Beauty Products Market
Beauty, spa, and cosmetic products comprise a significant portion of the Canadian retail market. Canadians are one of the highest global performers in the beauty market—with makeup as the strongest performing subcategory, comprising 35% of the country’s beauty sales with a 12% increase over the past year. Makeup and beauty sales are highest in urban areas—including Atlantic Canada, Alberta, Ontario, Quebec, and British Columbia.
In 2012, Statistics Canada reported that out of total household consumption spending of $56,279, Canadian households spent $1,194 on personal care products. Industry experts estimate that the Canadian beauty products market is valued at $5.3 billion dollars annually, and expected to rise 6% each year.
The Canadian beauty market is mature, and although Canada is the number one beauty market in the world, the Canadian market only registered modest positive growth in value terms in the past year, according to Canadian Country Report. The Canadian population is not significantly expanding and the marketplace has an excess of surplus, negatively effecting demand. There is, however, a large trend in the growth of premium products that helped support revenue increases for the Canadian beauty industry. Canada is the number one prestige beauty market in the world, spending $1.4 billion annually. The Canadian prestige beauty market is experiencing an eight-cent in dollar growth in 2013, well over the five-cent growth in America.
With Canada’s expansive growth in prestige beauty, average beauty product prices are on the rise. It is evident that Canadians are willing to pay more when it comes to budgeting for beauty. The NPD Group recently launched Canada BeautyTrends® that showed one in 10 Canadians stated that they were willing to cut back in other areas in order to spend more on beauty products. Specifically in the makeup category, premium foundation and eye shadow prices are seeing the highest growth rates, up 40% and 5% respectively.
High-end beauty products are not the only things on the rise, product development has recently contributed to the dynamics in retail, and consumers are more willing than ever to try new products. As the average age of Canadians continues to rise, beauty products for the aging population will likely become an area of high demanded worth watching. Developing products, such as anti-agers and denture care that cater to the older population should remain on the agenda for product developers. Multifunctional products have also become increasingly popular over the last few years. Multifunctional products, such as face lotion with anti-aging serum or oral care with whitening, rose in demand in 2014 and will likely continue to see growth. Beauty and personal care manufacturers increasingly use natural and organic ingredients in new product development. Developers should begin to take a more natural approach to beauty and personal care, paying attention to ingredients, packaging, and making an effort to focus on more environmentally friendly ingredients and manufacturing techniques. The health and wellness trend has definitely made an impact in beauty and personal care, and consumers are definitely willing to spend more on better quality and safer products.
In 2014, smaller brands have gained share at the cost of bigger companies. Smaller companies that specialize in ecological and niche premium products have benefited the most from the ever-increasing interest of Canadians. The Canadian beauty and personal care industry is highly competitive. About 93.2% of the Canadian beauty market is imported, which is up from 89% in 2009.
Although the Canadian beauty products market is only experiencing modest growth, the forecast is still optimistic in the coming years. Economic slowdown, market saturation, and inflation in various categories of the market may begin to impact the industry in the future as Canadian population growth is slowed. In contrast, as average disposable incomes are projected to continue to grow as the economy recovers for the 2008-09 crash, enabling more customers to spend money on more prestigious, economical, and value-added products. As aging population continues to grow, so will the demand for beauty products targeted for the elderly. As long as your company continues to watch trends and targets the correct market, Canadian beauty products will likely continue to be a solid investment opportunity.
