Sales of U.S. prestige beauty products reached $18.8 billion in 2018, a 6 percent increase over 2017, according to The NPD Group.

Breaking that down, the skin care category grew by 13 percent and contributed 60 percent of the industry’s total gains. Makeup, the industry’s largest category based on sales, grew 1 percent. Fragrance closed the year up 4 percent. Hair, was the smallest yet fastest growing category, with a 25 percent increase in sales.

“New retail concepts and technologies are changing the way we create, market, purchase and use beauty products. Brands and retailers must not only be cognizant of these transformations and act upon them, but identify new white space opportunities to captivate consumers and further differentiate themselves from the crowd,” said Larissa Jensen, Executive Director and Beauty Industry Analyst at The NPD Group.

Skin care sales netted $5.6 billion for the year, driven by the excitement around the naturals trend. Natural skin care accounted for $1.6 billion or more than one-quarter of annual sales, up 23 percent versus last year. Within facial skin care, the fastest-growing segments were lip treatments, toners/clarifiers, and all other face (which includes products such as facial sprays and alphabet creams). Body skin care products also experienced growth, along with sun products such as sunscreen and self-tanners.

Makeup sales reached $8.1 billion in 2018. Although it experienced soft growth, the category is showing potential, as the number of consumers using makeup reached 67 percent in 2018 – an increase of 6 percentage points over two years ago.* Among the fastest growing areas were makeup setting spray/powder and false eyelashes. Small remains a big opportunity in makeup, as travel size products grew faster than all others, up 29 percent versus last year.

Fragrance sales totaled $4.3 billion, driven by juices, which grew by 8 percent. Artisanal fragrance was the fastest growing aspect of the market. Growth in home scents slowed compared to last year, but diffusers were the fastest-growing in that market.

“Given the high adaptability of the beauty industry, I expect growth to continue in 2019, though it may be at a slower pace given the current economic uncertainties,” said Larissa. “I expect we’ll see an amplification of trends and themes that have already taken shape, including brand transparency, heightened importance of companies taking a stance on key social issues, as well as the evolution of experiential retail and pop-up concepts.”

In Q4, sales of U.S. prestige beauty products were up 1 percent, with makeup sales falling 3 percent and skin care growing to 6 percent, while fragrance remained flat. Although skin care outperformed makeup, industry analysts at Jefferies LLC noted that this may be a reflection of a mix down from prestige into masstiege as brands in the $12-$17 price range have delivered product newness, fresh marketing, and developed digital footprints similar to many prestige brands.

Overall, according to Jefferies, several factors that may have led to outsized growth vs. prior cycles for prestige beauty include population dynamics with millennials & GenZ outnumbering boomers; participation, led by make-up velocity; innovation, catalyzed by indie brands as barriers to entry reduced; specialty retail domains; digitization of marketing through social & influencers; and utilization of mobile devices with high def cameras and social media as a venue for personal story telling.

Source: The NPD Group / U.S. Prestige Beauty Total Measured Market, January-December 2018


*Source: The NPD Group / Makeup In-Depth Consumer Report 2018