We presented this deck to a full house at in-cosmetics North America in New York City on 8 September 2016, examining how self-expression and individualism are impacting consumer buying habits in colour cosmetics, consumer interactions with social media and attitudes about natural products as well as trends in premium v. mass products including masstige, fragrances, packaging and men's grooming.

1. PREMIUM OPPORTUNITIES: US MARKET TRENDS AND THE
CHANGING CONSUMER LANDSCAPE
AMANDA HARTZMARK
SEPTEMBER 2016

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Euromonitor International
INTRODUCTION

3. OVERVIEW OF GLOBAL AND US MARKETS
PREMIUM AND THE NEW CONSUMER CONTEXT
KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND
FRAGRANCES
CONCLUSIONS

4. OVERVIEW OF GLOBAL AND US MARKETS
PREMIUM AND THE NEW CONSUMER CONTEXT
KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND
FRAGRANCES
CONCLUSIONS

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Colour cosmetics, hair care and skin care lead global sales
OVERVIEW OF GLOBAL AND US MARKETS

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North America sees highest regional growth
OVERVIEW OF GLOBAL AND US MARKETS

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Premium beauty defies expectations in a cool industry climate
OVERVIEW OF GLOBAL AND US MARKETS
4%
CAGR for global
premium beauty
and personal care
growth to 2020
50%of total premium
beauty revenues
by 2020 will be
generated by US
and China

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Premium helps U.S. outpace global beauty growth across categories
OVERVIEW OF GLOBAL AND US MARKETS
2015 U.S. Beauty & Personal Care Value Sales and Growth by Category

9. OVERVIEW OF GLOBAL AND US MARKETS
PREMIUM AND THE NEW CONSUMER CONTEXT
KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND
FRAGRANCES
CONCLUSIONS

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Consumers flex their power
PREMIUM AND THE NEW CONSUMER CONTEXT

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Consumer changes transforming beauty
PREMIUM AND THE NEW CONSUMER CONTEXT
Lifestyle
Diversity
Niche
products
Digital

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Fitness Paramount
Sustainability & Ethical
Products
Trends from Foods
Focus on active, balanced lifestyle promotes holistic approach to beauty
PREMIUM AND THE NEW CONSUMER CONTEXT

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Diversity has spurred growth of niche products that offer better results
based on age, culture, ethnic group

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Lifestyle shifts and diversity inspire new product concepts
PREMIUM AND THE NEW CONSUMER CONTEXT
Sensorial: cooling,
energising, calming,
mood-enhancing
Multipurpose
Active-wear
Urban-wear
Active lifestyle
Small pack sizes
On-the-go formats
Natural ingredients
Activated/ bamboo
charcoal
‘Clean’ label
Food ingredients:
oats, nuts, yoghurt,
rice, honey
Lighter textures
Easy application
formats
Solution-based:
anti-redness, anti-
strain, anti-stress,
detoxifying
Healthy
Ethical
Holistic
Ingredient inspiration
Product positioning
Product benefits

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50%
of survey
participants in the
US said the bought
products that were
suited especially
for their hair type
PREMIUM AND THE NEW CONSUMER CONTEXT
Niche brands buoyed by consumer demand for unique, customized products

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Digitally influenced consumers tend to have more extensive routines
PREMIUM AND THE NEW CONSUMER CONTEXT
Note: Minimalists (0-3 skin care products
used weekly) , Moderates (4-7 skin care
products used weekly), Extensives (8-14
Skin care products used weekly)
Note: Minimalists (0-1 hair care products
used weekly), Moderates (2-3 hair care
products used weekly), Extensives (4-7
hair care products used weekly)
Note: Minimalists (0-1 colour cosmetics
products used weekly), Moderates (2-6
colour cosmetics products used weekly),
Extensives (7-16 colour cosmetics
products used weekly)

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Consumers’ priorities have been redefined
PREMIUM AND THE NEW CONSUMER CONTEXT
Digital &
Diversity =
Innovation
Lifestyle =
Multi-benefit
Experience
& Niche
Products =
Premium
The New
Consumerism
and Premium
Products

18. KEY TRENDS IN US AND GLOBAL MARKETS
PREMIUM AND THE NEW CONSUMER CONTEXT
KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE
AND FRAGRANCES
CONCLUSIONS

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19KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND FRAGRANCES
Eye, face and lip products see highest growth in colour cosmetics
Premium Mass

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20KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND FRAGRANCES
Premium products and BB&CC creams lead in facial cosmetics
Premium Mass

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Sephora introduces South Korean BB Cream brand
Dr. Jart+ to the U.S.
Over 15 BB/CC creams launch in the U.S
BB/CC Creams grow 61% (constant value)
Packaging innovations launch
Innovation spurs growth in premium facial cosmetics
KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND FRAGRANCES
2011
2012
2013
2015
93% 17%US Premium BB/CC
Creams CAGR 2011-
2015
US Premium BB/CC
Creams CAGR 2015-
2020

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22KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND FRAGRANCES
Premium mascara, eye shadow and liner push eye category forward
Premium Mass

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Eye cosmetics: Safety and longevity drive growth
KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND FRAGRANCES
2015
Growth
• Premium Mascara – 11%
• Premium Eye Shadow – 7%
• Premium Eye Liner/Pencil – 11%

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24KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND FRAGRANCES
Trends spur growth in premium and mass other eye makeup
Premium Mass

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Brow cosmetics: Boldness drives growth
KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND FRAGRANCES
Boldly Bushy Boldly Defined
MaybellineNewYorkEyeStudioBrowDefine+FillDuo—6/2015
CliniqueJustBrowsingBrush-OnStylingMousse—8/2015
AnastasiaBrowDefiner—1/2016
BurberryEyebrowDefinerlaunched—9/2015

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26KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND FRAGRANCES
Premium lipsticks and liner lead lip category
Premium Mass

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Variety drives growth in lip cosmetics
KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND FRAGRANCES

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Skin care: Premium growth with a twist
KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND FRAGRANCES

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Korean Beauty innovations still drive growth
Successful skin care products feature natural, innovative
ingredients
Niche brands continue to gain market share
Innovation still key, ingredients king in skin care
KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND FRAGRANCES
Formulations Textures
Formats &
Technology

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Premium skin care buyers more results-oriented, experimental
KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND FRAGRANCES

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Fragrance: Premium niche brands drive growth
KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND FRAGRANCES
Personalization through layering

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Jo Malone and Tom Ford exemplify layering & niche trends
KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND FRAGRANCES

33. KEY TRENDS IN US AND GLOBAL MARKETS
PREMIUM AND THE NEW CONSUMER CONTEXT
KEY GROWTH DRIVERS IN COSMETICS, SKIN CARE AND
FRAGRANCES
CONCLUSIONS

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Power to premium
CONCLUSIONS
2011 2015 2020
Premium Value Sales
($US billion, constant)
$20 $23 $28
Premium Penetration
(% Value)
32% 34% 37%
US$5 Billion
U.S. premium beauty
growth through 2020
Premiumisation of U.S. Beauty and Personal Care Market Forecasted to Continue

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Future of U.S. premium beauty: Growth-driving categories
CONCLUSIONS

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Fragrances: Growth categories
CONCLUSIONS
2015-2020 Premium Fragrance Growth (constant value) = US$1 Billion
Premium Unisex
2015-2020 CAGR:
15%

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Strong digital influence on premium purchases
CONCLUSIONS

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Macroeconomic Factors Evolving Retail Channels Success of Niche Brands
Evolving trends and opportunities
CONCLUSIONS
Source: Mike Mozart
• Newly-flush
consumers seek
affordable luxury
• Premium beauty:
Gateway purchase
• Rise of masstige
• Well-informed
consumers
• Physical customer
engagement
• Internet retailing,
the great equalizer
• Millennials usher in
era of individualism
• Foreign brands
garner attention
• Acquisitions: Large
companies take note
of niche

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Quality of products remains important
Focus on wellbeing, health
Uniqueness prized
Consumer experience in store and online is the key to
future growth
CONCLUSIONS
Key takeaways

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THANK YOU FOR LISTENING
Amanda Hartzmark, Ph.D.
www.euromonitor.com
¡MUCHAS GRACIAS!Thank You!
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