Euromonitor International’s latest research, published earlier this month, revealed another solid year from the beauty industry despite economic uncertainty and pressures from an increasingly polarised market. Industry growth was slightly stronger than that of the previous year, with total sales approaching US$426 billion globally. Discretionary categories, including colour cosmetics and fragrances, put in a reasonably steady performance, with reported growth close to that of the industry average at 5%.
What was most notable, however, was that while most categories were heavily reliant on emerging markets for growth, for colour cosmetics and fragrances North America featured among the top three growth regions. Much of the region’s impressive sales of colour cosmetics were down to nail polish, which grew by a staggering 30% in the US, thus enabling it to overtake Brazil to become the biggest nail polish market globally. Sales of premium nail polish alone more than doubled on the back of a robust performance from brands like Essie and OPI, which were brought to the retail market and saw distribution continued to widen.
In fact, when looking at individual categories within the global beauty industry as a whole, nail polish was one of the fastest growing (up by 11%) for the third consecutive year as incremental revenues jumped by an extra US$700 million globally to reach nearly US$6 billion in 2011.
Nail polish is fast becoming the new index for the beauty industry during volatile economic periods, replacing the widely recognised ‘lipstick effect’ as it offers the feel-good factor and the perception of a luxury makeover at a relatively affordable price. It has grown in profile on the back of a stronger preoccupation with nail art and customisation of colours inspired by fashion shows, celebrity influence and generally bolder designs from brand marketers. This trend has played out not only in salons but in retail outlets too.
While innovation has been most certainly driven by fashion, advanced technology has also had a big part to play. We have seen traditional polish transform and evolve in format and formulation, as well as application types. The last several years have witnessed the birth of gel-textured formulas and breakthrough innovations, such as magnetic polish from Nails Inc and nail polish strips from Sally Hansen. Beyond that, we should now expect more salon concepts to transfer to the retail mainstream. At-home manicure kits providing gel polish and UV light devices to cure the polish are no longer the preserve of salons, with certain products already available to purchase online.
As the beauty and personal care industry heads into another year of uncertainty, many brands involved in the colour cosmetics space will seek to benefit from the increasingly vibrant and profitable nail polish market. The success and wider retail distribution of salon brands like OPI is bound to generate renewed interest in potential acquisition targets such as independent salon brands like the UK’s Nails Inc or France’s Nailstation. What is clear is that Western markets, not simply first-tier emerging markets, will be at the frontline of growth. And that alone makes investment in the category highly attractive.