The vanity products business is booming, but the golden age is still to come as demographic trends firmly favor small luxuries, according to Bank of America Merrill Lynch.
"[Globally], vanity capital is approximately $3.7 trillion, and about the size of the German economy, the fourth largest in the world," BofAML equity strategist Ajay Shingh Kapur said in a note on Tuesday.
With the market projected to grow to $4.5 trillion by 2018, vanity products are "one of the few areas in global consumption that is seeing above average growth," he said.
Vanity products need not be expensive, but they must not be cheap. Typical products range from cosmetics and smartphones, to fitness wear and health foods. However, they also include high end products like luxury property, art, cars and fine wine.
"The really low-end stuff—cheap T-shirts, sneakers and watches, for example—probably do not qualify" because "they are merely utilitarian," said Kapur.
Demographic trends look set to boost spending: Women have more disposable income and particularly prone to spend on small luxuries that promise to improve their appearance, according to Kapur.
A case in point would be anti-aging cosmetics.