Beauty’s “Vibes Economy”: Industry Growth Data Doesn’t Match Many Brands’ Reality

There appears to be a widening disconnect between what’s reported about beauty industry performance and how many beauty companies are experiencing it on the ground.

Market data points to steady growth, with beauty outperforming most other consumer sectors and broader gross domestic product expansion in the United States. According to market research firm Circana, American prestige beauty sales rose 4% to $36 billion in 2025, while mass beauty sales increased 5% to $72.7 billion. Unit sales rose 3% in prestige and 2% in mass, indicating moderate advancements in demand across price tiers. By category, makeup grew 4% in prestige and 2% in mass, hair grew 8% in prestige and 4% in mass, skincare grew 3% in prestige and 4% in mass, and fragrance grew 5% in prestige and 15% in mass.

Data from market research firm NielsenIQ shows beauty and personal care sales up 11.4% to $123.6 billion, with in-store sales rising 2.8% to $63.8 billion and online sales climbing 22.2% to $59.8 billion. Category growth was widespread. Fragrance jumped 25.1%, hand and body lotion rose 14.6%, bath and shower increased 10.9%, facial skincare grew 10.7%, haircare climbed 10.2%, and cosmetics and nail gained 10%.

Yet, founders, operators and investors often describe a far more challenging operating environment than the topline data would suggest. With that context in mind, for this edition of our ongoing series posing questions relevant to indie beauty, we asked eight founders, executives, consultants and investors the following: Does this disconnect ring true to you? If you had to estimate year-over-year growth for the beauty industry today, where would you put it? What do you think “healthy” growth looks like in the current environment?

Amber Williams Fractional Chief Brand Officer and Advisor, Prestige Beauty

This disconnect absolutely rings true, especially for brands that are in a season of business not fueled by retail expansion, repeat new product launches or celebrity endorsement. The massive boom of growth that defined the post-pandemic beauty surge has slowed as economic uncertainty and global risk continue to weigh on consumer purchase decisions.

The topline numbers reported by several research houses do not fully indicate where consumer spend landed, who captured the growth or what it cost to get it. Growth is likely concentrating at the top, with enterprise-level businesses and beauty conglomerates absorbing the bulk of it, which explains why the operating environment for small- to mid-sized brands feels significantly different from what the data suggests.

The prestige beauty brands I work with are doing everything right by conventional standards. They are hitting quality benchmarks, showing up at retail, executing on social, forging strategic partnerships and minding their P&Ls carefully. But even with flawless 360 execution, cutting through in a market with insane customer acquisition costs makes double-digit growth far out of reach for many.

If I had to name an honest growth number for an independent or mid-market prestige brand right now, I would say 3% to 6%. Anything above that typically traces back to a viral moment, a major retail placement or a category tailwind specific to one SKU.

One brand I worked with experienced over 7X topline revenue growth in 12 months, primarily as a result of a full rebrand and digital retail expansion but sustaining momentum past that initial surge requires a deliberate shift in how a brand defines success.

Healthy growth has margin improvement and customer retention attached to it, not just a top line that looks impressive on paper. Now is the time for brands to refocus their growth strategies toward the long game. Reassess the foundation of your brand to ensure you have a defensible market position with structural advantages that can compound over time, albeit slowly in certain seasons.

Andrew Ross Senior Advisor and Venture Partner, XRC Ventures

Mark Twain supposedly said there are three kinds of lies: lies, damned lies and statistics. I don’t think anyone is deliberately lying here, but I think the beauty industry may have stumbled into a fourth category: statistics that are true but misleading. The disconnect is real. I think it comes down to four things.

First, the pie is growing but there are exponentially more forks at the table. The industry continues to fragment: new indie brands, celebrity launches, K-Beauty imports (now outpacing French exports to the U.S.), luxury fashion houses entering the category, and dermo-cosmetics eating into traditional skincare.

Total beauty spending can grow 4% to 5% while the average brand's share of that spending declines. The Circana and NielsenIQ numbers measure aggregate demand for beauty products. They don’t measure the health of individual beauty businesses.

Second, consumer loyalty is dissipating. NIQ data shows average loyalty to beauty brands has declined 20% in the past two years. McKinsey describes "promiscuous shopping behavior,” lots of discovery, very little brand loyalty. Moreover, consumers are loyal to products that work, not brands that launched them.

Eighty percent of brands surveyed at Cosmoprof this year said consumers are more experimental than ever, switching on trends or TikTok recommendations even when they're satisfied with what they have. That means every dollar of industry growth requires more brands to fight harder for a consumer who may not come back. Trial is up. Repeat is down. The topline benefits. Individual P&Ls suffer.

Third, the pricing lever seems largely spent. Much of the 7% annual growth from 2022 to 2024 was driven by price increases during the inflationary period, not volume. McKinsey now projects 5% forward growth—still healthy, but the easy gains from pricing are over. Circana's full-year 2025 data shows prestige beauty grew 4%, with units also up 3%, which is solid, but that shift from price-led to volume-led growth requires a fundamentally different playbook, and many brands are still in the process of making that adjustment.

Fourth—and this is the one that explains the disconnect most directly—growth is concentrating among fewer winners. The industry averages mask an increasingly skewed distribution.

Prestige skincare was challenged for most of 2025 while masstige brands grew high single digits. New fragrance launches accounted for nearly a third of total fragrance dollar gains. That means existing portfolios barely contributed. A handful of brands (Rhode, certain K-Beauty players, select masstige performers) are capturing disproportionate share while the long tail struggles.

The median brand experience is meaningfully worse than the mean. Combine this with point No. 2, where growth is more product-led than brand-led, and you have a much harder landscape in which to drive sustained brand growth.

Finally, the categories driving the headline growth at least until very recently, fragrance and hair, aren't where most indie and mid-stage brands compete. The categories where founders disproportionately operate, skincare and color cosmetics, have been growing at or below the rate of inflation.

If I had to put a number on "real" unit growth in 2026 for a typical indie or mid-stage brand operating at $20 million to $75 million in revenue in skincare or color without a major new distribution win, I'd say flat to low single digits for prestige and flat to mid-single digits for masstige. That's the lived reality beneath the 4% to 5% headline.

And "healthy" growth in this environment means unit growth at or above the category rate with stable gross margins, not topline expansion that comes at the cost of margin-destroying promotions and relentless newness.

It’s hard out here for founders and their companies. The industry is healthy. Many of the businesses inside it are not. That's the disconnect, and it's going to get even sharper in 2026.

Karen Young Founder, The Young Group

We’re definitely experiencing two different points of view where these questions are concerned. Brands are being pummeled from all angles: supply chain challenges, tariffs, layoffs, brick-and-mortar retail weaknesses, category saturation, sinking consumer confidence, increasing consumer debt and increasing costs for everything (consumer acquisition costs, advertising, marketing, packaging). Many brands have closed, filed Chapter 11 and switched out their senior executives.

Consumers are stressed for obvious reasons and shopping more prudently than in recent years. However, they are still shopping, and I believe they will continue to do so, even if they’re trading down. We can thank dupes for being part of that.

I believe growth, perhaps only in single digits, will continue. TikTok Shop is projecting $20 billion in sales this year, although this is no guarantee of profits for the brands selling on the platform as costs continue to rise.

This “healthy” growth will happen for several reasons. Beauty has become part of a much broader category: wellness. Consumers are buying into the concept with health patches, ingestibles, wearable health tracking devices, anti-stress therapy, LED light therapy and sleep aid accessories. The list is long. Many of these purchases will take away from the purchase of more traditional beauty products, but we have trained the consumer to believe they are all part of the same family.

Social media has convinced the consumer that beauty products, under whatever guise, are indispensable for their mental and physical well-being. Five generations of consumers believe these products are must-haves because they feel better and believe they look better because of them. These products are available almost everywhere, 24/7 and, compared to other consumer categories such as food, fashion, tech, travel and home furnishings, are very affordable.

Mass-market offerings are very high quality and, again, dupes have changed our way of thinking about product value. A little self-indulgence feels good in this chaotic world. Social media reminds us the category is hip and cool, and it’s a great escape. And don’t forget about all the celebrities who constantly remind us of these qualities.

Conclusion: Pricing will continue to be an issue. Prove your brand’s value. Pare back. Run a tight ship. Trim the assortment and reduce your SKUs if they aren’t profitable. Listen to the consumer. She’s driving the bus.

Lindy Firstenberg Director, Beauty, Health and Wellness, AlixPartners

The undiscerning eye would say the gains in these categories have been split across what is a very crowded market, thanks to accessible co-manufacturing, growth in DTC and Amazon channels, social media frenzies and so on. Twenty-five percent YOY growth in fragrance doesn’t translate to double-digit growth for the big players. LVMH perfumes and cosmetics organic growth in 2025 was flat YOY. L'Oréal 4% like-for-like, while Estée Lauder posted an 8% decline.

Today, capital is tighter and expectations are higher. Plus, the measuring stick has changed. It feels like yesteryear when assets were being valued at revenue-based multiples because today it's all about the EBITDA multiple. Despite there being more sellers than buyers, some are charging forth and simply selling their assets at a steep discount. Remember when Too Faced was purchased by ELC for $1.45 billion ten years ago? Let's see how that sale shakes out. Yet, despite these paradigm shifts, the market keeps growing.

Consumerization of professional products (or “medical grade,” though that term brings more questions than answers) is here to stay with the rise of consumer PhDs. L'Oréal’s stake in Galderma wasn't some fun diversification exercise. It's a long-term play into medicalization, which the conglomerate has long supported with La Roche-Posay, SkinCeuticals and Medik8. Plus, you have an entirely new crop of entrants entering first through professional channels—Aramore, Element Eight for starters. While there are upsides, we also see bleeding from health into the medical and cosmetic surgery fields as consumer dollars are being stretched into a new discretionary space.

Personal care is now taboo-less. Previously “mis-mannered" topics are not only on the table, but on the forefront. We're not just talking about mental health and menopause, though both of those have come a long way (yet, of course, we have further charting to go). But we're talking vaginal care, sperm health, hemorrhoid support and even Knix makes urinary incontinence feel cool.

Health and wellness have brought men into the beauty category as the three previously independent sectors become one. Men are not only entering beauty, but doing it in a significant way in some categories. Their penetration into fragrance is only growing as body mist is back and gen alpha and gen Z men proudly display their “scent wardrobes” online.

And, of course, our dear luxury players who are leveraging their halo to enter the sector. We're not just talking about fragrance, which now feels inevitable for every single luxury brand in existence, but cosmetics, too. Consider Louis Vuitton Beauty: To some or even, surprisingly many, a $160 lipstick for a piece of the Louis Vuitton dream factory feels like a steal. This can erode share from middle-market players.

These forces noted above have created a disconnect, one driven by:
(a) integration of beauty, health and wellness as consumers are now budgeting and shopping that way,
(b) the rules of the game no longer applying as the handshake deals and arrangements of the past no longer apply,
(c) consumers are looking for brands that not only offer identity resonance but also deliver on niche needs.

Brystal Balathazar Founder and Fractional CMO, BrandSpark Consulting

What market reports capture is dollar sales. What they don't capture is that a significant portion of those dollar sales are being driven by price increases rather than genuine demand growth. Units were flat or declining in key categories while dollar figures climbed. That's not an industry expanding its consumer base. That's an industry charging its existing customers more, and there's a meaningful difference between the two.

What the data also can't show is what it now costs to generate that revenue. The economics of building and running a beauty brand have repriced significantly over the last few years and not in a forgiving direction. Customer acquisition has become genuinely punishing. Paid social and influencer marketing, the channels that built the last decade of beauty brands, are delivering diminishing returns at higher price points.

The most powerful discovery tool today has quietly reverted to physical retail and a genuine personal recommendation, which means brands that built their entire acquisition architecture around digital are now rebuilding from the ground up while still paying yesterday's media costs. Layered on top of that are real COGS pressures: tariffs, packaging costs, freight, all stabilizing at a higher baseline than anyone underwrote their business against.

And sitting on the other side of that equation is a consumer who has been genuinely educated by the dupe economy and K-Beauty to interrogate the value of what she's buying in a way she simply wasn't three years ago. The result is a business environment where top line growth and business health have decoupled in a way that feels disorienting to operate inside of.

The piece that no data set will ever capture is the toll this has taken on the people building these businesses. The layoffs at companies that felt untouchable a few years ago. The indie brands that built real communities and real loyalty quietly announcing they're closing. The funding environment that has gone from wide open to nearly frozen. When founders and operators describe a market that feels brutal, they are not being dramatic. They are describing something real that the aggregate numbers simply aren't built to reflect.

If I'm being honest about where genuine demand-driven growth sits right now, I'd put it somewhere in the 3% to 5% range, and that number is being carried largely by fragrance and clinical haircare, two categories earning their growth through real consumer desire rather than pricing math.

To me, healthy growth in this environment isn't defined by a percentage at all. It's a business where contribution margins are expanding alongside revenue, where the best customers are coming back without being incentivized to do so, and where the brand has earned enough genuine loyalty that it isn't entirely dependent on paid acquisition to survive. That business is harder to build right now than it has been in a long time. It's also more valuable and more durable than almost anything that got built during the easy years.

Carolyn Thielman Founder and Fractional CFO, Thielstyle Consulting

The disconnect absolutely rings true. Industry data may show steady category growth, but that doesn’t always reflect how individual brands experience the market. For emerging brands, the environment often feels far more competitive.

In the past, smaller brands could plan for outsized growth simply by expanding distribution or scaling off a smaller base. Today that’s much harder. Customer acquisition costs are higher, product discovery is fragmented across platforms, and retailers are demanding stronger performance. Brands are no longer riding a wave of category expansion. They’re competing for share.

So, what does this mean for beauty founders and CEOs? It means you can’t manage today’s market with yesterday’s assumptions. At the industry level, I would estimate growth in the low-to-mid single digits across many beauty segments. But at the brand level, growth can vary widely. Brands that truly understand their customer and focus on a clear niche are the ones most likely to outperform. In tougher markets, growth doesn’t disappear, it becomes more granular.

For founders, “healthy” growth today is disciplined growth. It’s not just about increasing revenue. It’s also about knowing when not to chase it. Start by asking harder questions: Is growth being driven by stronger customer demand or by increased discounts? Are we building repeat customers or simply buying one-time sales? Are we visible where consumers experiment and convert?

In navigating this environment, smaller brands will need to focus on alignment with pricing, value proposition and product positioning with a clearly defined customer, and then measure growth against profitability, not just topline momentum.

Brian Fox Krawczyk Founder and Chief Creative Officer, PointNine Fragrance

This disconnect rings true in the words of many of my contemporaries, but I believe it is short-sighted. Globally, brands are experiencing the same turbulence that the world is experiencing. I believe this turbulence makes it seem harder to source, create and launch new, innovative consumer products. Global cultural strife, rising populism worldwide and additional obstacles posed by tariffs on imports and exports can feel overwhelming for some brands.

I believe that all of us in the beauty, fashion and fragrance industries simply need to stay focused on our brands' growth and not be distracted by 24/7 global news, divisive social media and the ongoing woes of the global financial markets. I believe, as beauty, fashion and fragrance creators, we need to stay laser-focused on product and brand innovation and launch products that fit the changing needs of our global culture and consumers.

I firmly believe that, if you focus only on money, you will never increase your brand profits. If you focus on being the best brand for change, innovation and consumer needs right now, you will holistically strengthen your brand and grow your sales and profits exponentially.

I would expect year-over-year growth in the beauty industry today to be mostly in the single and lower double digits as market research numbers show. I believe this goes back to the mindset of global beauty brand creators and their focus on what shouldn't matter to them.

As leaders in the beauty, fashion and fragrance industries, it is our job to help consumers weather cultural and social upheaval by inspiring them with creative, aspirational products that help them forget the world's problems and issues. Everyone wants to buy aspirational beauty products, fashions and fragrances that make us feel better about the world we all live in.

I was raised by L'Oréal at the beginning of my career. At L'Oréal, only high double-digit growth was seen as successful. They pushed me to dig deep within myself to identify creative problem-solving, marketing and sales strategies to help me achieve high double-digit annual growth. This is what we all must do.

David Whitcroft Managing Partner, Crew Finance

Yes, that aligns with the rising competition we've seen in the beauty industry. While the aggregate growth rate shows an expanding sector, many challenges appear at the individual brand level. Increasing input costs continue to pressure product-level margins and marketing has gotten more expensive every year.

While we see fewer grow-at-all-costs approaches, unprofitable customer acquisition is still common in DTC. Brands pursuing that strategy increase CPM, CPC, CAC for brands struggling to find a profitable approach. That competitive tension results in headwinds for brands despite combined sector growth, even as brands try to find a pathway to profitable growth.

If you have a question you'd like Beauty Independent to ask founders, executives, consultants and investors, send it to [email protected].