The Beauty Business Keeps Growing But It’s Missing A Huge Opportunity

Last year the beauty industry had $570 billion in worldwide revenue, the industry grew by 9.3% and is forecasted to grow by 8.4% per year through 2028, according to Euromonitor International.

Numbers like that don’t happen in most sectors and especially when they’re already as large as the beauty industry is now. So it’s no surprise that the business continues to attract investors seeking growth who are paying high values, even for smaller companies.

The high prices paid for beauty companies continues to draw entrepreneurs into the space. In turn, they create a continuous stream of startups that attract the interest of even more investors. The cycle keeps building; consumers want newness, entpreneurs create startups, investors invest. As long as consumers want what’s being offered, it can go on for a long time.

What Will Consumers Want?

For some time, consumers worldwide have spent more on skincare than on any other part of the beauty business. It’s clearly what they wanted until now.

The focus on skincare has also worked well to facilitate online purchasing because, unlike so many cosmetics, you don’t need a beauty bar to decide whether to buy.

But growth in other subsectors, including color cosmetics, fragrance, deodorants, suncare and men’s grooming, are forecasted to be higher than skincare growth through 2028, according to Euromonitor’s presentation at the Beauty Matter Future Fifty event last week.

Even more than the faster-growing product categories, when you dive into what consumers say they’re interested in, you start to see a focus away from how traditional beauty products have been created and sold.

Euromonitor asked consumers about their perceptions of health and wellness. A majority of consumers said “being healthy” meant mental wellbeing, feeling good, having a healthy immune system, emotional wellbeing and absence of disease.

A whopping 80% or more said they would pay more for personalized products based on DNA testing or detailed hair or skin diagnosis, a medical endorsement or a medicated formulation. But most beauty and wellness products aren’t sold that way. So many consumers want it and will pay for it but they’re not getting it.

The top medical concerns for older consumers were menopause and joint/muscle pain while for younger consumers it was stress, anxiety and menstrual pain.

But when industry respondents were asked the most important new product or service launches in the most recent year, the greatest number (over 40%) said new formulations and sustainable packaging.

The Disconnect And The Opportunity

The beauty industry markets products to help consumers look better but in the last few years and especially as the focus on skincare has grown, the marketing focus has been on health, wellness and healthy looking skin.

But consumers’ interest in health and wellness is focused on things that the beauty industry isn’t paying attention to. It’s an opportunity missed.

Consumers want real, proven solutions for medical and emotional issues. But the industry is focused on new formulations for existing products.

The industry’s approach will continue to generate success for quite a while. But it misses a huge opportunity.

There are numerous startups using DNA and hair/skin analysis to create deeper and personalized solutions. The big players are dipping their toe in the water but the younger, smaller companies are much more focused on it.

What those companies are doing will resonate with consumers because it addresses the wellness issues consumers care about. The large beauty companies could do it too but they’d have to pivot towards wellness inside the human body and not just on the surface.