May 18, 2024

Impact of COVID-19 on the Cosmetic Market: Adaptation and Recovery Strategies

Cosmetics Market is Estimated to Witness High Growth Owing to Growing Influence of Social Media and Digital Marketing

The cosmetics market is experiencing high demand owing to increasing disposable income, growing working women population, and rising social media influence. Cosmetics comprise a wide range of products including skincare, haircare, fragrances, color cosmetics, and others. These products are used to enhance the appearance and attractiveness of the users. Social media has been a major driver for promoting and marketing cosmetic brands. Digital marketing and social media influencers attract more customers, especially young adults and teenagers. The Global cosmetics market is estimated to be valued at US$ 438.5 Bn in 2024 and is expected to exhibit a CAGR of 5.3% over the forecast period 2023 to 2030.

Key Takeaways

Key players operating in the cosmetics market are L’Oreal S.A, Unilever plc., The Procter & Gamble Company, The Estee Lauder Companies Inc., Shiseido Company, Limited, LVMH Moët Hennessy, Kao Corporation., Oriflame Holding AG, Avon Products Inc., Revlon, Inc. Key players are focusing on product innovation and development of natural and organic cosmetic products. Online retailing and celebrity endorsements offer major opportunities in the global market. Growing adoption of advanced technologies such as augmented reality and artificial intelligence for product demonstration and virtual makeovers is expected to drive market growth.

Key opportunities in the market include rising disposable incomes in developing economies boosting premium products demand. Wide social media penetration is assisting brands to promote new products through influencer marketing. Growing working women population demanding premium quality cosmetic products for self-care is another major opportunity. Technological developments such as augmented reality for virtual makeovers and product visualization is attracting more customers.

Market drivers

The rapidly growing influence of social media is a key driver propelling the market. Platforms like YouTube, Instagram and TikTok have become major mediums for promoting and sampling new cosmetic products. According to a survey, over 80% of customers research products online before purchasing. Celebrity endorsements and social media influencers have made cosmetic brands highly accessible and aspirational. Growing working women population with increasing disposable incomes is another major factor augmenting cosmetic products demand in premium segments across the globe. Customers are willing to spend more on premium beauty and self-care products.

Current Challenges in Cosmetics Market
The cosmetics market is facing increasing challenges due to changing consumer preferences and rising awareness regarding ingredients used in cosmetic products. There is growing demand for natural and organic cosmetics with minimal chemicals. Strict regulations around the world regarding use of chemicals is also posing issues for brands. Supply chain disruptions caused due to Covid pandemic and Russia Ukraine war have drastically impacted the cosmetics industry. Rising inflation and economic uncertainty have made consumers more cost-conscious which is reducing their spending on cosmetic products.

SWOT Analysis
Strength: Wide product portfolio and brand loyalty of leading brands. Growing demand for premium luxury cosmetics from high income groups.
Weakness: Heavy reliance on few key markets like North America and Western Europe. Vulnerability to geopolitical issues disrupting supply chains.
Opportunity: Potential for growth in developing Asian markets like India and China. Demand for natural and organic products provide new opportunities.
Threats: Popularity of herbal and ayurvedic alternatives. Stringent regulations around the world on chemicals used.

Geographical Regions
North America and Western Europe account for around 50% of the global cosmetics market value currently led by huge demand from United States and Germany. However, fastest cosmetics market growth is expected from Asia Pacific region led by China, India and other Southeast Asian countries. Growing middle class population, rising disposable incomes and changing lifestyles is driving huge demand for skin care, color cosmetics and fragrances from Asia in coming years. Latin America and Middle East regions also offer major opportunities for cosmetics brands due to high consumption priority given to personal care products.

The cosmetics industry is witnessing rising opportunities from developing regions of Eastern Europe, Latin America and Africa where investment in cosmetics industry is steadily rising and consumer disposable incomes are growing at faster pace opening new opportunities.

*Note:

1.Source: Coherent Market Insights, Public sources, Desk research
2.We have leveraged AI tools to mine information and compile it