While a downturn or a market slow down represents de-growth for several categories, some verticals in beauty show high growth. Check out the Lipstick Index

1. THE LIPSTICK INDEX
Cosmetic category performance during economic slow downs

2. What is the Lipstick Index?
The lipstick index is a term coined by Leonard Lauder, chairman of the board of Estee
Lauder, used to describe increased sales of cosmetics during the early 2000s
recession.
Lauder made the claim that lipstick sales could be an economic indicator, in that
purchases of cosmetics – lipstick in particular – tend to be inversely correlated to
economic health. The speculation was that women substitute lipstick for more
expensive purchases like dresses and shoes in times of economic distress.
Lauder identified the Lipstick index as sales across the Estee Lauder family of brands.
Subsequent recessions, including the late-200s0s recession, provided controverting
evidence to Lauder's claims, as sales have actually fallen with reduced economic
activity. Conversely, lipstick sales have experienced growth during periods of
increased economic activity. As a result, the lipstick index has been discredited as an
economic indicator.

3. What's changed?
In the 2010s, many media outlets reported
that with the rise of nail art as fad in the
English-speaking countries and as far afield
as Japan and the Philippines, nailpolish had
replaced lipstick as the main affordable
indulgence for women in place of bags and
shoes during recession, leading to talk of a
nail polish index

4. The Lipstick effect - 2013 category mapping during recession
Make up category feature in the
growth list
Nail Polish & Mascara witness high
growth whereas Eyeliner got a small
growth lipsticks however do not
feature in this visual.
NOTE: Industry dynamics during the 2008/2009 downturn. Total category growth among 38 developed markets during
2008/2009.
The size of the bubble represents the intensity of the effect within each sector. The larger the bubble, the further away the
category growth rate is from the start of each sector growth bands.
IS NAIL POLISH THE NEW LIPSTICK?

5. Lipstick
Beauty and
Personal Care
USA -6.8 -1.5
United Kingdom 7.9 3.5
France -0.5 -0.2
Sweden -3.6 -1.1
Italy -2.3 0.6
Spain -1.2 -0.9
Germany 0.3 2.6
Note: Lipstick and Beauty and Personal Care Growth in 2009.
Market sizes, retail value RSP, US$million, fixed 2012 exchange
rates, year-on-year growth (%).
Rise in other beauty categories
In 2009,
• Lipstick sales in the US dropped by almost 7%.
• Only consumers in the UK maintained their spending
on lipstick that year,
• While sales in Italy, France and Spain declined

6. Same effect, different categories
Nail polish could be considered the
new “lipstick” of the last recession.
• 2008/2009, nail polish was the
fastest growing category in the
global beauty and personal care
industry
Note: Average growth among 38 developed markets across selected periods. 1999-
2000 and2008-2009 were recession years in most countries, while 2001-2007
represents the period of strong economic growth.

7. In 2008 – 2009
Cash-strapped women
rediscovered nail polish as
an affordable fashion
accessory and a morale
booster

8. Nail polish compared to non-grocery retail sales
Between 2008 and 2011,
nail polish achieved double-digit retail sales growth in the US,
Germany, the UK and Italy.

9. Key takeaways
The one thing that all of these
recession-proof items have in
common is that they offer instant
gratification and are generally
affordable.
“affordable” does not
necessarily mean “cheap” or “the
cheapest”, but rather the
opposite
The lipstick effect theory is
therefore all about shopper
defined affordability
the lipstick
effect

10. THANK YOU