LONDON — Iris Ventures has cast an investor’s eye on the beauty business with a new report created in collaboration with trend forecaster WGSN.
The report, which will be published on Friday, is called “A New Lens on Beauty,” and features insights from the Iris team, which has invested in and helped to scale brands including Gisou, 111Skin, Olistic, Aromatherapy Associates, Kama Ayurveda and Charlotte Tilbury.
It looks at how consumers’ needs have broadened and evolved, and how beauty brands can win by taking a more holistic approach and discarding preconceived notions about aging.
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The report argues that product offerings “should go beyond superficial fixes to cater to multidimensional consumers leading increasingly complex lives.”
It also sees the industry “evolving into a new type of beauty, where a holistic approach will guide us toward products and practices that support our well-being long term.”
The report highlights a series of trends, including “slow aging,” or a desire to age well.
“This ‘new way to age’ will blur the lines between beauty, wellness and health care. Cellular beauty solutions that address biological aging, not just chronological aging, and ‘prejuvenation solutions’ for Gen Z, will aim to stop issues before they arise,” the report said.
Iris and WGSN also believe that a “less prescriptive and more intuitive approach to wellness is emerging. Younger generations will rebel against cliches and the pursuit of perfection through anti-wellness rhetoric and humor, to redefine self-care on their terms.”
Going forward, there will also be changes in age-targeted beauty, according to the authors.
“Age-related narratives are being rewritten. In a world where younger people are maturing faster and older people are acting younger and living longer, rigid ideas about what is ‘age-appropriate’ will become increasingly antiquated. A more open-minded and multilayered approach will emerge to serve every stage and age, from Alpha to Boomer,” the report said.
Looking ahead, premiumization is expected to drive growth in the luxury, prestige and masstige segments, particularly in skin care.
According to the report, premium beauty accounts for 40 percent of the global beauty market and is projected to grow at an annual rate of 8 percent. That compares with the 5 percent growth anticipated in mass beauty between 2022 and 2027.
The premiumization trend has been boosted by shop-in-shop partnerships and blended retail channels, such as Ulta Beauty at Target and Sephora at Kohl’s in the U.S. Mass consumers, meanwhile, demonstrate channel loyalty, with 94 percent of U.S. prestige beauty shoppers engaging with mass channels, too.
The report contends that beauty retail remains essential, as consumers prefer omnichannel shopping and in-store product discovery.
Some 100 percent of Sephora U.S. consumers make beauty purchases both in-store and online, while the figure stands at 96 percent at Ulta Beauty and at 86 percent at Target, the report said.
It also addresses the current M&A market for beauty. It argues that the sector “is open for best-in-class assets, and will continue with fewer, higher quality deals at high multiples across strategics and private equity.”
“Strategic beauty groups continue to be very active, all making moves in the past 12 to 24 months. As they digest recent acquisitions and build strong balance sheets with high cash-generative businesses, it is expected that they will be ready to redeploy capital on best-in-class assets. We will also see an increased focus from larger luxury groups entering the category,” the report said.
Iris specializes in purpose-led, consumer-centric brands and tech-based solutions that support “healthier, happier and more convenient lives” across consumer sectors including beauty, health, wellness, family, lifestyle, nutrition, daily tech and modern commerce.
The fund said it aims to fill “a critical funding gap” in early-stage growth, backing companies that fall between seed-stage generalist VCs and late growth buyout consumer funds.
WGSN is a cross-industry trend forecaster that partners with brands on strategic foresight. It focuses on consumer and design projections in beauty, consumer tech, fashion, interiors, lifestyle, food and drink forecasting.
