Sales of prestige beauty products in the U.S. reached $17.7 billion in 2017, a 6 percent increase over the previous year, according to The NPD Group. The fastest growing segment was skin care, which grew 9 percent, reaching $5.6 billion in sales and contributing 45 percent of the industry’s total gains.
“Change was the theme of the beauty industry in 2017, from the shifts in trends and category performance, to the wave of mergers and acquisitions which show no signs of abating in the near future,” said Larissa Jensen, Executive Director and Beauty Industry Analyst at The NPD Group. “The industry has not only adapted to this change, but has continued to achieve strong and consistent growth, as it has seen for the last few years. We can expect change to continue to be the catalyst of growth for the industry in 2018.”
Skin care growth was triggered by success realized by smaller segments, including masks (+32 percent), facial exfoliators (+12 percent) and cleansers (+6 percent), as well as other face products (+39 percent), which includes emerging formats, essences and facial sprays. Other segments, such as facial moisturizers (+7 percent), skin care’s largest by dollar volume, and age specialists (+7 percent), also performed well in 2017. Additional categories under skin care that experienced growth are body, sun and hair care.
Makeup grew 6 percent to $8.1 billion in 2017, and remains beauty’s largest category, bringing the most dollar volume to the industry. Growth was driven by high volume segments including foundation (+7 percent) and eye shadow (+13 percent), as well as other face products such as bronzers, highlighters and glow products. Sales were also positive for other key segments like face primers (+17 percent), concealer (+10 percent), eye brow makeup (+7 percent) and lip color (+2 percent).
Fragrance sales lifted 4 percent to $4.0 billion in 2017. Niche areas such as natural and artisanal fragrances grew 32 percent and 14 percent, respectively. Within the category, the home scents market is booming, and reached $80.4 million (+ 59 percent). Other areas of growth include candles (+56 percent) and the smaller segment of home ancillary gift sets (+165 percent) which include candle and reed diffuser gift sets.
The prestige beauty industry ended the fourth quarter strong in 2017. During the holiday season, beauty was the growth leader during various weeks including Thanksgiving/Black Friday. Top sellers were false eyelashes, lip gloss, skin care sets and kits, as well as home ancillary gift sets. Overall, fragrance juices brought in the most dollars for the entire holiday season driven entirely by Christmas week, followed by makeup and skincare face products, which showed consistent growth throughout the holiday season.
“As beauty brands and retailers look to understand ‘what’s next’ to keep the momentum going, their focus should be on developing new and alternative ways to engage with consumers. Amidst the news headlines around store closures and challenges facing traditional department stores, it’s important to remember that brick-and-mortar is a critical component to driving growth,” said Larissa. “We’re seeing more brands enhance their in-store interaction with consumers through pop-up, pop-in, and other experience stores, and we expect this will accelerate in this new year.”
For full-year 2017 beauty market performance and insights, be sure to attend CEW’s upcoming State of the Industry and Forecast featuring NPD, Nielsen and Mintel. To purchase tickets, please click here.