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Background:

The global beauty industry is booming.

“Beauty remains one of the most dynamic, challenging and sought-after industries, much more than other consumer goods — or even fashion,” says Priya Rao, executive editor of The Business of Beauty. “What we’ve seen is that consumers are so rabid and fervent for their beauty products… and brands are still really excited about bringing a new proposition to market.”

This week on The BoF Podcast, editor-in-chief Imran Amed sits down with Rao to break down the five critical themes covered in BoF’s new report, “The State of Fashion: Beauty,” created in partnership with McKinsey & Company.

Key Insights:

• In the oversaturated beauty and wellness market, it can be difficult for new brands to gain consumer attention. To break through, they should first focus on one product or theme before moving to other categories. “[Rihanna’s] Fenty Beauty was known for colour cosmetics until they most recently launched skin care,” says Rao. “They didn’t try to launch hair care and injectables and sexual wellness devices all at once.”
• Expert voices are key when it comes to building trust as a beauty brand. “What dermatologists or aestheticians have done for skin care, we need that in wellness,” says Rao. “The way that wellness really grows is with credibility from the people who are founding these brands and selling these products.”
• Gen-Z wants beauty products that are more environmentally friendly but also affordable. According to Rao, brands like E.l.f and Milani have been able to address that demand. “They are giving the best experience to beauty consumers, but they also check those boxes of being socially conscious and value driven,” says Rao.
• Beauty M&A will consist of smaller deals driven by strong underlying financials. Big deals like L’Oréal buying Aesop for $2.5 billion will be a more of a rare occurrence. “Profitability is going to come into play much more… that’s across the businesses out there in consumer goods,” says Rao.

Additional Resources:

• The State of Fashion Special Edition | The New Face of Beauty: The special edition of The State of Fashion report by BoF and McKinsey & Company explores the reshaping of the global beauty industry. Download the full report to learn about the key dynamics that will impact all categories in the years ahead, from the rise of wellness to the influence of Gen-Z.
• The Business of Beauty Global Forum 2023: Streaming Live from Napa Valley, California on May 30-31.