By CultureBanx Team
- Sales of face care items dropped 2.1% in the past 12 months
- Lipstick has wide profit margins: A tube of lipstick costs about $2.50 to produce yet can command as much as $35
Impulse beauty buys are fading as the ‘Lipstick Index’ gets smeared. In the U.S. there was a 2.1% drop in sales of face care items in the 12 months to Oct. 1 compared to a year earlier, Bloomberg reported. Even though the dollar is strong, other areas of the economy are faltering. Makeup sales, and lipstick, in particular typically aren’t as affected by inflationary pressures, but that seems to be shifting.
Why This Matters: The Lipstick Index has been a longtime economic indicator during times of recession, because despite economic downturns, lipstick sales grow as consumers still want to buy one small item to make them feel good. We’ve moved away from living in a time of always wearing a mask and lipstick sales started to surge. Data from global market tracking firm NPD Group found sales of lipstick and other lip makeup grew 48% in first-quarter over previous year, exceeding $222 million.
Lipstick has wide profit margins: A tube of lipstick costs about $2.50 to produce yet can command as much as $35. NielsenIQ recently reported that while prices for consumer-packaged goods rose 8% at the end of 2021, health and beauty goods increased by just half that amount at 4%.
Consumers want to look good when they feel bad about the economy. As consumer sentiment fell in the spring and early summer, lipstick sales rose implying “the lipstick index is alive and well,” said Larissa Jensen, vice president beauty industry advisor at NPD.
Take Walmart (WMT +0.62%) for example, in 2021, the company told CNN that lipstick is the top performer across all segments of cosmetics, and that lipstick sales were a standout in its quarterly report.
Situational Awareness: Here’s a quick Lipstick Index history lesson: during the Great Depression industrial production plummeted 50%, makeup sales actually increased between 1929 and 1933. The recession of 2001 was fueled by the September 11, 2001 terrorist attacks, but The Wall Street Journal reported that lipstick sales rose 11% over the period.
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