Fragrance and makeup drive 8% growth in US prestige beauty market for 2024, Circana finds

The US prestige beauty market experienced significant growth in the first half of 2024, increasing by 8% to reach $15.3 billion, while sales at mass merchants remained flat, reported Circana, a leading advisor on consumer behavior, in a recent report. This growth was fueled by several key trends across the beauty landscape, with fragrance, makeup, skin care, and hair products leading the way.

Fragrance: The fastest-growing prestige category

According to Circana's report, fragrance emerged as the fastest-growing category within the prestige beauty market, with dollar sales up 12% compared to the first half of 2023. Notably, sales are increasing at both the high and low ends of the price spectrum.

Eau de parfums and parfums continue to be significant drivers of category growth and rising prices, while lower-priced options such as mini sizes and body sprays are also making a significant impact. “In fact,” Circana reported, “units sold for mini- and travel-sized product grew at double the rate compared to the overall fragrance category.”

Additionally, sales revenue for body mists and sprays, which are mostly on trend with younger consumer demographics, doubled compared to the same period last year.

In the mass market, younger consumers are also driving the "dupe culture" trend, with private-label brands growing by more than 50%. These brands are often seen as affordable alternatives to prestige and luxury brands, further emphasizing the consumer demand for value.

Makeup: Lip products lead the way

Makeup remains the largest category in the prestige market, with year-over-year sales growing by 5%, according to Circana. “The lip segment continues to outperform, with double-digit growth driven by lip balms and oils,” as detailed in Circana’s report.

In addition, less traditional makeup forms are gaining traction outside the lip segment, including “liquid blush, stick, balm, and liquid bronzer, stick foundation, and stick eye shadow,” said Circana. Meanwhile, lip gloss and liner were top sales gainers in the mass market, highlighting the ongoing consumer focus on lip products.

Skin care: The rise of body products

Prestige skincare dollar sales increased by 7% in the first half of 2024, making it the fastest-growing category in terms of units sold, as explained in Circana’s report. The body segment is leading this growth, with body spray sales experiencing triple-digit increases. Additionally, larger volume segments like creams, lotions, and cleansers also saw double-digit growth during this period.

Of important note, the report added, “According to Circana’s receipt-based Checkout data, first-half consumer spending on prestige body products increased by 25%, and there are 17% more buyers in this market than there were last year.”

Hair products: Premiumization driving growth

Hair product sales in the prestige market grew by 10% (based on dollars), with styling and treatments being the fastest-growing areas, Circana’s report continued. Premium products, particularly those priced above $30, are driving this growth, with sales increasing at three times the rate of lower-priced items.

Notably, premium products now account for 25% of unit sales in the category, up from 15% three years ago. The prestige hair market is also unique in that it is the only beauty category where the majority of sales occur online, with e-commerce sales continuing to grow at a double-digit rate and the “channel is showing no signs of slowing,” per Circana’s data.

The bifurcation of the beauty market

“An accelerated bifurcation is emerging in the beauty industry, highlighted by the continued strong growth in prestige in relation to the mass market,” said Larissa Jensen, global beauty industry advisor at Circana, in the report. This bifurcation underscores a broader trend in consumer behavior, where value perception plays a critical role in purchase decisions.

“Within prestige, drivers of growth point to a similar pattern, indicative of a consumer who is seeking elevated value,” she added. While some consumers gravitate toward high-end products that promise superior quality and unique experiences, others are more inclined to seek out budget-friendly alternatives that mimic luxury offerings. As a result, the beauty industry is witnessing a distinct separation between those who prioritize investment in premium products and those who favor affordable options that deliver comparable results.

“Optimizing these opportunities will vary as consumers’ approach to beauty spending differs by demographic,” Jensen concluded, “from attitudes and usage to purchase influencers and shopping preferences.” Brands operating in both the prestige and mass markets must strategically navigate this divide by catering to their target audiences' diverse needs and expectations, ensuring that their product offerings resonate with consumers' evolving preferences and spending habits.

The first half of 2024 underscores the evolving dynamics within the beauty industry, with a clear shift towards prestige products driven by consumer demand for premium, high-value offerings. As the year progresses, the industry will continue to adapt to these changing consumer preferences.