Cosmetics include products such as skincare creams, lotions, oils, masks, eyeliners, lipsticks, and makeup that are used to enhance one's appearance or fragrance. Cosmetic products help in cleansing, protecting, and nourishing the skin as well as hair. Growing consciousness regarding physical appearance and youthfulness has uplifted the demand for cosmetics globally. However, changing lifestyle patterns and increasing disposable income have led to shifting preferences towards premium and natural/organic cosmetic products.

The global cosmetics market is estimated to be valued at US$ 438.5 billion in 2023 and is expected to exhibit a CAGR of 5.3% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market Opportunity:

The growing popularity of online shopping and ease of product availability is offering lucrative growth opportunities for cosmetics brands. Online sales channels provide customers with convenient options to choose products from a wide range of brands sitting at home. Leading cosmetics companies are focusing on expanding their presence on online retail platforms to tap the vast online customer base, especially among millennials and Gen Z. Strategic collaborations with major e-commerce sites allow cosmetics brands to efficiently market and sell their products. Growing internet and smartphone penetration in developing regions is further fueling the growth of online shopping. Therefore, expanding presence across online sales channels can help cosmetics brands to boost customer reach and sales significantly over the forecast period.

Porter's Analysis

• Threat of new entrants: Low capital requirement but established brands, regulations and distribution channels make entry difficult.
• Bargaining power of buyers: Large buyers like supermarkets have significant influence on pricing. However, brand loyalty balances their power.
• Bargaining power of suppliers: Suppliers of raw materials have lower power due to availability of substitutes and formulation knowledge of buyers.
• Threat of new substitutes: New natural/herbal products pose threat but compliance to regulations protects established brands.
• Competitive rivalry: Intense competition among global leaders to capture more market share through innovation, promotions and acquisitions.

SWOT Analysis

• Strengths: Strong brand value, loyal customer base, wide distribution and retailing channels for major brands.
• Weaknesses: High research and advertising costs, vulnerabilities to seasonality and dependent on economic cycles. Vulnerable to changing consumer preferences.
• Opportunities: Emerging markets with rising incomes present large opportunities. Niche segments like men's grooming and organic products are growing.
• Threats: Commoditization of products, stringent regulations, low-cost rivals and environmental concerns around ingredients and packaging waste.

Key Takeaways

The global cosmetics market is estimated to be valued at US$ 438.5 Bn in 2023 and is expected to exhibit a CAGR of 5.3% over the forecast period 2023 to 2030.

The global cosmetics market is expected to witness high growth over the forecast period led by rising incomes, aspiration and adaptation in Asia Pacific regions. In 2023, the Asia Pacific region is estimated to account for over 45% of the global market share led by countries like China, India and Southeast Asian nations with growing middle class.

Regional analysis shows the Asia Pacific region continuing to be the fastest growing market through 2030 driven by China, India and other Southeast Asian countries. In these countries, improved standards of living and growing fashion consciousness is driving cosmetic product adoption. Western brands are also aggressively expanding in Asia through partnerships with local retailers and innovations suited to various skin tones.

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. Major players are focusing on mergers, acquisitions and development of natural/herbal products to tap opportunities in Asia, Latin America and Africa.