Dive Brief:
- Indicating steady demand for high-end beauty products, U.S. prestige beauty sales rose 8% year-over-year to $15.3 billion in the first half of this year, according to a Circana report. On the other hand, mass-market merchant sales were flat compared to last year.
- The strongest growth was in prestige fragrance, which saw sales rise 12% in the first half of 2024 compared to last year. Driven primarily by styling and treatment products, prestige hair care sales increased 10%, while high-end makeup and skin care brands rose 5% and 7%, respectively.
- Sales trends in the mass beauty market were noticeably worse in the first half of the year, with fragrance declining 1%, hair care increasing 2% and skin care edging up just 1%. Makeup performed the worst, declining by 4%.
Dive Insight:
Though sales growth among prestige brands outpaced their mass-market counterparts, there were some bright spots in the mass category. The demand among younger shoppers for luxury scents, for example, is driving sales for dupes of high-end fragrances. Private-label scents, which are promoted as affordable alternatives to prestige fragrance brands, saw a 50% jump in sales in the first half of this year, Circana found in its analysis.
Though fragrance sales primarily occur in stores, previous Circana research suggests that consumers are increasingly buying their scents online. In its December 2023 report, Circana found that online sales of prestige fragrance brands were almost twice the rate of physical store sales from the early fourth quarter until Dec. 2. For the first half of this year, though, prestige hair care was the only category where the majority of sales are occurring online, Circana noted.
“An accelerated bifurcation is emerging in the beauty industry highlighted by the continued strong growth in prestige in relation to the mass market,” Larissa Jensen, global beauty industry adviser at Circana, said in a statement. “Within prestige, drivers of growth point to a similar pattern, indicative of a consumer who is seeking elevated value. Optimizing these opportunities will vary as consumers’ approach to beauty spending differs by demographic – from attitudes and usage, to purchase influencers and shopping preferences.”
The growth spurt in prestige beauty sales is not unique to this year. Last year, prestige beauty brand sales jumped 14% year over year, according to a Circana report. While high-end hair care and skin care brands each saw their sales rise by 14% year over year, luxury makeup sales increased by 31% from the previous year, Circana’s previous report found.
Previous research also suggests consumers are splurging on cosmetics, despite cutting back elsewhere. In the first five months of this year, shoppers spent $16.3 billion online on cosmetics, an 8.8% bump year over year, an Adobe Analytics report found.
Prestige beauty sales are also key to Ulta Beauty’s future growth. In May the company reported a 3.5% bump in net sales to $2.7 billion, but expressed concerns over market share loss as more prestige beauty stores open. Ulta Beauty CEO Dave Kimbell said the retailer lost prestige beauty share in stores, but not online.
