Should I Invest In The Makeup Industry?

Being a woman who wants to be smart with her money, I don’t like the idea of investing in companies that I don’t understand. I have thought about other industries that I resonate with and would be more inclined to do my research into because they make sense to me.

At the moment, I have been considering investing in the makeup industry, which is just a small part of the broader beauty and personal care industry. There seems to be no slowing down with this industry, with more brands, more money and more opportunities coming out of the works and can present a good opportunity for investors like myself, but with that, there are also some challenges with it.

Overall Industry Look

Growth

The first element I had to look at was the overall growth of the market, which is currently a very strong performer with continual expected growth each year, and as someone who uses the market, it’s very clear and easy to understand this trajectory. The makeup industry has outperformed other shopping industries like apparel. This industry has excelled during inflation, which is interesting as it’s not necessarily a necessity to most; however, there are so many affordable options still widely available to meet current wages.

Projections suggest the global beauty market will grow annually by 5% till 2030.

Resilience

The industry has shown resilience even during economic uncertainty, such as this inflation, as mentioned, and it is not a necessity. But also, as mentioned above, products are still affordable, as they are a purchase; these products last up to 3 months, so they are seen as a great short-term investment. This can be called the lip product effect.

Should I Invest?

The makeup industry, as part of the wider beauty sector, offers compelling investment opportunities due to growth and resilience to new customer demands and technological advancements. For example, brands such as Kylie Jenner and Refy Beauty are examples of creating new products that combine and are evolving with the demands for something new and must-have.

Here are some of my considerations currently:

What is my risk tolerance? As this industry is big and pretty saturated, I need to decide how much and where I will be putting it. Do I take a risk with a new makeup business in the hope it becomes viral and takes off, or do I invest somewhere where the risk and reward are minimal?

With that being said, that means further research into these brands to help guide my decision on the level of risk I want to take. While companies might have a great product, if they are bad at marketing and their online presence, it can seriously affect their success.

Due diligence means I need to look into a company's financial health, competitive advantages, pipelines, supply management and how quickly they are able to evolve with consumer demands and changes.

The beauty industry is going to be something that has both long-term and short-term potential, so I'm picking what I want. Do I want a slow burner that I believe will grow to be a billion-pound company one day, or do I want to keep my investments short and sweet?