by Prestige beauty was on a hot streak in 2023.
According to annual data from Circana, premium sales increased 14 percent in 2023, hitting $31.7 billion. That contrasts with modest mass market dollar gains of 6 percent.
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“Prestige Beauty has been on a double-digit growth trajectory for the past few years,” said Larissa Jensen, VP of beauty and industry consultant, Circana. “For the most part, across all categories, prestige units have increased. That’s stronger than dollar sales because it speaks to demand. The growth we are seeing on the mass side is primarily driven by higher prices.”
Jensen said data shows consumers are trading up in category segments that carry similar price points between the two channels, such as cleansers, sun care and body products. “Consumers are generally trading up in segments where average prices are close to mass and prestige. But if you look at growth in something like facial moisturizers, they’re almost the same between mass and prestige,” she said. “Consumers remain loyal in those sub-segments where you see big price differences.”
In makeup, premium sales climbed 15 percent, while gross sales grew only 6 percent. In fragrances, prestige and mass gains were at 12 percent and 4 percent, respectively. Skin care increased by 14 percent in quality, and 11 percent in mass, while hair sales increased by 14 percent and 6 percent in quality and mass respectively.
in mass, most of the growth came from skin care and makeup; they were the only two categories to also grow in unit sales. Jensen said lip oils are an emerging player in lip makeup, growing at twice the rate of premium makeup overall. Hand soap is also emerging as a star player and scalp care remains a key driver in hair.
For fragrances, gift sets were the fastest growing segment – reflecting a larger trend towards smaller sizes and higher value products. As a result, the body spray market tripled.
The “mass-stige” brands, which Jensen defined as those with mass pricing and prestige positioning and distribution, are also driving growth. “When you look at the performance of those brands, they grew 16 percent,” she said. “Prestige brands are growing 12 percent, and mass brands are growing 9 percent.”
She noted that mass consumers have shown greater channel loyalty, but 94 percent of buyers of prestige beauty brands are also cross-shopping in the mass channel. “Shoppers are balancing between premium and value,” Jensen said. “That could explain why the masstige brands, which offer the premium image at a value price point, are growing the strongest.”
Social media remains a key driver, and the advent of dupe culture has affected the success of those middle ground price points.
“Social media is still a big driver of trends, and some of the brands that are growing have gone viral,” Jensen said. “For example, a body spray is a much more reasonable issue than a luxury perfume.
“Social media plays a role here because you have consumers and dermatologists on TikTok saying, ‘Oh, well, at the end of the day, this is what works.’ 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 engagement with beauty has remained high, driven by the spending power of Gen X and Boomers and the social media obsession among Gen Z shoppers. last year, families with children under the age of 18 grew their beauty spending by 16 percent,” she said. “Those families without children increased by only 6 percent.”
There is growing beauty on both ends of the age spectrum. As reported, Gen X outnumbers Boomers and Gen Z by 44 percent and 18 percent respectively.
“When we look at the demographic breakdown, a lot of share is coming from an older consumer,” she said. “We cannot ignore this consumer. While everyone tends to focus on the younger consumer because that’s the consumer of the future and you want to hold their loyalty, we can’t do that at the expense of the older consumer. The US is demographically a younger country, so globally, older consumers account for an even larger portion of most countries’ sales. They are even more important in other countries, in terms of size.”
For the year ahead, Jensen is keeping an eye on the fragrance, which she describes as “a canary in a coal mine.
“We started to move towards value from super-luxury fragrances, and that makes me think that will happen in 2024. We are optimistic about prestige beauty, but I think there will be a significant slowdown, especially when you expected consider growth rates in recent years,” Jensen said. “2024 is probably the year we’ll see that pullback.”
Shoppers are still largely shopping in brick and mortar rather than online, Jensen said, and that’s across categories. “When we look at the dollar share of e-commerce versus brick-and-mortar, e-commerce is pretty steady, and brick-and-mortar is really gaining share — not just in prestige, but also in the mass channel,” she said.
“We’re very much a hands-on, physical store industry,” Jensen said. “It’s important for brands and retailers to recognize that yes, this omnichannel strategy is very important, but you can’t see that you have to allocate your spend to where the consumer is shopping.”
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