I thought the Beauty Brains community might be interested in this article I wrote on the cosmetic industry. Sometimes a little peek behind the curtain can be helpful…
Worldwide Cosmetic Market
If you look at the entire worldwide cosmetic industry, sales reach about $170 Billion dollars a year. It’s distributed pretty uniformly around the world with ~$40 billion in the Americas, ~$60 billion in Europe, ~$60 billion in Australia & Asia, and another $10 billion in Africa. The Western world spends a bit more per person but India and Asia are quickly catching up.
5 Primary Cosmetic Segments
So now that you know where all the money is spent, it’s helpful to know what people are spending their money on. The cosmetic industry (aka beauty industry or personal care industry) can be broken down into 5 segments. Sales are distributed roughly by the %’s given.
- Hair Care – 20%
- Skin Care – 27%
- Fragrance – 10%
- Make-up – 20%
- Other – 23%
Market researchers like to break these up into even more segments but these 5 cover everything.
Hair Care Market
About 20% of all cosmetic products sold are for the hair. Shampoos make up the vast majority of this market since almost everyone uses shampoo. Other significant market segments include conditioners, styling products, hair color, and relaxers. Currently, the biggest players in this category are Procter & Gamble (Pantene) and L’Oreal.
Skin Care Market
The range of products that are offered for the skin care market are much more diverse than the hair care market. Skin care makes up about 27% of the total cosmetic industry and includes skin moisturizers, cleansers, facial products, anti-acne, and anti-aging products. Of all the cosmetics, skin care products can be some of the most expensive with 2 ounces of product routinely selling for >$200. Women do not mind spending big bucks to keep their skin looking young.
The biggest companies in this market include Procter & Gamble (Olay) and Unilever (Vaseline).
The color cosmetic market represents about 15% of the cosmetic industry and includes anything from lipstick to nail polish. Included are things like blush, eyeshadow, foundation, etc. The array of products is vast and the number of color variations are practically infinite. You can spend a lot of time as a cosmetic chemist working on new shades of familiar products. The market is highly segmented so there isn’t really one dominant player. Maybelline an Clinique are just a couple of significant brands.
This market segment has really taken a hit in the last few years but it still makes up about 10% of the cosmetic industry so some companies are still making money. This is the highest profit segment of the cosmetic industry but consumers are fickle. Only a few brands (like Chanel #5) can last for a long time. Fine fragrances come and go like fashion and companies have to continue to reformulate just to compete.
The “other” category represents 23% of the cosmetic industry and is made up of things like toothpaste, deodorants, sunscreens, depilatories, and other personal care products not yet mentioned. Actually, many of these products could fall under one of the categories already mentioned but the industry likes to keep them separated whenever they do stories on the various markets. The dominant companies are many of the same already mentioned, P&G, L’Oreal, and Unilever.
While the cosmetic industry is considered a “mature” industry (that means business people don’t expect much significant growth) it is a pretty reliable industry. No matter what, people want to smell and look good so even when the economy hits a recession people will still buy soap. The recent economic conditions demonstrate, they do buy less, but they do keep buying.
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Interesting data. Well done gathering and articulating. As someone who is an Executive for one of the top brands listed I will say it is always amazing how consumer trends sustain over time.
Top categories in a recession will always be lipstick and fine fragrances while replenishment on Skincare does exist, it is less frequent.
All in all, women like to feel good and it is so fascinating to watch the consumer spending trends to gain insight into what makes women feel great and where they allocate their beauty dollar.
Well captured Beauty Business Brains!
Interesting! It’s easy to forget that when we talk about the cosmetic industry, we are not just referring to makeup. We are referring to all the products that are used by men, women, and children to enhance their appearance; promote the health of their skin, hair, nails, and teeth; and smell great while doing it 🙂
Hey Perry, you have shared good statistics of cosmetics. Beauty and cosmetics have become very big industry and nowadays people are using herbal and natural products. because they are afraid of long lasting side effects of chemical products in india among the top herbal and natural beauty product, product made up of Seabuck Thorn is in trend and its impact is awesome.