. The impact of
inflation is quite pronounced in Latin America, according to survey results.
Whether increased spending will lead to a decrease in volumes is not a straightforward issue. Some consumers desire to spend on more
premium beauty brands as a treat after living for two years in lockdown, while others are simplifying their routines (particularly in colour
cosmetics) and purchasing products less often, leading to a slowdown in consumption. Rising prices are also steering consumers towards
private label, multifunctional products that reduce dependence on multiple products, and high-efficacy and/or multi-benefit products.
Consumers, groomed by shopping festivals, are increasingly relying on promotional deals when purchasing.
Spending more than USD30 on a To what extent has inflation impacted your company in the past 12 months?
beauty product, 2020-2022 % of respondents
80%
70%
60%
50%
40%
2020 - 25% 30%
20%
2021 - 26% 10%
Anti-ageing
products

0%
2022 - 28% Total Asia Pacific Australasia Western Eastern North America Latin America Middle East
Europe Europe and Africa
No impact Slight impact Moderate impact Extensive impact
Source: Euromonitor Voice of the Industry: Beauty and Personal Care, fielded October 2022
© Euromonitor International
 H2 BEAUTY AND PERSONAL CARE UPDATE 16
16

Skin care registers best forecast, but price fluctuations and consumer sensitivity are challenges
Change in average unit price in fastest growing skin care
categories, top five beauty and personal care markets,
2021-2022
% Change in Average Unit Price from Jan 2021 to Jul 2022
20%
15%
10%
5%
0%
-5%
Source: Euromonitor Beauty and Personal Care Forecast Model, updated 31 October 2022 -10%

Out of all categories, skin care is projected to have the greatest gains in the -15%

forecast period, followed by colour cosmetics and fragrances, driven by skin -20%

care’s growing narrative of wellness and self-care. However, growing consumer

pricing sensitivity from rising prices and inflation may encourage consumers to
change their skin care consumption habits, such as trading down in price tiers
or making less frequent purchases, or cannibalisation among categories.
However, rising prices are uneven across categories and markets. Among the
top five beauty and personal care markets, price decreases in liquid/cream/gel/
bar cleansers contrast with price growth in skin care sets/kits. Price decreases USA China Japan Brazil Germany
in the US come as a welcome change to US consumers grappling with the Source: Euromonitor Beauty and Personal Care Price Tracker, updated 31
highest inflation rates in decades. October 2022
© Euromonitor International
 H2 BEAUTY AND PERSONAL CARE UPDATE 17
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Wellness claims trend upwards and foretell stronger self-care messaging in 2023
Wellness Claims in Beauty and Personal Care Online Wellness Claims Tracker across BPC Categories of Online SKUs, March 2022
SKUs, March 2022
# of SKUs
2,500,000

2,000,000

1,500,000

1,000,000

500,000

0
Skin health Healthy Physical health Mental and
ingredients emotional
well-being

Source: Euromonitor International's Wellness Claims Tracker. Note: Captures only online SKUs from retailers across 40 markets across all beauty and personal care categories.
Momentum from pandemic-induced focus on health and safety continues, as consumers more closely examine beauty ingredients to
achieve wellness. Wellness has been identified by Euromonitor International as having the furthest-reaching impact on industries and
consumers in the future. As we close 2022 amid a backdrop of stressful macroeconomic forces (eg energy crisis, COVID restrictions, cost of
living crisis) and challenging current events (eg comeback of respiratory illnesses and high rates early on in flu season, geopolitical
uncertainty etc), beauty and personal care players should look to strengthen their messaging on various aspects of self-care (eg sleep,
stress, anxiety, microbiome etc)—with notable mention of sleep trending upwards in the beauty space.
© Euromonitor International
 H2 BEAUTY AND PERSONAL CARE UPDATE 18
18

Beauty salon occupancy is back for hair treatments

Two years after hair salons closed due to Monthly Beauty Salon Visits by Hair Treatment, 2020-2022
pandemic lockdowns, consumers have Share of global respondents
returned to hair salons. Euromonitor’s
Hair cut
Beauty Survey found that hair styling, hair
loss treatments, hair colour/dyes made
notable gains as treatments of choice since Blow dry/blow out

2019. And since hair care continues to

grow (1.3% globally in constant terms in Hair styling
2022 and 1.4% in 2023 as of the Q4 2022
update), brands have opportunities to
Hair loss treatment
grow their partnerships with hair salons
and independent hair professionals.
Hair colour/dye
In 2022, Wella Company expanded its
professional segment with the launch of
Shinefinity, a professional glazing Hair relaxant chemical treatment

colourants service, in addition to

increasing momentum in Sebastian and Hair extensions
Nioxin brands. The company’s positive
association and recommendation from hair 0% 5% 10% 15% 20% 25% 30% 35% 40%
professionals is having a halo effect on its 2020 2021 2022
consumer products division as well. Source: Euromonitor’s Voice of the Consumer: Beauty and Personal Care survey, fielded June 2022

© Euromonitor International
 H2 BEAUTY AND PERSONAL CARE UPDATE
H2 business activity underscores skin health, personalisation and clean beauty
In September 2022, Church & Dwight Co Inc
announced the acquisition of Hero
Cosmetics, which produces the leading acne
patch brand, Mighty Patch, and a newer
innovation, Lightning Wand, a convenient-
to-use pen with a serum to treat post-acne
marks. Innovation brought much-needed
life to acne treatments in the form of acne
patches, a sticker-like spot-treatment for
acne which became popular globally since
2020 due to its suitability for working from
home. The acquisition signifies a growing
interest in skin care as it seeks to diversify
from its oral care, depilatories and dry
shampoo hair care brands.
Source: Hero
Cosmetics
© Euromonitor International
Kosé renovated its concept store in Tokyo in
August 2022 and introduced Color Machine,
a make-up simulator that uses 3D
projection mapping technology. It can
project make-up images onto the
consumer’s face, rather than using virtual
images on a 2D screen. There, the user can
see realistic make-up images from all angles
and with facial expressions. In addition,
Color Machine identifies harmonious
patterns from more than 8,000 make-up
colour combinations based on the
pigmentation of the customer’s skin, hair
and eyes. Elevating the consumer journey
in-store is a key strategy in Asia Pacific.
Source: TV
Asahi News
19
19
Beauty specialist Credo Beauty acquired
Follain, known for its skin care and
conscious positioning, in October 2022, to
better leverage the “clean” momentum.
However, consumers are informing
themselves to better differentiate between
claims with scientific consensus and claims
used in fear-mongering tactics, resulting in
greater scrutiny of “clean” labels. Beauty
specialist retailer Sephora, under LVMH
Moët Hennessy Louis Vuitton SA, received a
lawsuit in November 2022 that alleged its
“Clean at Sephora” seal was misleading. The
label was created to overcome the hurdle
that the subjective definition of “natural”
poses, instead focusing on free-from claims
or ingredient exclusion lists. However, the
lawsuit claims that the label’s usage on
brands containing synthetic ingredients is
“inconsistent” with consumers’
understanding—signifying the industry’s
widely varied interpretations of “clean”.
 H2 BEAUTY AND PERSONAL CARE UPDATE 20
20

AmorePacific’s acquisition of Tata Harper aligns with global trends that favour efficacy
South Korean multinational AmorePacific is branching outside of
Asia Pacific through its September 2022 announcement to acquire
US-based clean beauty indie leader, Tata Harper. The acquisition
gives AmorePacific more footing in North America and Europe; the
brand’s premium positioning and sales through beauty specialists
and high-end department stores complement the parent company’s
segmentation, while its “farm to face” positioning makes it
attractive to consumers in Asia Pacific, who over-index on skin care.
AmorePacific’s acquisition of Tata Harper aligns with global trends
that favour efficacy. Euromonitor’s Beauty Survey 2022 found that
31% of respondents in South Korea, 34% in China, and 25% in the
US were willing to pay 10-20% more for proven efficacy and
benefits. The company is also venturing into beauty tech through its
“Tailored 3D Printing System”, which designs a mask by considering
the locations of the customer’s eyes, nose and mouth, as well as the
Source: Euromonitor Competitor Analytics, based on data published April 2022.
Note: Actuals and Growth, Retail Value, GBO USD mn, fixed ex rates, 20 Consumer Goods areas of the forehead, cheeks and chin, based on facial imaging. The
3D printer then prints a hydrogel mask that will fit perfectly with the
Leading Skin Care Claims, World, 2021 customer’s face shape. These initiatives give the company leverage
Tata Harper Hydrating Natural Organic Cruelty-free in clean beauty, wellness and personalisation trends—features that
solution-focused older consumers and younger consumers have
AmorePacific Hydrating Skin Health Antioxidant Natural
expressed greater willingness to invest in.
Source: Euromonitor Product Claims and Positioning, 2021. Top claims ranked left to right.
© Euromonitor International
 H2 BEAUTY AND PERSONAL CARE UPDATE 21
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Discontinuation of The Ordinary’s colour cosmetics outlines challenges of pricing and expansion
Estée Lauder Cos Inc-owned Deciem Group announced in late 2022 the Average prices of foundations/concealers vs The Ordinary, 2022
discontinuation of its foundation and concealers in 2023. The company Median average price range per SKU in USD
cited that its colour cosmetics line has not been profitable since the 35
launch of its foundations in 2017 (which required a waiting list) and its
concealers in early 2021. The products had positive reviews and the 30
brand was leveraging consumer-driven trends—eg wide shade range for
inclusivity, affordable pricing for accessibility, and science-backed 25
multifunctional formulation for efficacy.
20
The closure is a fascinating case study on the difficulty of finding the
“sweet spot”—the right intersection of in-demand consumer trends, 15
profitable price margins, and consumer perception/willingness to pay. It is
possible that The Ordinary’s close association with skin care hampered its 10
expansion into colour cosmetics, or that the price-accessible offering was
misdirected to markets with higher consumer purchasing power. Also 5
possible was difficult timing; younger consumers (The Ordinary’s target
audience) simplified their colour cosmetics routines in 2020-2022, which 0
may have contributed to the products’ low volumes. The brand’s low France Sweden UK US Germany China Spain
pricing strategy could not be offset by high volumes, while competitors
Markets containing the highest online SKUs of The Ordinary's
with similar multifunctional foundations/concealers were emerging. foundations/concealers in Euromonitor's Via Pricing Sample
Unfortunately, the brand could not take advantage of the 2022 rebound
The Ordinary foundations/concealers All foundations/concealers brands
in colour cosmetics or the current increased consumer appetite for low
Source: Euromonitor International Via data from 1 January 2022 to 13 December 2022.
pricing due to inflation. Note: Data cover only sales through e-commerce channels
© Euromonitor International
 H2 BEAUTY AND PERSONAL CARE UPDATE 22
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Luxury players tap into value creation through multifunctionality and limited editions
Given the rising interest in value creation amid growing
consumer pricing sensitivity, a more simplified approach to
beauty brings further scope for multifunctionality and
convergence with adjacent categories. As colour cosmetics
rebounds post-COVID-19, consumer interest in hybrid skin
care and make-up items is high across markets. Harnessing
the power of combination and multi-tasking products also
bodes well for price sensitivity and affordability. Image source: saksfifthavenue.com

Hermès’s recent launch of lip oils, priced at USD55,

capitalises on this desire for multi-benefit products. Not only
have lip oils received a boost in demand after the lifting of
mask mandates in the majority of markets, but they also
match the current “no make-up make-up” aesthetic for
simple, streamlined routines.
Luxury players can capitalise on another form of value
creation through “emotional value”. Chanel’s autumn 2022 Limited edition collabs from
Hermès’s Infused Care Oil
debut of eye shadow inspired by its iconic tweed designs combines “nourishing skin luxury fashion players drive
combines the appeal of tweed and make-up, while the care action” with trending newness and value among
pops of colour. super premium beauty
limited edition nature drives newness and encourages
consumers.
consumption. Image source: hermes.com Image source: The Beauty Look Book

© Euromonitor International
 H2 BEAUTY AND PERSONAL CARE UPDATE 23
23

Beauty players use partnerships to capture more detail in diagnosis stage

While many brands offer online quizzes or consultations,
smartphone-based skin diagnostics and virtual try-ons for
hair colourants and colour cosmetics, technology is evolving
to capture consumers’ individuality in greater detail. This
detail could range from detecting skin tones (eg Lancôme's
Shade Finder that detects 22,500 different skin tones) to
Image source: Packaging News analysing skin conditions on a par with dermatology
Clinique partnered with
equipment (eg Walgreens Boots Alliance’s No7’s Pro Derm
SharpEnd to incorporate Scan, which was developed with dermatologists).
Launched in April 2022,
NFC in its packaging, which
No7’s Pro Derm Scan Product packaging is also guiding personalised experiences,
leads to a personalised
makes recommendations as seen in Clinique’s Moisture Surge Gel Cream 100H
diagnosis for skin health
for best-suited skin care packaging. This incorporates near field communication (NFC)
(above) while a skin analysis
and colour cosmetics.
tool checks more than 80 technology, which allows consumers to read the label on
Image source: boots.com
data points on a user's face their smartphones, answer questions about their living
in a single scan. environment and lifestyle, and access virtual skin analysis
L'Oréal's Coloright also
includes cartridges and tool Clinical Reality – a virtual skin analysis tool that offers
colourants that can be customised skin care and make-up tips.
customised with more than
1,500 colours. L'Oréal Groupe features mass customisation brand Color&Co,
and also launched Coloright in 2022, an AI hair colour system
Image source:
consumergoods.com that measures hair colour, percentage of grey hair, length,
Image source: Clinique density and other factors that affect the hair colouring.
© Euromonitor International
 H2 BEAUTY AND PERSONAL CARE UPDATE
Key findings
Q4 2022 forecast shows
upgrade in global beauty for
2022, but downgrade from
baseline
2022 and 2023 growth
notably driven by habit
persistence
Rising inflation adds
pressure on discretionary
spend, while price changes
suggest a peak, for now
Skin health a key part of H2
2022 business activity, while
wellness demand expected
to accelerate in Q4 2022
© Euromonitor International
24
24
High commodity prices and supply chain disruptions caused by the war in Ukraine and
shutdowns in China amid its zero-COVID policy continue to set the global economy on a course
of slower growth and high inflation. As a result, the Q4 2022 update shows an upgrade for
2022 from Q3, but a notable downgrade compared to a more optimistic baseline projected in
April 2022. China’s recent changes in zero-COVID policies foretell future optimism.
In 2022 and 2023, habit persistence will account for a notable segment of growth, particularly
affecting hair care, skin care and fragrances—suggesting that consumers are sustaining their
pandemic-induced routines. However, players in other categories where habit persistence is
less of a driver (eg colour cosmetics and sun care) can leverage “skinified formulas” and anti-
ageing benefits to overcome these challenges.
Although median online price changes indicate consumer price inflation is reaching a peak,
tightening consumer spending, due to high inflation, rising costs of essential goods and energy,
may chip away at post-COVID-19 gains in beauty and personal care. Survey results and pricing
analysis suggest that the inflation impact varies across markets, categories and tiers. Opposing
motivations (eg post-pandemic indulgence to spend more vs trading down to private label)
suggest that the inflation impact is not a straightforward issue.
AmorePacific’s acquisition of Tata Harper, Church & Dwight Co Inc’s acquisition of Hero
Cosmetics, and Kosé’s focus on personalisation highlight the continued attractiveness of clean
beauty and wellness-positioned brands. Wellness and self-care will be top of mind as we move
into Q4 2022 amid a backdrop of worsening macro, pricing, and supply chain conditions.
 H2 macroeconomic update

© Euromonitor International
 H2 MACROECONOMIC UPDATE 26
26

Global growth outlook continues to worsen amid rising recession risks

The global economy faces an increasingly bleak outlook due to a multitude Global Real GDP Growth Baseline Forecast 2019-2023
of headwinds. The disruptive and destabilising impact of the ongoing war in %
10.0
Ukraine has fuelled high inflation and thereby triggered a widely spreading 4.9
3.9
cost of living crisis. In turn, central banks globally have reacted with tighter 5.0 2.6
1.0 0.8 0.6
monetary policy to combat rising prices, yet with negative implications for 0.0
economic activity. Growth in China, although less impacted by inflation, has -5.0
weakened considerably due to economic pressures resulting from the
country’s pursuit of its zero-COVID policy. Against this backdrop, better-than- -10.0
World Developing Advanced US China Eurozone
expected and strong economic performances in India and Indonesia in 2022 Economies Economies
remain the exception, as the global economic outlook steadily worsened
2019 2020 2021 2022 2023
between Q1 and Q4 2022. This is reflected in Euromonitor’s Q4 2022
baseline which saw a downward revision of global real GDP growth to 2.9% Global Real GDP Growth: Baseline vs Scenario Forecasts
in 2022 and 2.6% in 2023. 2019-2023
Real GDP growth,%
The eurozone and US face significant recession risks as both economies 8
6
grapple with high inflation, declining consumer purchasing power and tighter 4
2
monetary policy. Downside risks remain high, particularly in view of 0
uncertainties around Europe’s energy crisis and over-tightening of monetary -2
-4
policy in the US, with both scenarios potentially causing severe downturns. 2019 2020 2021 2022 2023
China’s economy is also under growing pressure due to its zero-COVID policy
Euromonitor Baseline Global Stagflation C19 Pessimistic
and a slowdown of its vast real estate sector. Thus, with the main economies Source: Euromonitor International Macro Model (updated 10 October 2022)
facing growing challenges, the global economic outlook continues to worsen. Note: Data from 2022 onwards are forecasts. Regional real GDP growth using PPP
weights
© Euromonitor International
 H2 MACROECONOMIC UPDATE 27
27

Persistent and broadening inflation significantly reduces consumer spending power

Inflationary pressures continue to rise in most economies globally due to rising commodity prices, labour shortages and some ongoing
supply chains issues. Therefore, Euromonitor International’s 2022-2023 inflation forecasts were revised upwards for most countries in Q4
2022 relative to predictions made in the last quarter. Inflation is expected to reach 10.6% in emerging and developing markets and 7.1% in
advanced economies in 2022. Plus, it is expected that, despite some pressures easing, inflation will remain high in 2023.
During the course of 2022, inflation has broadened beyond rising prices for energy and food. This is because manufacturers have
increasingly passed on mounting labour and input costs to consumers to protect their margins. Consequently, a wide array of goods and
services see higher prices. This, in turn, is undermining real income growth, consumer purchasing power and confidence, with particularly
severe implications for consumers in low-income countries. At the same time, central banks are raising interest rates to tame inflation,
thereby putting pressure on highly indebted countries and economic activity overall, thus worsening the global economic outlook for 2023.
Global Consumer Price Inflation Baseline Forecast 2019-2023
%
Retail Sales Index in Selected Countries 2020-2022
Y-o-y change
12.0 10.6
9.0 45%
10.0 8.0
7.3 7.8 30%
8.0 7.1
5.7
6.0 15%
3.8 4.0 4.1
4.0 2.5 2.6 0%
2.0 -15%

Nov 2020

Nov 2021
May 2020

May 2021

May 2022
Aug 2020

Feb 2021

Aug 2021

Feb 2022

Aug 2022
0.0
World Developing Advanced US China Eurozone
Economies Economies
2019 2020 2021 2022 2023 China US Germany UK
Source: Euromonitor International Macro Model and from national statistics.
Note: Data from September 2022 onwards are forecasts
© Euromonitor International
 H2 MACROECONOMIC UPDATE 28
28

Real GDP annual growth forecasts and revisions from last quarter
Country/Region 2020 2021 2022 2023 2024-2029 2022 Revision 2023 Revision
( %, percentage points)
Advanced Economies -4.5 5.2 2.2 1.0 1.6 -0.4 -0.7
US -3.4 5.7 1.7 0.8 1.6 -0.8 -0.5
Eurozone -6.4 5.4 2.6 0.6 1.3 0.0 -1.3
France -7.9 6.8 2.3 0.5 1.4 0.0 -0.8
Germany -4.6 2.9 1.3 -0.5 1.2 -0.3 -2.7
Italy -9.0 6.6 2.7 0.7 0.9 0.2 -0.8
Spain -10.8 5.1 4.0 1.7 1.4 0.0 -0.8
UK -9.4 7.4 3.1 0.5 1.5 -0.1 0.0
Japan -4.6 1.6 1.3 1.4 0.7 -0.2 0.1
South Korea -0.8 4.0 2.5 2.0 2.1 0.0 -0.3
Developing & Emerging Economies -2.0 7.0 3.3 3.9 4.1 0.0 -0.1
China 2.2 8.8 3.6 4.9 4.3 -0.4 0.1
Russia -2.9 4.2 -8.0 -2.5 1.3 1.3 0.0
India -6.9 8.7 7.3 6.1 6.1 0.1 0.0
Brazil -4.2 4.7 1.4 1.0 2.0 0.9 -0.3
Mexico -8.2 4.8 1.7 1.4 2.1 0.0 -0.6
Indonesia -2.0 3.7 4.9 4.8 5.0 0.2 0.0
Turkey 1.8 11.0 3.0 2.7 2.8 0.0 0.0
© Euromonitor International
 About our industry forecast model

© Euromonitor International
 ABOUT OUR INDUSTRY FORECAST MODEL 30
30

Beauty and personal care data and reporting timeline

• April 2022 Annual research update of Passport Beauty and Personal Care, 2022 edition
Report: Voice of the Industry: Beauty and Personal Care
Report: Resealable and Refillable Packaging in Western Europe
• May 2022 Macroeconomic data and 5-year forecast scenarios updated (Q2 2022)
Report: World Market for Beauty and Personal Care
• June 2022 Report: Impact of the War in Ukraine on Health and Beauty in Russia
• July 2022 Report: Hand Sanitisers: The Story Ahead

• August 2022 Macroeconomic data and 5-year forecast scenarios updated (Q3 2022)
Report: Generation Z Beauty Consumer: Core Values, Opportunities, and Role in the Digital
Beauty World
• September 2022 Report: The Fragrance Phenomenon: Opportunities Post-Pandemic
• October 2022 Macroeconomic data and 5-year forecast scenarios updated (Q4 2022)

• November 2022 Report: Where Consumers Shop for Beauty and Personal Care
Report: The Fragrance Phenomenon: Redefining Values and Priorities
Report: Voice of the Consumer: Beauty Survey 2022 Key Highlights
• December 2022 Report: Competitor Strategies in Beauty and Personal Care

© Euromonitor International
BEAUTY AND PERSONAL CARE: HALF-YEAR UPDATE 2022

For further insight please contact

Kayla Villena
Head of Beauty and Personal Care
Kayla.Villena@euromonitor.com
https://www.linkedin.com/in/kaylagvillena/

© Euromonitor International
BEAUTY AND PERSONAL CARE: HALF-YEAR UPDATE 2022

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