Looking good is an increasingly expensive hobby, but triple-digit price tags haven’t deterred the well-heeled from dashing toward a growing crop of luxury skin creams.
Ultrapremium skin care products — or those priced at $150 and above — account for a meager 3 percent of the $2.2 billion prestige skin care market, but generate the strongest growth in the overall category, where the average price point is $32.50, according to The NPD Group.
Estée Lauder boldly launched her $115 Re-Nutriv Crème in 1958 (today, its sells for $330), but the trend took root in earnest a decade ago and has benefited from a surge of activity in the last three years.
Although the superpriced products account for only 3 percent of the skin care market, those priced at $70 and above — or twice the market average — have more than doubled volume in the last three years to $380.2 million, growing from 11 percent of the category in 2002 to 22 percent by year-end 2005. At the same time, products under $70 dropped from almost 90 percent of skin care sales in 2002 to under 80 percent in 2005, and generated less dollar and unit volume last year than they did three years ago.
During that stretch, the over-$150 set has quadrupled in both unit and dollar volume and now totals $39.6 million in sales, noted NPD Group’s senior beauty industry analyst, Karen Grant.
Brands leading the charge into the elite realm include La Mer, Natura Bissé, Kanebo, La Prairie and RéVive. Their peers include a host of dermatological brands, including N.V. Perricone M.D., Murad, Dr. Brandt and Dr. Hauschka Skin Care.
Each brand’s guiding principle is the same: Results — not price — drive sales. Of course, fancy packaging and a compelling heritage don’t hurt either, given that many of these brands are built on word-of-mouth advertising.
Grant commented that players in this segment — at home in a select group of retailers including Neiman Marcus, Bergdorf Goodman, Saks Fifth Avenue and Nordstrom — continue to shatter the price ceiling.
“A $400 to $500 face cream is no longer unusual. The market seems to support it,” said Dr. Gregory Bays Brown, president and founder of RéVive, adding that women are looking for an alternative to plastic surgery. Brown acknowledged that when the company introduced its first product at $120 a decade ago, he thought consumers might find the price high. His initial concern has been put aside. On Sept. 5, RéVive will introduce a $1,500 antiage skin treatment called Peau Magnifique. Its star ingredient, Telomerase, costs $4 million a gram, said Brown. RéVive has already pre-sold 115 units — or $172,000 worth — across Saks, Bergdorf’s and Barneys New York.
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La Prairie, a Switzerland-based beauty firm with prices that range from the $40 Cellular Luxe Lip Enhancer to $650 for Skin Cavier Luxe Cream, also gravitates toward expensive ingredients. In October, La Prairie plans to introduce the $525 Cellular Radiance Concentrate Pure Gold, a 24-karat gold serum billed as “the richest skin care for the most privileged faces.”
“La Prairie uses only the most innovative, advanced and rare technologies and ingredients that ensure proven results and optimum efficacy. These technologies, ingredients and proprietary complexes come with a price,” said Lynne Florio, president of La Prairie, adding that the brand’s packaging reinforces its luxury standing.
“Beauty is a lifestyle. And in order to have beautiful, healthy skin you have to make an investment,” declared Nancy Hueske, general manager and marketing director for the Barcelona-based Natura Bissé, which boasts an average retail ring of $600. “Natura Bissé brings science to cosmetics. It uses the best ingredients in the highest concentrations,” Hueske said of the 28-year-old, family-owned brand. As for the hand-manipulated, marine DNA used in the company’s Diamond Drops, she commented that ingredients are costly and kept in a safe in Natura Bissé’s laboratory in Spain.
But as price points continue to soar, fewer consumers can afford to buy these products, warned industry consultant Allan Mottus. “When consumption starts dropping, you’ve got a problem on your hands,” he said, adding that a steady stream of price increases have hampered fragrance sales in recent years, from which the business has yet to recover.
Mottus acknowledged, however, that both La Mer and SK-II have succeeded in raising prices without losing sales.
“Customers are not as concerned about paying high prices for products with the best technology and science that delivers real results,” said Makoto Nakamura, president of Kanebo Cosmetics USA, which has a skin care offering that ranges from $40 to $650 for its Sensai Premier cream. He noted that the Japanese brand is the most expensive skin care per ounce, and its results are supported with clinical results. “We have over 200 scientists working in our scientific research facilities in Japan,” noted Nakamura.
Luxury skin care brands, often gushed about by celebrities, are aspirational, and the pool of shoppers — generally affluent women 35 to 50 years old — who can actually afford to buy them is small. Fortunately for firms entrenched in this space, younger consumers have turned their attention to staving off aging and the rich among them seem willing to shell out a great deal of cash to do so.
Many of them are mining their beauty regimens from the pages of celebrity magazines, a place where La Mer is frequently mentioned.
“It’s about influencers,” said Maureen Case, president of La Mer, Bobbi Brown and Jo Malone. “There’s a committed curiosity about the brand,” said Case, adding that aside from the occasional print ad, La Mer does not advertise.
“The experience [of La Mer] is almost an endorsement of the customer,” said Case. “People today are a composite of brands, and that blend is very modern. Luxury is always being redirected.”
Lauder purchased La Mer in 1995, and has steadily won over loyalists by touting the brand’s history. La Mer was created by aerospace physicist Max Huber, who looked to the healing properties of the oceans to soothe chemical burns caused by an experiment that exploded in his face. Twelve years later, he formulated the Crème, which relies on distilled sea kelp.
Case said that today La Mer harvests its sea kelp in San Diego, which is later packed on ice and flown to Huber’s New York laboratory, where it will ferment for about four months. The Crème is then hand-filled into jars. La Mer is currently sold in about 160 doors.
“This brand is about the product itself,” declared Case.
For its part, the Estée Lauder brand has continued the trend started by its founder and expanded its Re-Nutriv range, proving luxury’s merit in the broader department market, as well. Re-Nutriv skin care products reach up to $900 in price, and are currently sold in just over 500 doors.
“People will do a lot to look more youthful,” said Marjorie Lau, vice president of marketing, North America, for Estée Lauder. She noted that Re-Nutriv has a strong international business, particularly in Europe and Asia, where women tend to be more skin-conscious.
She added, “We are living in an age where people are youth-obsessed.”