The global cosmetics market is expected to grow by five per cent annually and reach a volume of US$590 billion by 2030. This is the forecast put forward by management consultancy McKinsey in its new industry report. Experts anticipate the strongest growth in emerging markets, particularly in Latin America and South-East and Central Asia, where demand for cosmetics is rising amongst more affluent consumers. In Europe, moderate growth is expected, driven primarily by volume increases. According to McKinsey, the industry is holding back on price rises due to consumers’ price sensitivity and a selective shift towards cheaper products.

Perfume overtakes decorative cosmetics

According to McKinsey, the perfumery sector is experiencing particularly dynamic growth across all price ranges. The fragrance market is set to grow by six per cent annually until 2030 – driven by prestige and niche fragrances, as well as masstige and designer brands. Perfumery has overtaken decorative cosmetics and is now the third-largest category in the beauty industry after skincare and haircare. Skincare will remain the largest category in 2030, accounting for 40 per cent of the market. However, consumers are increasingly seeking out more affordable brands – particularly those recommended by dermatologists or originating from the K-Beauty sector. As a result, high-priced skincare is coming under increasing pressure, especially as aesthetic treatments and wellness services are competing more strongly with it. In hair care, professional products and technological innovations are driving growth in the premium segment, whilst mass-market brands are aligning themselves with premium offerings at lower prices. Meanwhile, colour cosmetics are regaining momentum after years of minimalist make-up trends – primarily due to interest in more striking looks and hybrid make-up and skincare products.

From shop to algorithm

At the same time, McKinsey observes upheavals caused by broader definitions of beauty and changing shopping behaviour driven by social commerce. As a result, wellness offerings, dietary supplements and aesthetic treatments are gaining in importance. Companies are increasingly developing products that transcend traditional categories. New players with innovative offerings could gain an edge over established providers. At the same time, product searches and purchases are shifting towards influencers, social platforms and digital marketplaces. With a 28 per cent share of global sales, e-commerce is already the largest beauty distribution channel and is set to account for the largest share of market growth by 2030. In the US, beauty sales on TikTok have risen by 260 per cent annually since 2023 and are set to reach four billion US dollars this year. McKinsey expects AI platforms to influence up to 35 per cent of e-commerce transactions in the coming years. Traditional sales channels such as department stores and specialist retail chains will need to find new ways to attract and retain customers.

Source: McKinsey