The Prestige beauty was on a hot streak in 2023.
According to Circana’s annual data, prestige sales increased by 14 percent in 2023, reaching $31.7 billion. This contrasts with mass markets’ modest dollar gains of 6 percent.
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“Prestige beauty has been on a double-digit growth trajectory over the last several years,” said Larissa Jensen, Circana’s vice president of beauty and industry advisor. “Generally, prestigious units grew in every category. This is more interesting than dollar sales because it appeals to demand. “The growth we see on the mass side is primarily due to higher prices.”
Jensen said the data revealed that consumers are trading in category segments with similar price points across the two channels, such as cleansers, sun care and body products. “Consumers generally trade in segments where average prices are close between mass and prestige. “But if you look at the growth of something like facial moisturizers, they’re almost the same across mass and prestige,” he said. “Consumers remain loyal in sub-segments where you see big price differences.”
In makeup, prestige sales increased 15 percent, while bulk sales increased only 6 percent. In fragrance, prestige and mass gains were 12 percent and 4 percent, respectively. Skin care increased by 14 percent in terms of prestige and 11 percent in terms of mass, while hair sales increased by 14 percent and 6 percent in terms of prestige and mass, respectively.
Much of the mass growth came from skin care and makeup; These were the only two categories that also showed growth in unit sales. Jensen said lip oils are an emerging player in lip makeup, growing at twice the rate of prestige makeup in general. Hand soap is also emerging as the star performer, and scalp care continues to be an important factor in hair.
Gift sets were the fastest growing segment in perfume; this was indicative of a greater trend towards miniature sizes and high-value products. Accordingly, the body spray market has tripled.
“Mass” brands, which Jensen defines as those with mass pricing and prestigious positioning and distribution, are also driving growth. “When you look at the performance of these brands, they grew by 16 percent,” he said. “Prestige brands are growing by 12 percent and mass brands are growing by 9 percent.”
He noted that mass consumers demonstrate greater channel loyalty, with 94 percent of prestige beauty brand buyers also cross-shopping in the mass channel. “Shoppers are moving back and forth between premium and value,” Jensen said. “This may explain why masstige brands that offer a premium image at a valuable price point are growing the strongest.”
Social media remains a major driving force, and the emergence of a culture of deception has also contributed to the success of these mid-range price points.
“Social media continues to be a big driver of trends, and some of the growing brands have gone viral,” Jensen said. “For example, a body spray is a much more reasonable request than a luxury perfume.
“Social media plays a role here because you have consumers and dermatologists on TikTok saying, ‘Oh, this is what works after all.’ Consumers have learned over time through social media and other education that you don’t have to pay to get a lot of results,” Jensen continued. .
Consumer interest in beauty remained high; This is due to the spending power of both Generation X and Boomer Generation and the social media obsession of Generation Z consumers. “If you look at prestige beauty spending by households earning over $100,000 annually, households with children under 18 increased their beauty spending by 16 percent,” he said. “Childless households increased by only 6 percent.”
Beauty is growing at both ends of the age spectrum. As reported, Generation X outperforms both Boomers and Generation Z by 44 percent and 18 percent, respectively.
“When we look at the demographic distribution, we see that a large share comes from older consumers,” he said. “We cannot ignore this consumer. While we tend to focus on younger consumers because everyone is a consumer of the future and you want to earn their loyalty, we cannot do this at the expense of older consumers. The US is a demographically younger country, and so globally older consumers represent a larger share of sales in most countries. “They are even more important in other countries in terms of size.”
Over the next year, Jensen is keeping an eye out for the smell, which he describes as “the canary in the coal mine.”
“We’re starting to see a shift in fragrance from super luxury to value, and that makes me think it’s going to happen in 2024. We’re optimistic about prestige beauty, but I think there’s going to be a significant slowdown, especially in fragrance. Think about the growth rates of the last few years,” Jensen said. “2024 is probably going to be it.” “This will be the year we see the decline.”
Jensen said shoppers are still overwhelmingly shopping in brick-and-mortar rather than online, and that’s true across categories. “When we see the dollar share of e-commerce compared to the physical store, while e-commerce remains relatively stable, the physical store is actually gaining share not only in terms of prestige, but also in the mass channel.” said.
“We are more of a hands-on, brick-and-mortar store industry,” Jensen said. “It’s important for brands and retailers to recognize that yes, that omnichannel strategy is incredibly important, but you can’t lose sight of the fact that you need to allocate your spend to where the consumer is shopping.”
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