The Business of Beauty in 2024: Trends, Challenges, and Opportunities
A comprehensive analysis of the beauty and wellness industries in the upcoming year
In the ever-evolving world of beauty and wellness, 2024 promises to be a year filled with excitement, challenges, and opportunities. As we delve into the latest trends and developments, it becomes clear that the landscape is shifting, presenting new possibilities for brands, investors, and consumers alike. From blockbuster M&A deals to the struggles of celebrity and influencer lines, and the quest for a clearer definition of wellness, let’s explore what lies ahead in the dynamic world of beauty and wellness.
Blockbuster M&A Deals Shape the Industry
The year has already seen two major beauty and wellness brands finding new homes, signaling a trend of increased M&A activity. Skincare label Dr. Barbara Sturm was acquired by Puig, while feminine wellness line The Honey Pot found a new partner in Compass Diversified. With the success of recent acquisitions by Unilever and Shiseido, more brands are expected to come to market, including smaller lines like Kiko Milano, Tree Hut, Pixi, and Erno Laszlo. The fear of economic conditions and inflation hindering valuations and strategic buyers has dissipated, making 2024 a prime time for beauty brands to seek superior valuations and the right strategic buyers.
Uncertainty Surrounds Buyers in the Beauty Industry
While the number of brands coming to market is increasing, the question remains: who will be buying all these brands? Beauty conglomerates such as L’Oréal and Unilever have been divesting from certain labels to focus on specific areas, making them less likely to jump on trends like “clean” or “natural.” As conglomerates tighten their theses and purse strings, it is expected that many of the deals in 2024 will be done with financial sponsors or unexpected buyers. However, not all brands will find the desired buyer, leading to uncertainty in the market.
Struggles of Celebrity and Influencer Lines
After the success of Rihanna’s Fenty Beauty and Selena Gomez’s Rare Beauty, many celebrities and influencers have tried their hand at building their own beauty and wellness labels. However, the market has not been kind to these lines, as seen with the failures of Morphe and Amyris. Retailers are becoming less reliant on celebrity and influencer lines, and talent may shift their focus to other projects, leaving these brands to struggle.
Challenges for Independent Labels
The success of brands like Drunk Elephant, Tatcha, and Glossier in the mid-2010s led to a surge of new beauty labels entering the market. However, capital is no longer flowing as freely as before, and fast growth without profitability is no longer enough to attract investors or retailers. With an oversaturation of brands, a rightsizing is inevitable, making it harder for independent labels to thrive in the competitive beauty industry.
The Evolution of Wellness
The definition of wellness is expanding beyond supplements and CBD. Themes like longevity are influencing skincare and healthcare, presenting opportunities for brands and retailers to explore holistic treatments, sleep advancements, and wellness-centric stores. Innovation in the wellness industry is expected in 2024, bringing new perspectives and experiences to consumers.
Conclusion:
As we embark on the journey that is 2024, the beauty and wellness industries are poised for significant changes. From the flurry of M&A activity to the challenges faced by celebrity and influencer lines, and the need for independent labels to find their niche, the industry is evolving rapidly. Amidst these changes, the concept of wellness is also being redefined, offering new avenues for brands and retailers to explore. The year ahead holds both excitement and uncertainty, but one thing is certain: the business of beauty will continue to captivate and inspire us all.