Portable fragrances, sensitive skin care and mineral makeup may just save the beauty biz, according to industry insiders.

After the Recession of 2009, pockets of growth—as seen with the products above—show signs of hope for the U.S. prestige beauty industry, noted The NPD Group, Inc., a Port Washington, N.Y.-based market research company in recent findings.In 2009, the prestige beauty marketplace saw a 6% decrease in sales to $8.19 billion—so 2010 is going to be a tough nut to crack.

“This year was indeed a very challenging year for the beauty industry,” said Karen Grant, vice president and global industry analyst, NPD. “And now in 2010, the reality is that business will still be challenging.”

The overall industry decline was primarily driven by fragrance, said NPD in its market investigation. Total sales of fragrance fell 10% to $2.48 billion in 2009 in both men’s and women’s categories. One segment that performed slightly better than the overall market was gift sets, which dropped the least, down 8% in women’s and 5% in men’s, offset somewhat by the increase in average price, reaching an average of $64.50 for both genders.

Sensitive skin care SKUs like Dermelect Cosmeceuticals targeting common issues such as redness are selling well.

In women’s fragrance juices, sales of smaller sizes (1oz. and under) worked for both men’s and women’s fragrances. Women’s fragrance juices under one ounce grew 8% in units, versus annual 2006. Looking at new smaller SKUs in 2009, growth came from new items like the Harajuku Lovers Snow Bunnies, as well as existing SKUs like Beautiful and Pleasures.Innovative styles like the Romance and Ralph rollerballs and the solid perfume necklace from Daisy all performed well at retail. For men, growth came from 1oz. SKUs from Polo Blue, Polo Black, the One, Light Blue, and the original Polo.

So, do good things come in petite packages? According to Grant, absolutely.

Classic fragrances such as Estee Lauder Beautiful are holding strong in recent market declines, noted NPD.

“Smaller sizes are a great way for consumers to get a taste of what’s new or to remember a loved favorite scent.When someone is purchasing for his or herself, smaller sizes are also smaller investment and allow you to try even more premium priced options without making a huge investment,” she told HAPPI in an interview.

Additionally, when someone considering fragrance as a gift, smaller sizes are not only a thoughtful option, but a budget friendly one, added Grant.

As for the next big sector, prestige makeup, it posted a second year of declines—down 5% to $3.16 billion, noted NPD in its report. The only two segments to outperform the category were gift sets (+2%), fueled by new face-focused sets and the face segment (-2%), which was driven by mineral-based products.

The leader in face focused sets is Bare Escentuals, noted Grant.Also helping boost sales of face-focused sets were Lancome, Trish McEvoy, as well as Clinique.
“The popularity of these sets is that they all provide both value and a natural makeup look,” Grant told HAPPI.

This was aided in part by the fact that there was 50% more new mineral products introduced in 2009. Standouts among the newer mineral makeup offerings were MAC Mineralize and Lanome Ageless Minerale, Grant told HAPPI.

“It is important to point out that prestige only captures a small slice of the mineral makeup pie, but this product remains a big focus and a major driver of the face segment in prestige,” said Grant.

Limited edition rollouts from leading makeup brands like Bare Minerals entice consumers.

The prestige skin care category posted its first year of declines, down 4% to $2.47 billion. Even though the category struggled overall, on a positive note, skin care was the only beauty category to see a 2% rise in the fourth quarter (October-December 2009). The key driver to the quarter’s results was basic care skin care, specifically dedicated to sensitive skin, which saw positive growth – outperforming anti-aging growth for the first time, noted NPD.

And in skin care, it’s all about Estee Lauder. According to Grant, the leader in basic and sensitive prestige skincare offerings is Clinique.For sensitive skin, there were also offerings from brands at the highest end of the market like La Mer and also at entry price points like MAC – all Estee Lauder brands, by the way.

Whether skin care, cosmetics or fragrance, Grant added that the other “absolute reality” is that consumers—as many as three in five women—tell NPD they are buying beauty products because “they make me feel confident” and “even in these tough economic times, I will still buy beauty products because they make me feel better about myself.”
“As our consumers increasingly seek the best product for the price or the best price for the product we must continue to stay focused on what will increase our relevance to them,” said Grant.