Analysis: The Beauty Industry Post-COVID-19

Heading into 2020, the cosmetic industry was growing, buoyed by increased global demand and product innovation. For instance, L'Oréal S.A. LRLCY ended the prior year with revenue increasing 8%, on a year-on-year basis, due to growing demand in Asia. The same demand bump buoyed sales at Estée Lauder Companies Inc EL while LVMH LVMHF also saw revenue jump 9% in 2019, compared to the prior year.

In light of the health care pandemic, however, demand growth and innovation ceased as supply chains halted. The following is a detailed analysis of COVID-19's impact on the cosmetic industry. 

Top And Bottom Lines

Alongside the global travel bans which rendered supply chains non-functional and forced consumers to shift their spending behaviors, consulting firm McKinsey estimated this year's global revenue for the beauty industry would take a 30% hit. 

Following the initial outbreak, Japanese personal care company KOSÉ Corp KSRYY, alongside L'Oréal, LVMH, and Revlon Inc REV slashed their outlook, with respective sales all declining up to 20%.

Despite the drop, CEO Debbie Perelman remained confident Revlon's actions would help it maintain a leadership position. In fact, on a brighter note, companies are already seeing signs of recovery, with Revlon's e-commerce business growing approximately 47%, almost twice compared to the same quarter last year. 

New Normal In Skincare

Beauty brands have been forced to adapt to a world where consumers spend more time in their homes. As a result, glamour is far less important as the healthcare pandemic redefined the meaning of beauty.

In the face of shifting preferences, Estée Lauder reported strong sales in its active skincare category with several bestsellers being night creams and potent serums, as well as increased demand for AI-driven skincare maintenance tools. 
Thus, though traditional product line demand is recovering, COVID-19 is set to give birth to new categories of beauty products. 

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