Lincoln International’s Ashleigh Barker provides an update on the beauty market and an outlook for H2 2024.

In a recent column, Andrea suggests the “lipstick index”—the idea that consumers buy affordable beauty products during economic downturns—may not be as strong this time if a recession occurs. Andrea attributes the potential weakening of the lipstick index to consumers already having accumulated plenty of beauty products.

Ashleigh Barker, Director in our Consumer Group, “disagrees with the notion that we’ve reached peak beauty.”

“While it’s true that the beauty industry has experienced notable fluctuations, there have always been ebbs and flows across both channel dynamics (prestige versus mass) as well as the core categories (color, skin, hair, fragrance and broader personal care),” Ashleigh said.

She noted that while consumers might be starting to think about saving more, they are still prioritizing personal and self-care needs.

Ashleigh stated that there is sustained demand for premium products, even in crowded categories like skin and hair, as well as for those that offer value and quality through efficacy.

“Even as data may point to softer growth for the remainder of this year, I think it’s a factor of consumers becoming more selective with where and how they invest their dollars in beauty versus turning away from the industry altogether,” Ashleigh said.

From a positioning standpoint, companies that remain dedicated to their core strengths and strategically build customer trust and loyalty will thrive, she added. Success will come to those who innovate with new delivery systems or formats, demonstrate tangible results and support claims with clinical evidence, ensuring their products fulfill promises and capture market share.

In terms of deal flow Ashleigh noted, “Across M&A, Q2 and the first half of Q3 saw the market pick up with several notable deals in play, albeit at a slower pace than initially anticipated at the start of the year. However, we may not see every deal that’s currently in the market close before year-end with longer diligence periods playing out, and I expect more “out of process” proprietary deal flow to take center stage.”

View additional insights in the original article.