Market Trends of Luxury Packaging Industry
Cosmetics and Fragrances are Expected to Drive Demand
- Increasing disposable incomes, particularly in emerging markets, are driving higher expenditures on premium products. This trend is further amplified by a growing emphasis on brand image and the necessity for product differentiation, making luxury packaging a crucial element in crafting the desired brand perception. Additionally, the influence of social media and consumers' desire to exhibit their lifestyles through their purchases are significantly contributing to the demand for visually appealing and high-end packaging.
- In China, online shopping has overtaken brick-and-mortar shops as the preferred method of purchasing cosmetics among consumers. In 2023, over 45% of China's cosmetic retail sales were made online. According to the National Bureau of Statistics of China, in 2023, the retail sales of cosmetics in China totaled about CNY 414.17 billion (USD 57.48 billion), registering an increase of 5.23% compared to sales in 2022. This growth in the sales of cosmetics is propelling demand for luxury packaging.
- The lifestyle and cosmetics sectors are experiencing a consistent increase in sales. As the demand for cosmetic products continues to grow in China's second and third-tier cities, the cosmetics retail market is expected to sustain its upward momentum. Additionally, the evolving perception among men regarding skincare is driving significant growth in the men's cosmetics market in China, which is further anticipated to support market growth.
- The demand for sustainable packaging for cosmetics and perfumes is growing with increased sales globally. In response, vendors are witnessing strategic collaborations. For instance, in January 2023, Dow and LVMH Beauty, a division of luxury conglomerate LVMH, partnered to expedite the implementation of sustainable packaging across LVMH's perfume and cosmetic products. This collaboration would facilitate the integration of both bio-based and circular plastics into various LVMH beauty applications, ensuring that packaging quality and functionality are maintained.
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Asia-Pacific Expected to Witness Increasing Growth Rate
- Asia-Pacific is expected to register high growth during the forecast period, owing to the increase in disposable income and consumer spending on luxury products. Large populations and massive urbanization have led to a rise in the adoption of urban lifestyles due to changing consumer patterns and the rising demand for luxurious products.
- Furthermore, in the region, the market is experiencing growth driven by sustainable packaging initiatives. Manufacturers of premium products are increasingly adopting biodegradable materials for their packaging solutions. Prominent international brands are emphasizing eco-friendly luxury packaging to align with their sustainability goals and enhance their corporate social responsibility.
- The primary factors driving the market's growth include growth in product launches in the fashion and cosmetic sectors. The major international brands are eyeing emerging economies, such as China and India, to set up their stores in these countries, as they pose various growth prospects. For instance, in October 2023, Dow Personal Care expanded its sustainable portfolio with three new product launches at in-cosmetics Asia 2023. The launch of new products, including the Beauty Rebalanced 2.0 Concepts Collection and the Sustainable Hair Care Collection, underscores the company's dedication to providing a comprehensive portfolio of sustainable and high-performance solutions in the personal care sector.
- The expansion initiatives of cosmetics manufacturers in the region are projected to create demand for different luxury packaging solutions made of plastic and paper. In March 2024, packaged consumer goods company Hindustan Unilever Ltd (HUL) intended to significantly expand its premium beauty business. The company planned to enhance its premiumization strategy by accelerating growth across its existing personal care brands, such as Tresemme and Lakme. This initiative came three years after the introduction of a range of digital-first brands, underscoring HUL's commitment to capturing a larger share of the premium beauty market.
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