Strong growth in makeup leads the way, NPD Group says

PORT WASHINGTON, N.Y. — A surge in cosmetics sales lifted the U.S. prestige beauty market last year, according to market research firm The NPD Group.

U.S. prestige beauty care product sales rose 6% to $17 billion in 2016, NPD Group reported. Makeup saw the most growth, up 12% year over year, and contributed 82% of the prestige sector’s overall gains, the researcher noted. Meanwhile, sales edged up just 2% in skin care and 1% in fragrances for the prestige market.

At the channel level, prestige beauty sales growth outpaced that of the U.S. mass beauty market, where Nielsen tallied 2% sales growth for 2016, according to NPD Group.

“The beauty industry has gained $1 billion for three consecutive years, and while this is something to celebrate, industry players must not get too relaxed. This is no time for walking; it is still very much a run,” NPD Group global beauty analyst Karen Grant said in a statement.

“A proliferation of trends has fueled growth and innovation in many aspects of the industry. However, it has brought with it a restructuring in beauty,” she explained. “As consumers seek feel-good experiences and strive for healthier lifestyles, they are at the same time redefining the meaning of beauty in their lives.”

For many, that has meant more makeup: Four out of every five dollars spent in prestige beauty was for cosmetics, NPD Group reported. In new prestige beauty product launches last year, cosmetics sales grew 24% to nearly $1 billion, while skin care and fragrances saw declines.

Products that help the face be makeup-ready were the market drivers in prestige skin care, including masks (24%), lip treatments (20%), facial cleansers (7%), and facial exfoliators (5%).

In the prestige fragrance category, sales of juices grew 2% in 2016. Flankers were a growth driver for this segment, generating 21% of total fragrance sales and 161% of fragrance gains, according to NPD Group.

Unlike in the prestige space, both makeup and skin care drove sales growth equally in the mass beauty arena, NPD Group noted. Skin care turned in greater gains in mass than in prestige, while fragrance sales were down for the mass channel in 2016.

“How consumers are using and choosing their beauty products is different today. More than ever, consumers are turning to beauty to look and feel their best,” according to Grant. “Across industries, services and experiences are on equal, if not higher, footing than products alone. These trends convey to us that there’s a shift in what makes consumers feel good, and how they are gifting to others.”

Holiday season prestige beauty sales reflected a restructuring in the space, NPD Group observed. Though the holidays historically have been seen as a perennial fragrance season, makeup is now leading. Prestige cosmetics sales climbed 12% in the fourth quarter of 2016, while prestige fragrance sales dipped 1%.

That shift impacted overall holiday performance for the prestige beauty arena, as dollar growth slowed to 5% in the fourth quarter from 7% in the 2015 quarter, NPD Group said. Still, prestige makeup sales generated nearly $525 million more than fragrances during the 2016 holiday season.

 “The top-performing brands today are social and community-driven. To be successful, brands and manufacturers need to look beyond the traditional retail channels and find more opportunities to adapt to the emerging trends,” Grant added. “They must recognize that it is not only important how many consumers are aware of your brand, but how many convert to it. Those that master this technique will thrive.”