• by Aaron Baar , February 18, 2008

Despite challenging economic times, the beauty industry enjoys growth and may continue to do so, as long as companies keep introducing new products, particularly those with a natural or organic selling point.

According to research firm the NPD Group, the prestige beauty industry--defined as products sold mainly at department stores--grew 2% in 2007 with sales of $8.9 billion. Makeup, which accounted for a 38% market share, grew 4% to $3.4 billion. Skincare was also up 4%, to 2.5 billion, driven in large part by anti-aging products. Fragrance sales, which account for about one-third of the industry's sales, were down 1%, according to NPD.

"During challenging economic times in 2007, the prestige beauty industry managed to rise above the negatives," said Karen Grant, NPD's senior beauty industry analyst, in a statement accompanying the research. "Looking ahead, we do see opportunities with products, like organic/natural products, which are resonating with beauty customers of all ages. We have seen astronomical growth over the past few years with more natural brands and products hitting the marketplace, and we expect to see that continue."

According to NPD, anti-aging facial products accounted for 60% of skincare sales in 2007. The anti-aging products totaled $1.2 billion in sales, a 5% increase over 2006. Since 2003, anti-aging product sales have grown 28%, according to NPD.

Leigh Anne Rowinski, a director of client solutions and beauty industry expert at Information Resources Inc., tells Marketing Daily that anti-aging products span all age groups, from teenagers to baby boomers and older. "Skincare has been supporting overall [category] growth, and will continue to do so," she says. "We've seen some of this movement in the last three to four years as the prices have come down."

Rowinski adds that more companies are trying to find ways to create and market more natural or organic skincare products. Recent purchases of niche "natural" brands like Burt's Bee's by Clorox and Tom's of Maine by Colgate underscore that trend. "We are still at the beginning point and moving forward," Rowinski says. "The mainstream marketers are just getting behind this."