Driven by a slowdown in major economies, especially China, the beauty and personal care industry witnessed a “souring” mood at the end of 2024, foretelling more cost-cutting going into 2025. Ruthless optimisation will continue as investor pressure mounts, as more beauty players offload non-performing brands to shift resources to “power brands”. Industry behemoths are still in search of the right distribution model, but urgency to adapt to new models is highest in direct selling.
This report comes in PPT.
Having remained relatively unscathed during the cost-of-living crisis, the beauty and personal care (BPC) industry saw the mood souring towards the end of 2024, driven by a slowdown in major economies, but especially China. Optimisation and cost-cutting are set to continue into 2025.
Leading companies see increasing brand offering as the way forward, specifically through scientific formulas and proven efficacy. This bodes well for consumers, but risks making the premium segment more crowded than ever and thus recouping capital investments harder. It also means that the lower- and mid-price segments are effectively left for retailers and their private label products to dominate.
Industry behemoths are still in search of the right distribution model. Nowhere is this more apparent than in the actions of traditional direct selling companies. Avon’s physical store openings are a tacit acknowledgement that the pure direct selling model is no longer viable in 2024, demanding change in the business model. Online retailing is no magic ingredient either, as e-commerce gains post-COVID-19 decelerate and consumers return to B&M for brand discovery.
More beauty players are offloading non-performing brands and shifting the resources to “power brands” (termed by Unilever). Even if the inflationary pressure recedes in most of the world, persistent consumer thriftiness means that non-performing brands are a luxury no industry company can afford having. 2024 was a year full of M&A activities and 2025 shapes to be just as busy as companies are forced to tighten up their operations.
Gobbling up emerging brands will not be the only go-to move. Increasingly, incumbents are intent on getting themselves involved early in the value creation. Be it venture capital arms or early investments/tie-ups with fledgling brands, such efforts are likely to be expanded.
This is the aggregation of baby and child-specific products, bath & shower, colour cosmetics, deodorants, depilatories, fragrances, hair care, men's grooming, oral care, skin care and sun care. Black market sales and travel retail are excluded.
See all of our definitionsIf you purchase a report that is updated in the next 60 days, we will send you the new edition and data extraction Free!