Luxury beauty sales turn ugly

By Guy Montague-Jones

- Last updated on GMT

Related tags Cosmetics Aroma compound

Sales of luxury cosmetics in the US sagged last year falling 3 percent with all categories taking knocks, according to NPD Group.

Total prestige beauty sales were down to $8.38bn in a year when the economic situation deteriorated rapidly and consumers began looking more carefully at their spending.

Make-up sales defy lipstick factor

One of the surprises of the study was the poor performance of make-up which had been mooted as a recession resistant beauty category. The much talked about Lipstick Theory had predicted that women, unable to splash out on expensive luxuries, would turn to make-up to cheer themselves up.

But the NPD study said that luxury make-up sales in the US fell 3 percent last year to $3.2bn. With the exception of natural make-up and premium priced face products, all segments in the make-up category suffered declining sales last year.

Slump in fragrance sales

Fragrance was also a big loser last year. Sales of prestige scents were down 6 percent to $2.68bn and products for both men and women struggled with sales falling 8 percent and 5 percent respectively. The reduction in sales of men’s fragrances stemmed from a 20 percent drop in new launches.

NPD said one ray of sunshine in the fragrance market lay in higher priced gift sets which enjoyed double-digit growth both in dollar and volume terms.

Skin care sales stay afloat

Meanwhile prestige skin care products were the most successful performers in 2008 staying even with the previous year on a dollar basis at $2.4bn.

Within the category anti-aging performed well as did “specialization” products such as whitening and allergy relief products which enjoyed double-digit growth.

Face products priced over $70 also enjoyed healthy growth of 4 percent and natural/spa/wellness brands grew 6 percent to $304m.

Commenting on the figures, NPD beauty analyst Karen Grant said: “Across all three prestige beauty categories, there were areas that experienced growth despite overall soft performance.

“We saw growth in premium price, natural and new innovations among trusted brands as well as alternative brand types.

“Moving forward, we must continue to look for these opportunities, find new ways to reach our consumers, and build our relationship and communication with them – that relationship is an increasingly critical part of the total value - not just price - they see in what we are offering them and in whom they choose to invest.”

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