What’s Next for Recession-hit U.S. Beauty and Color Cosmetics?

As female consumers streamline their makeup, Euromonitor’s Carrie Lennard says both mass and premium brands will have to work harder to earn a place in their cosmetic bags.

Written by: Carrie Lennard, Beauty and Personal Care Analyst, Euromonitor International

Cash-strapped U.S. consumers have reined in their spending on color cosmetics, prompting a 1% decline in value growth in 2009, equating to a drop of $116 million in the value of the U.S. color cosmetics market. Worries about the U.S. economy led to cautious consumer spending as consumers reduced their consumption of non-essential beauty products and made do with their existing makeup.

Premium makeup hit harder than mass cosmetics
Although premium-priced color cosmetics accounted for a sizeable 38% value share of color cosmetic sales in the U.S. in 2009, value sales of luxury color cosmetics declined by more than 5% in 2009. Their mass-priced counterparts, however, grew by more than 1% as many consumers decided to trade down to cheaper products.

Companies eliminate poorly performing color cosmetic brands
The recession has made retailers and manufacturers rethink the number of brands they need to be offering in order to improve profitability. As a result, a number of color cosmetic brands were cut from retailer and manufacturer line-ups in 2009 and early 2010. Procter & Gamble decided to discontinue the struggling Max Factor brand in the U.S. in June 2009, although the brand remains available in other countries. Premium color cosmetic brands were also far from immune to this round of cost-cutting. Estée Lauder decided to withdraw its Prescriptives brand globally in January 2010, while L’Oréal decided to stop selling its Shu Uemura brand in U.S. stores in 2010, although customers will be able to order the brand online.

Key 2010 trends in color cosmetics
Eyelash-enhancing products is one of the major beauty trends of 2010 in the U.S. The early 2009 launch of lash growth medicine Latisse from Allergan has now spawned a number of other products that claim to lengthen lashes, such as Lilash, Revitalash and MD Lash.

Although growth in sets/kits stagnated at 0% from 2008-9, the category is set to add $144 million to its value size over 2009-14. Color palettes/makeup sets and kits have the potential to gain in popularity provided they offer consumers better value alternatives to expensive single makeup items. Americans have become more focused shoppers following the recession, closely scrutinizing prices and product claims. Manufacturers should respond by making greater efforts to highlight the value offered by sets/kits.

Outlook and future trends in color cosmetics for 2011 and beyond
Opposing trends are likely to be seen in U.S. color cosmetics in 2011. On the one hand, the recession has given rise to a new breed of budget beauty lines from the likes of Payless. On the other hand, there is a smaller but growing market for “professional” makeup. At-home airbrush kits are expected to sell well, as are professional color cosmetic ranges such as Smashbox, the brand acquired by Estée Lauder in May 2010, which was originally developed as a professional makeup line. What is clear, however, is that many female consumers are now streamlining their make-up bags, and only want to buy products they believe offer value for the money. Regardless of price positioning, both mass and premium color cosmetic players alike will have to work harder to convince consumers that this new mantra applies to their brand.