Premium cosmetics include skin care, hair care, fragrances, and color cosmetics such as lotions, creams, toners, shampoos, hair conditioners, perfumes, makeup etc. Premium cosmetics are popular for their high-quality ingredients and formulations that deliver superior efficacy and sensory benefits. These products are of the highest quality, contain natural, toxin-free ingredients, and promise visible anti-aging results.
The global premium cosmetics market is estimated to be valued at US$ 123.39 Bn in 2023 and is expected to exhibit a CAGR of 6.1% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
Rising demand for luxury and organic premium cosmetic products has opened up lucrative market opportunities. Consumers, especially millennial, are increasingly willing to pay premium prices for natural and organic personal care products that are derived from plant-based ingredients without harmful chemicals. The organic premium cosmetics market is expected to grow rapidly owing to increasing health and environmental concerns. Manufacturers are launching organic skin care and beauty brands made from botanical ingredients to cater to this growing consumer demand. The demand for clean label and sustainable luxury premium cosmetics is urging companies to invest more in organic and eco-friendly formulations. This rising interest towards natural and organic premium cosmetic presents a major market opportunity for new product launches and business expansion.
Porter’s Analysis
Threat of new entrants: The threat of new entrants in the premium cosmetics market is moderate as it requires significant capital to establish global brands and distribution channels. New entrants also face competition from established global brands that have large marketing budgets and strong brand loyalty.
Bargaining power of buyers: The bargaining power of buyers in the premium cosmetics market is high as large retailers and online players control a major share of the distribution and can negotiate favorable terms with brands. Buyers also have many brands to choose from in the market.
Bargaining power of suppliers: The bargaining power of suppliers is moderate due to the availability of substitute ingredients. However, some luxury brands prefer exclusive partnerships giving suppliers some power over pricing and policies.
Threat of new substitutes: The threat of new substitutes is moderate as premium cosmetics have strong brand positioning and customer loyalty that protects from alternate products. However, new premium beauty brands and mass premium brands pose some threat.
Competitive rivalry: The competitive rivalry is high among global premium cosmetic brands to gain market share and retain customer loyalty through continuous innovations, marketing initiatives, and expanded product ranges.
SWOT Analysis
Strength: Premium cosmetic brands have strong brand equity, loyal customer base, global presence, innovation capabilities, and wide product portfolios. They use celebrity endorsements and digital marketing effectively.
Weakness: Premium cosmetics have high manufacturing and marketing costs that impact profits at times of economic slowdown. Some brands face issues around sustainability andingredient sourcing.
Opportunity: Growth opportunities exist in male grooming segments, organic and natural products, skin care, developing markets like Asia Pacific and Latin America, and expanding digital and omni-channel strategies.
Threats: Changing customer preferences towards indie brands, price competition from mass premium brands, regulations around ingredients, and economic downturns pose major threats.
Key Takeaways
The global premium cosmetics market is expected to witness high growth during the forecast period supported by rising disposable incomes, increasing spending on personal care, strong marketing by brands, and expanding retail channels globally. The global Premium Cosmetics Market is estimated to be valued at US$ 123.39 Bn in 2023 and is expected to exhibit a CAGR of 6.1% over the forecast period 2023 to 2030.
The Asia Pacific region dominates the premium cosmetics market with China, Japan, South Korea accounting for over 40% value share. The region is witnessing fastest growth led by expanding middle-class population, increasing demand for global brands, and beauty retail boom in major countries.
Key players operating in the premium cosmetics are L'Oréal,Estée Lauder Companies,Procter & Gamble,Shiseido,Coty,Chanel,LVMH Moët Hennessy – Louis Vuitton,Kering,Unilever,Beiersdorf. These brands are continuously expanding into skin care and male grooming segments, strengthening digital capabilities and using celebrity endorsements and CRM initiatives to foster customer loyalty.
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