Despite the 5% slowdown in 2020, the Beauty & Personal Care market – which has reached a global value of 483.3 billion dollars – will jump to $ 616 billion by 2025 and to give thepush will be ecommerce and subscription boxes. The pandemic was undoubtedly influencing the decline of the last year but, given the future improvement in the health situation and the reduction of uncertainty about the global economic prospects a strong recovery in the sector with a CAGR of 5.0% (Statista, 2020 & Growth Capital extraction).
Asia represents the most relevant market (38%), followed by Europe (24%) and the United States (18%). Looking at the detail of the European countries, those with the largest beauty markets are Germany (€ 14.9 billion), UK (€ 12.9 billion) and France (€ 12.5 billion); Italy and Spain are worth about 50% of the German market, but still present interesting growth opportunities as they are penetrable without the need for large investments in marketing. The photo is taken by the “Beauty & Personal Care economy report” analysis by Cross Border Growth Capital, advisor in Italy for capital increases and extraordinary finance operations for startups and SMEs.
In particular, the most important segment, equal to 45%, of the beauty sector is that relating to personal care products which, with a value of 215 billion dollars in 2020, expects to reach 268.5 billion dollars by 2025. Next is the segment represented by Skin Care products (27%) which is worth 169.2 billion dollars, and that of Cosmetics, which represents 18% of the global B & Pc market and shows the most promising future: growth is expected with a CAGR of 6.4% in the next 5 years and a size of 118.5 billion dollars by 2025. Finally, fragrances play a marginal role, with a market share of 10%.
It is, in general, a market strongly influenced by online: today 51% of consumers around the world regularly buy on the web (Statista, 2020) and, unsurprisingly, the outbreak of the pandemic in 2020 has further reinforced this trend. The spread of ecommerce therefore also concerns the B&PC sector: on average, brands and beauty retailers have seen a 20-30% increase in their online sales compared to pre-Covid-19 levels, with even some cases of doubling of revenues from e-commerce (McKinsey, 2020).
“The European beauty & personal care market is going through a very lively phase driven by the strengthening of online penetration and the increase in the propensity to spend per capita“, spiega Lorenzo Triboli, Associate di Cross Border Growth Capital. According to the manager, the players of the beauty world should therefore prioritize digital channels to capture and convert attention of existing and potential customers considering that 34% of consumers are digital beauty shoppers, i.e. regularly buy beauty products through online retailers (Euromonitor, 2020).
“The ecommerce segment will reach € 28 billion in sales in Europe in 2024, growing 5 times faster of the traditional channel. Germany, with a weight of the online channel equal to 31% of the total market, represents the largest market, valued at 4.6 billion euros. Italy and Spain – continues Triboli – are the countries, among those taken into consideration, meno digital-oriented (respectively 15% and 22%) “. Triboli reports that” Italy in particular, with 1.3 billion euros in sales, is a smaller but very interesting country, since it has higher margins for circulation online and boasts a CAGR expected for 2020-2024 of more than 10% “.
And in an increasingly ‘digital’ beauty context, a high potential segment is represented by subscription box models, which provide – in exchange for a monthly or quarterly advance payment – the recurring physical delivery of a beauty box with a selection of products inside, designed to offer an experience and added value compared to products sold individually at retail.
Born in the USA about a decade ago, this phenomenon soon achieved success and also conquered the European market recording, in the last 3 years, a CAGR of 28%. According to Cross Border Growth Capital this trend will remain strong in the future too, thanks to the ability to better interpret the most successful trends: personalization, community engagement, sustainability and attention to product quality.
According to the data, the beauty box market should in fact approach 875 million euros by 2024 in Europe, which would imply a CAGR of 27.3% over the next 4 years. Globally, FabFitFun and Ipsy are the most relevant players, while in Europe BirchBox ed in Italy, the leader in the subscription box market is Abiby which closed 2020 with + 170% turnover compared to 2019 and + 162% in terms of boxes delivered.
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