The Economic Impact Of The Makeup & Cosmetics Industry on Society

make up and Cosmetic industry:

Cosmetics are now considered to be essential goods in life since they may improve one's
overall look and have a beneficial influence on personality. They may also be a means of self-
expression as people can experiment with various hues, textures, and fashion trends to
produce distinctive appearances and to create a unique and creative personality. The
cosmetics and makeup sector are renowned for its creativity and invention, and it is always
changing to reflect shifting consumer trends and tastes. Manufacturers are concentrating on
creating and maintaining a varied product range that may meet each individual's unique
needs. This sector is so large that it supports millions of employments globally and brings in
billions of dollars annually, which in turn has an impact on the national economy.
Due to the rising demand for this industry, the size of the worldwide cosmetics market, which
was USD 277.67 billion in 2020, is anticipated to climb by USD 287.94 billion in 2021 and
USD 415.29 billion in 2028, at a CAGR of 5.0%.

Awareness:
Due to growing worries about one's physical appearance and general wellbeing brought on by
a hectic schedule, adjustments to routine, changes in eating habits, and variations in sleep
patterns, the demand for cosmetics and makeup is rising. Demand for goods is also
anticipated to increase due to the rising popularity of hair colors, night creams for skin
healing, and sun care products. For instance, the number of people applying sunscreen all
year round in Canada climbed from 17% in 2015 to 26% in 2018, according to the Canadian
Dermatology Association's 2018 Sun Safe Behavior Survey.
Manufacturers are concentrating on integrating customization and digitalization in cosmetic
items to attract a client base, for example companies are working to introduce new
personalized skincare system from L'Occitane Group, which can analyze a person's skin
condition and deliver a tailored face care solution. In the approaching years, it is anticipated
that growing grooming awareness and technology improvements would promote the
expansion of the cosmetics business. For instance, Kao Corporation introduced a new product
that will smooth skin, hide pores, and improve skin texture. This item was introduced in
February 2021 and is called SOFINA IP INTERLINK SERUM Pore Refining Moisture.
Industry analysis:
The makeup and cosmetic industry is huge and this industry employs millions of people
worldwide, including makeup artists, product developers, sales representatives, and
manufacturers, the money generated from this industry can have a significant impact on the
economy and society in several different ways. As a result, it helps to boost general economic
growth by generating income and work possibilities for people, raising their spending power
and, consequently, their level of life. Employment is also essential for resolving economic
issues. Governments across the globe benefit from enormous tax money generated by the
makeup and cosmetics sector. The export of cosmetics and makeup may have a big influence
on the economy because the export of cosmetics and other beauty items may have a big
impact on a nation's economy. A nation can generate foreign cash through the export of these
items while also giving those involved in their manufacturing and export work. As it
demonstrates the nation's capacity to produce high-quality goods, the export of cosmetics and
makeup can draw in foreign investors. To benefit from the cheaper manufacturing costs,
foreign investors would be interested in setting up production facilities there.
Adoption of Sustainable Cosmetics to Drive Market Growth
The well-informed segment of society has started to demand more eco-friendly products due
to the growing public knowledge of sustainability. Products created using ecologically
friendly, organically generated materials are gaining popularity all over the world due to their
safety and lack of toxicity. This is because people are becoming more aware of the negative
effects that synthetic chemicals have on the environment and human health. For instance, the
organic personal care market in the UK had growth of 7% in 2018, according to the research
"organic beauty and wellbeing market" released in 2018 by social association certificate.
RESTRAINING FACTORS
There are many Preservatives, pigment molecules, and other synthetic compounds used in
cosmetics that can have negative side effects on the body, including allergic responses, the
development of black spots, acne, or discoloration, among other things. Due to extended
contact to these items, the body continuously accumulates hazardous substances, which might
be the cause of this. As a result of these considerations, consumers are becoming more
interested in cosmetic procedures that can permanently modify their appearance and enable
them to stop using beauty products on a regular basis. Rising consumer knowledge of the
negative impacts of cosmetic goods is thus anticipated to impede the growth of the cosmetics
business.
Gender Analysis
These days, men as well as women are significantly impacted by beauty products. Younger
people and members of the working class are becoming more interested in beauty care
options.
A rise in the number of working women around the world is anticipated to increase product
demand and support market expansion. For instance, according to figures given by the
Australian Government in February 2020, women had a share of roughly 47% of all
employed Australians in 2019. Globally, there is a growing awareness of men's grooming,
which is driving up product demand. In the U.K., for instance, a survey by The Bluebeards
Revenge in 2018 revealed that 52% of the men polled claimed they would be willing to spend
extra for grooming supplies.
Distribution Channel Analysis
In terms of distribution channels, the market is divided into supermarkets, specialty shops,
and internet channels. Due to the availability of a large variety of items from numerous
cosmetic companies under one roof, the supermarket segment commands a significant portion
of the worldwide market, because of fact that now people are preferring online shopping
because of its convenient, the online stores market is expected to expand significantly.
Leading companies:
Due to the existence of several local and foreign companies throughout the world, the
cosmetics sector is extremely fragmented and competitive. Additionally, businesses are
concentrating on creating natural and organic products, which will spur market expansion. To
draw customers and establish a firm presence in the market, manufacturers are putting a lot of
effort into creating unique goods, appealing packaging alternatives, and robust advertising
campaigns in collaboration with social media influencers and brand ambassadors.

Four of the top 10 cosmetics firms in the world are based in the US, while two are each in
Japan and France. The biggest cosmetics firm in the world is still L'Oréal, followed by P&G
and Unilever. The production of cosmetics and beauty products is controlled by a few multi-
national corporations which includes:

1. Loreal with $33.93bn revenue

2. Unilever with $25.38bn revenue

3. P&G with $19.41bn revenue

4. Estee Lauder with $14.29bn revenue

5. Shiseido with $8.73bn revenue

6. Beiersdorf with $6.91bn revenue

7. LVMH with $6.36bn revenue

8. Kao with $5.17 revenue

9. Coty with $4.71 revenue

10. Johnson & Johnson with 4.45bn revenue

Growth:
The global beauty market is currently valued at $511 billion. The beauty and personal care
industry brought in $564.40 billion in sales in 2022. The market is predicted to develop at a
compound annual growth rate (CAGR) of 4.76% between 2022 and 2026. By 2022, the
beauty and personal care industry's whole income will be 25.4% derived from online sales.
Sales per person in the US fall to $74.15 in 2022. Europe's market is worth US$138.40
billion. In comparison to 2021, the worldwide market for cosmetics expanded by more than
16 percent in 2022. The skincare industry is predicted to generate 188 billion dollars in
revenue by 2026, making it one of the most profitable product categories. By 2021, the North
Asia region accounted for more than 35% of the global market.
Influence of social media:
Social media has grown in importance as a platform for businesses to advertise their goods.
The social media posts can reach a large spectrum of global prospective clients and create
buzz, especially in the cosmetics sector. The usage of social media sites like Instagram and
YouTube is expanding, which is good for the cosmetics industry. These platforms not only
significantly affect certain demographic groups, but they also raise consumer demand for
beauty products and close the communication gap between consumers and cosmetics
manufacturers. As of November 2022, Sandra Cires Art had the most subscribers of any
YouTube beauty video creator with almost 16.3 million followers. Fashion and beauty-related
content, such as makeup and skincare tutorials, hauls of cosmetics, and product
recommendations, is one of the most viewed categories on YouTube.

Financial analysis:
The financial information in the annual reports of publicly traded firms in the cosmetic and
make up sector also explains the economic impact of the make up and cosmetic industry on
society. The health and profitability of the makeup and cosmetics sector may be determined
through financial analysis. Even in times of economic instability, the beauty and cosmetics
business has always demonstrated significant growth potential. According to market research,
the sector is predicted to develop at a healthy rate for the foreseeable future. In the beauty and
cosmetics sector, profit margins may be relatively high, especially for high-end and luxury
firms. However, given the intense competition, some businesses might find it difficult to
continue to be profitable. Successful cosmetic and cosmetics businesses typically have high
levels of brand awareness and loyalty. Because consumers frequently are willing to pay more
for products they perceive as high-quality or exclusive, this can translate into higher prices
and better margins.
Financial analysis of some leading brands:
Loreal:
The L'Oréal Group grew its global consolidated revenues by almost 10 billion euros between
2010 and 2019. The company's consolidated revenues decreased by more than 1.5 billion
euros in 2020 and came to just under 28 billion euros after a decade of consistent growth.
Sales did, however, dramatically increase in 2021 and reached about 32.29 billion euros.
Sales reached an all-time high of almost 38.26 billion euros in 2022, increasing even further.
(Dominique Petruzzi, 2023)
Financial report analysis for 2021 reveals that the L'Oréal group saw +16.1% increase. The
total Growth at constant exchange rates came out to 16.9%. The net impact of modifications
in the scope of consolidation was +0.8%. According to stated data, the Group's revenues
reached 32.28 billion euros by the end of 2021, a rise of +15.3%. 557,672,360 shares make
up the capital of the corporation as of December 31, 2021. The capital will consist of
535,412,372 shares with one vote each as of February 10, 2022.
According to financial statements :
 Gross cash flow increased by 16% to 6,640 million euros.
 The necessary working capital was reduced by 88 million euros.
 Investments totaled 1,075 million euros, or 3.3% of revenues.
 At 5,653 million euros, net cash flow in year 12 increased by 3.1%.
 The stockholders' equity is 23.6 billion euros.
The financial sheet is still strong. L'Oréal acquired 22,260,000 of its own shares from Nestlé
on December 7, 2021. The Group's net debt at the end of December 2021 was 3,586 million
euros, including 1,670 million euros in financing leasing obligations.
Estee lauder
Company achieved record sales and profitability on an adjusted basis for the year, exceeding
company's expectations in the fourth quarter, and generated exceptional performance in fiscal
2022. Diversification allowed  utilize the situation and take advantage of the current
expansion, which proved helpful in the face of pandemic and macro complexity.(Fabrizio
Freda, 2022)
The net sales for the fiscal year that concluded on June 30, 2022, were $17.74 billion, up 9%
from the $16.22 billion recorded for the same time in the previous year. In comparison to the
same quarter the previous year, when net earnings were $2.87 billion, the company generated
net earnings of $2.39 billion. Diluted net income per common share came to $6.55, down
from the $7.79 posted at the same time last year. Adjusted diluted net profits per common
share were $7.24, up 12% . The year 2022 was Estée Lauder's most prosperous ever. In that
year, the company's global net sales reached over 17.7 billion US dollars, capping a decade of
nearly uninterrupted expansion.
 Net income for the year 2022 is $2390 million.
 Net cash flow for the year 2022 is $-1001 million.
 Total assets in the balance sheet for the year 2022 are $20,910 million, total liabilities
are $15,320 million and shareholder equity are $5590 million.
 Total revenue for the year 2022 is $17.737 million.
Coty
Coty is a well-known cosmetics firm with an extensive history in the beauty sector. The
business was established in 1904 and has since expanded to rank among the biggest in the
world for the beauty industry. Coty offers a wide range of brands in its portfolio that appeal to
different types of consumers. Under the Coty umbrella, some of the most well-known brands
are Covergirl, Rimmel London, Sally Hansen, and Clairol. Coty makes significant
investments in R&D to provide cutting-edge goods that satisfy consumers' shifting demands
and tastes. For instance, the business recently unveiled a range of augmented reality (AR)-
enabled beauty try-on kits that let customers visually put on makeup before they purchase it.
 Coty Inc. produced a global gross profit of over 3.4 billion US dollars in the fiscal
year 2022.
 Net sales for Coty Inc. were over 5.3 billion dollars, up somewhat from the previous
year's figure of about 4.6 billion dollars.
 About 1.5 billion dollars were spent on advertising and consumer promotions by Coty
Inc. Over 400 million more dollars were spent on advertising in 2018 than in 2021.
Reference:

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