Premium beauty market set to thrive according to McKinsey study
By Eva Morletto12 juin 2023
The premium beauty market is expected to reach 580 billion euros within the next four years, with an annual growth rate of +8% in the luxury segment, according to McKinsey & Company. Cosmetic e-commerce is forecasted to experience an annual growth rate of 12% by 2027.
McKinsey & Company recently released a report titled "The State of Fashion: Beauty" highlighting the strong potential of the premium beauty market in the coming years. According to the study, this promising sector could achieve an annual revenue of around 580 billion euros over the next four years.
Last year, major cosmetics and haircare brands generated a global revenue of approximately 430 billion euros, as estimated by McKinsey. While the overall cosmetics market is experiencing an annual growth rate of +5%, the luxury segment is seeing even stronger growth, reaching around +8% per year. This growth rate is higher than those observed in other high-end consumer sectors such as fashion, footwear, eyewear, or gastronomy.
Multiple factors contribute to this growth and optimistic forecasts for the horizon of 2027. Increasingly, prominent fashion houses are making significant investments in the beauty segment. Renowned brands like Hermès, Gucci, and Valentino are diversifying into this sector, offering their customers the assurance of quality products and facilitating their entry into the highly competitive beauty market.
In terms of geographical regions, the Middle East and Africa are gradually revealing their potential, with a projected growth rate of +12% by 2027 according to McKinsey.
In this context, the online market has become highly competitive, with online cosmetic sales quadrupling between 2015 and 2022 across all brands. This trend is expected to continue, with a forecasted annual growth rate of 12% by 2027, further strengthening the market share occupied by e-commerce, currently estimated at 20% across all sales channels.
China and the United States, whose markets have been respectively affected by the pandemic and inflation, are also expected to recover in the upcoming financial periods. The Chinese market, in particular, is anticipated to rebound as it alone represents a 96 billion euros sector for the industry.
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