Concerns and challenges in the cosmetics and perfumery sector: Insights from the 7th Beauty Cluster Barometer

The Beauty Cluster presented yesterday in Madrid the results of the VII Barometer of the cosmetics, perfumery and personal care industry, with the attendance of more than 60 professionals from the sector. In collaboration with Nueva Investigación, the Beauty Cluster has carried out this study based on a total of 143 surveys completed between mid-February and the end of May. The Barometer gains relevance every year, and this seventh edition has registered its highest participation since its inception, highlighting the presence of large companies both in terms of turnover and number of employees. On this occasion, 66.4% of the companies are members of the Beauty Cluster, while 66.67% of the non-member participants are aware of the work of the Beauty Cluster.Almost 69% of respondents have their company headquarters in Catalonia, although there is a greater geographical dispersion of companies, with a presence in the Valencian Community, Madrid, the Basque Country, the Canary Islands and other Spanish regions. In addition, 28 of the surveys were answered from Italy, the United Kingdom, the Netherlands, Switzerland, France and the United States, offering a more global and international perspective. This is significant, as 76% of the participating companies sell their products in foreign markets. The majority of these markets are within the European Union, Latin America, North America, the Middle East and Asia-Pacific. 23.8% of the companies do not sell outside the country, making it the highest percentage of the two previous studies.The main conclusions of the 2024 Barometer indicate that the participating companies are continuing their growth trend in terms of both turnover and workforce. In terms of turnover, 34.3% of respondents belong to companies with an annual turnover of between 5 and 50 million euros, the largest group. This is followed by 23.1% of those belonging to organisations with a turnover of more than 50 million euros. A similar percentage, between 16 and 18%, is shared by those who belong to companies with a turnover of between 1 and 5 million euros and those who belong to companies with an annual turnover of less than half a million euros. 8.4% of the respondents are part of companies with a turnover between half a million and one million euros. 74% of the respondents have improved their turnover figure compared to the previous year.In terms of number of employees, almost 45% of barometer participants work in a medium or large company. However, micro and small businesses continue to have a large impact on the survey results, with more than 55% of respondents belonging to these organisations (38.7% and 26.8% respectively). Despite softer growth than in the previous year, 58% of respondents admit that there has been an increase in jobs in companies in the sector.Investment in innovation is non-negotiable: 96% of respondents admit that they will invest in innovation by 2024. 92% are from Spain and the vast majority will invest less than 10%. The main areas of investment are the same as last year: staff training (59%) and new product lines (56%), although equipment and facilities become a new investment territory this year.Almost 95% of the companies in the barometer say they will launch a new product in 2024, related to facials, body cosmetics or sun protection.Optimism in 2024The results show that most of the surveys reflect an optimistic view of the future. Companies are confident that their turnover will grow and they also expect to be able to expand their workforce. 47% of the companies believe that their situation is better than that of their competitors.The hybrid model between teleworking and face-to-face work is still the preferred model for companies in the sector. 40.6% of participants telework one or two days per week. 23.1% have flexible teleworking in terms of days and hours, and almost 31% of the companies surveyed admit that they have not implemented teleworking in their organisation.What concerns to the sector?Although concerns about rising supply costs have fallen by more than 15% from the previous year, it is still the biggest source of uncertainty among industry professionals, followed by rising staff costs, a concern that was not among the most important last year. Regulation and regulatory changes are a concern for more than 40% of respondents. Concerns related to COVID-19 continue to decline for the second year in a row and are now down by less than one percentage point. The entry of low-cost competitors in cosmetics, the inability to maintain the same prices and consumer misinformation on social media and online remain concerns for a large proportion of respondents.How it will work the demand in 2024?Once again this year, the demand for natural products and sustainable packaging will be the most popular, although it will decrease. The influence of social media and influencers and the weight of private label due to the inflationary situation will be the factors with the highest growth.The demand for beauty products will continue to increase this year, as it has done for several years in a row. The weight of private label products is growing by 6% and consumers continue to be aware of the importance of caring for the environment, demanding more sustainable products with packaging that does not have an environmental impact.In terms of how these sales will be made, marketplaces continue to grow, as do multi-brand online sales and pharmacies and parapharmacies. In-house e-commerce and beauty salons are in decline. Department stores will increase their demand, as will supermarkets due to increased demand for private label. Perfumeries will also see their sales figures increase.Commercial visits continue to be the most effective way for respondents to advertiseAs in the previous edition, face-to-face sales visits are the most effective for the respondents of the barometer and this year they experienced an increase of more than 7 percentage points, reaching almost 80%. They are followed by trade fairs and events with 71.3%, remaining stable compared to the previous year, traditional media with 53.1%, and social networks with 51.7%. Regarding the latter, which continues to lose weight and maintains the trend of the previous year, 52% of companies use social networks and influencers as an advertising medium, growing by almost 10 points compared to the previous year. Instagram is the preferred platform for advertising their products and TikTok is on the rise. The media is also one of the preferred options for advertising products, although 46% of companies do not use them; the remaining 54% do use them and usually use more than one medium. The most commonly used are online and print media, e-mail marketing and trade magazines.As last year, own-branding remains the most representative activity in the survey, with more than 38% of people working for a company with its own brand, a slightly lower percentage than in the previous barometer. The main product lines also remain unchanged from the previous year, with facial treatments dominating with 71% and body cosmetics with 54%. Own-brand products are followed by companies supplying ingredients, active ingredients and/or essences and distribution, online sales and/or retail. In contrast to the previous year, companies offering services to companies and/or consultancies were on the second rung, and this year their impact on the report has been reduced.In terms of own-brand product lines, although facial treatments and body cosmetics continue to lead this branch, categories such as sun protection, childcare, perfumes and fragrances and nutricosmetics increased their presence in this edition, while those related to hair care or aesthetic appliances experienced a slight decrease.Once again this year, the Beauty Cluster seeks with this Barometer to be a thermometer and capture what is happening in the industry and what concerns the sector, and each year it has a greater number of respondents, which allows it to offer a more real and strategic vision.

Concerns and challenges in the cosmetics and perfumery sector: Insights from the 7th Beauty Cluster Barometer

Together with Nueva Investigación, Beauty Cluster develops the seventh edition of its sector barometer and points to 2024 as a year of growth and optimism for the cosmetics and perfumery industry