Customers invest in premium-priced products

Despite a wavering economy, all of the U.S. prestige beauty categories enjoyed healthy growth in 2012, according to global information company the NPD Group, which presented in late January the U.S. and global beauty industry's first look at 2012 year-end results for skin care, makeup and fragrance at its annual "Hot off the Press" event at the Harmonie Club in New York.

Cosmetic Executive Women — a professional organization in the beauty, cosmetics, fragrance and related industries — partnered with the NPD Group to host this year's event.

According to NPD, the total U.S. prestige beauty industry showed an increase of 7% in dollar sales in 2012 compared with 2011.

"Coming off the wave of 2011, one of the most robust sales periods in over a decade for the beauty industry, 2012 has shown some great highs, along with some modest lows," stated Karen Grant, VP and senior global industry analyst for the NPD Group.

While all of the U.S. prestige beauty categories posted healthy growth, prestige skin care sold in U.S. department stores generated the largest growth at 10%, followed by makeup at 7% and fragrance at 5% compared with 2011.

"Even though consumer confidence continues to waver, there is momentum at both ends of the price and product spectrum. In 2012, along with smaller categories in beauty, we are seeing investment spending on premium-priced makeup, skin care [and] fragrance, as well as premium-priced sets, which lead in growth once again. Even in Europe, where the economic environment is more challenging, the major premium-priced category, fragrance, was positive. Premium-priced products remain one of the brightest spots in beauty and will continue to carve out market share across all categories and geographies in the New Year," Grant said.

The NPD Group also noted that the U.S. food, drug and mass channel (excluding Walmart) experienced nearly a 3% increase in sales for total beauty in 2012 versus 2011. Makeup sales posted the biggest increase at 5%, followed by skin care at 3%, while fragrance sales declined 4% in dollar sales compared with 2011. In national chain stores, fragrance sales grew 7%.

"In the United States, although we have seen some tempering in sales performance, compared with 2011, growth remains positive for both the prestige and mass channels. The trend of prestige beauty outpacing mass beauty continues to be evident since the recessionary period of 2009 and will likely continue into 2013," Grant said.