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Exploring Innovation in Beauty and Personal Care

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Beauty and personal care is one of the most innovative industries with over 25% of new brands launched in this space, according to Euromonitor International’s Innovation tool, which tracks new product development across the 50 most disruptive FMCG categories. Following the evolution of innovation in beauty and personal care can help businesses understand and respond to consumer purchasing preferences and help them make informed strategic decisions. Additionally, other FMCG industries seek inspiration from beauty and personal care and hope to learn from how beauty brands position their benefits to speak directly to consumers.

In 2023, innovation in beauty was concentrated around key skin and hair care categories. New product launches focused on delivering efficacy and wellness benefits, and often premiered in the US for large brands, whilst smaller ones used their local markets as a testing ground.

Graphic showing BPC Industry overview statsIngredient-led beauty concept leads innovation in moisturisers and treatments

Moisturisers and treatments sees the most new brand and sub-brand launches in the industry, accounting for almost 25% of new product development in beauty and personal care in 2023

Source: Euromonitor International’s Innovation tracker

Consumers look for “natural” facial care, but in the absence of a standardised claim for natural, ingredient-level information helps better inform their purchasing decisions. Incorporating highly efficacious ingredients is a focus for industry players globally. The concept of ingredient-led beauty is key in new product development and drives the launch of new brands and product lines.

Mary & May is a clean K-beauty skin care brand, which first appeared on the digital shelf in the UK in 2021, according to Euromonitor International’s Innovation dataset that monitors brands across 32 markets. Ingredient transparency is among the brand’s key USPs, which is increasingly important for consumers. Openly disclosing ingredients of its products contributes to Mary & May’s success in expanding globally and launching nine sub-brands in the tracked markets over 2021-2024.Screengrab from Passport Innovation data set

Holistic wellness trend pushes BPC brands to innovate to meet consumer health needs

As beauty is increasingly perceived as part of holistic wellness, brands are shaping their traditional portfolios to address consumers’ emerging health needs. With the holistic approach to wellness gaining emphasis in hair care, new products increasingly focus on and promote hair and scalp health. As a result, conditioners and treatments has become an important playground of innovation and welcomed the second-highest number (almost 150) of new product launches in the industry in 2023. The trend is expected to contribute to the positive outlook of the category’s development, projected to register a 3% CAGR in global retail value terms between 2023-2028.

Aveda is globally recognised for its natural, plant-based products, and follows a holistic beauty approach, connecting hair, skin and body care with wellness in an environmentally-friendly way. Over 2021-2023, Aveda launched close to 20 new sub-brands, including an entire new line, Scalp Solutions, dedicated to scalp health. Innovation in beauty and personal care mostly comes from brands expanding their product portfolios with new lines. Over 90% of new product development is driven by sub-brand launches, according to Euromonitor International’s Innovation data.Screengrab of beauty product performance

Innovation occurs in biggest BPC markets, leading brands to test products in the US

Euromonitor International’s Innovation data reveal that the biggest beauty and personal care markets (in value terms) are the most active in innovating. Most new product launches occur in large markets, where consumers are receptive to trying new products and alternatives, have high levels of disposable income to experiment, and have a varied retail environment where brands can premier their new products.Chart showing  Beauty and Personal Care Innovation by Retailer in the US 2023The US market has the highest number of new brands appearing via online retailers, which is not surprising considering its size and vast consumer base. In 2023, the US accounted for 22% of the global value sales of beauty and personal care. Besides the US, most product launches in beauty take place in Brazil, India, Germany, France and the UK. Small brands innovate more dynamically and launch new products in their local or regional markets. However, bigger players tend to test their products first before expanding to multiple markets. For example, well-known brands Drunk Elephant or Olay both launched new product lines over 2021-2023.

A common factor in their strategies is that they premiered multiple new sub-brands in the US and Canada, before expanding to other markets. US consumers are most open-minded towards trying and experimenting with new products.

In 2023, nearly 60% of US consumers said that they like to try new products

Source: Euromonitor International’s Voice of the Consumer: Lifestyles Survey (fielded January to February 2023, n=1000)

Monitoring innovation trends to inform businesses’ own strategies

Beauty and personal care serves as an incubator for new product development. Companies across the FMCG space keep an eye on new brand launches in this industry to understand which features or attributes align with consumer needs the most. Such insights enable them to identify areas for future innovation within their own business. Companies should think about the concept of wellness holistically and consider how it manifests itself in the industry where they operate. Additionally, they should openly disclose the ingredients of their products as consumers increasingly demand transparency on this front.

To learn more about tracking new brand and sub-brand launches across the global digital shelf, read our article Strategies for Success in Innovation and New Product Development and visit our Innovation product page.

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