The NPD Group Reports on the State of the U.S. Prestige Beauty Industry

NPD Sees Some Growth in 2007 as Makeup Reigns Queen in Industry

PORT WASHINGTON, NEW YORK, February 13, 2008 – The NPD Group, leading consumer and retail information provider, reports the U.S. prestige beauty industry* grew by two percent in 2007 vs. 2006.

Makeup
Makeup reigns supreme in the prestige beauty industry with 38 percent of the market share, up from 36 percent in 2003. Two out of every five dollars spent on prestige beauty products go to makeup. Dollars rose to $3.4 billion, an increase of almost half a billion dollars or 17 percent in the last five years.  Across the different segments in makeup, the lip segment ended the year down two percent in dollars, but the rest of the segments saw growth. The face segment, which makes up 46 percent of prestige makeup dollars, was up four percent and driven by foundation. The eye segment was the second biggest leader of growth, making up 29 percent of the dollars and growing five percent since the prior year.  In the eye segment, mascara held court with at least seven months of double digit growth

“During challenging economic times in 2007, the prestige beauty industry managed to rise above the negatives,” said Karen Grant, The NPD Group senior beauty industry analyst. “Women and men are still willing to spend money on products that make them look and feel better. Looking ahead, we do see opportunities with products, like organic/natural products, which are resonating with beauty consumers of all ages. We have seen astronomical growth over the past few years with more natural brands and products hitting the marketplace and we expect to see this continue,” said Grant.

Skincare  
Americans will never stop searching for the perfect solution to look younger and improve their skin. Skincare products, which include face, body, sun and hair products, make up 28 percent of all prestige beauty dollars and were up four percent in 2007. Sixty percent of prestige skincare sales were spent on facial products that tout anti-aging benefits. While basic skincare was down one percent, anti-aging products** drove growth. They totaled $1.2 billion in sales for 2007, up five percent from a year ago. Since 2003, dollar volume for anti-aging products have grown by 28 percent.  

“Consumers continue to buy anti-aging products in droves. More than half of women facial skincare users say anti-aging benefits are extremely or very important to them. Skincare’s royal affair with premium products continues to expand judging by the growth we have seen in premium and super-premium products. Premium facial products $70 and above approached $700 million in sales in 2007,” said Grant.

Fragrance
Prestige fragrances make up about one-third (33%) of the beauty industry dollars. At $2.94 billion, fragrance dollars are back to levels last seen in 2003. Men’s and Women’s fragrances were both down one percent in 2007 vs. 2006. The market is flooded with new launches and scores of brands, but last year consumers seemed to return to classics in women’s fragrances. Sales of existing women’s brands, brands that have been on the market since at least 2006, grew by two percent, totaling $1.7 million, close to $31 million more than a year ago. 

“Over half of women surveyed told NPD when they are buying for themselves; they are buying a fragrance they once owned. It may be that consumers are finding comfort in familiar brands because of the crowded marketplace,” said Grant. “We also must consider the importance of December. It is a critical month for prestige fragrances, with one-third of annual sales generated during this time. This past holiday season it seems fragrances were up against other hot consumer items, even more so than in the past, like GPS systems and digital picture frames, making it much harder for fragrances to stand out,” said Grant.

*Prestige beauty – products sold mainly at U.S. Dept. stores
 **Anti-aging benefits include: anti-aging, wrinkle reduction, firming/lifting

About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,600 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless.For more information, contact us or visit http://www.npd.com.