The changing industry of ‘beauty’ is one manifestation of this demographic tailwind. A fast-growing industry with highly profitable companies that benefit from this significant demographic shift globally.
The difference is skin deep. A key to younger generations' beauty preferences is indeed skin deep. When asked in a survey whether they’d rather spend their money on skincare or makeup, 56.9 percent voted in favor of the former. Gen-Z and Millennials have skin on the mind even where makeup is concerned.
The majority actively look for makeup products that are protective of their skin as much as they are fashionable. Housing ingredients such as aloe and SPF rates highly for them as skincare is all about the “self-care.”
Self-Care is the new beauty trend. In fact, much of skincare’s expansion is thanks in part to the growing popularity of self-care, a lifestyle that promotes health via emotional and mental wellbeing. Pandemics may slightly interrupt a Megatrend but rarely change it much over time. This is one example where the companies well positioned on social media and on-line are overcoming the lack of footfall into city centres. Adaption in action.
A stock we have held for over 4 years as a major beneficiary of demographic shifts to younger generations
Estee Lauder has been a holding in our portfolio for 4 years. It is a principal beneficiary of the Gen-Z & Millennials Megatrend (amongst other Megatrends).
Covid-19 has not changed the long-term growth opportunity in the beauty industry providing a level of resilience. They are particularly well positioned in skin care which is a high margin business; one that helps it deliver very high levels of profitability. This year has seen its skin care products even being used by astronauts in space.
Since the lockdown, consumers have been shopping more online (especially those in the 50+ age cohort) and skincare routines are broadening. Also, with the millennial generation getting older and make-up serving as a recruitment tool for skin care, we believe the accelerating growth trend in prestige skin care is here to stay.
As skin care requires more research and development than other beauty products, customers tend to remain loyal to larger brands they know and trust. This stock and its management team continues to fulfill our expectations.
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