They call it stuck in the middle for a reason. In beauty, mid-sized brands are feeling the squeeze.
That pressure is showing up in growth expectations. One beauty industry consultant told us that, across the brands the consultant works with, ranging from roughly $2 million to $50 million in annual revenue, planned growth for 2026 is averaging in the low single digits. Rather than pursuing rapid expansion, many brands are sharpening focus through fewer product launches, tighter assortments and narrower marketing priorities.
Those tempered plans suggest mid-sized brands are confronting a distinct set of structural challenges. Larger companies benefit from scale efficiencies and retail leverage, while emerging brands can grow quickly from smaller bases and strong traction on digital platforms like TikTok. Brands in between, however, may be particularly exposed to rising customer acquisition costs, intensified competition, retailer demands, funding constraints and a fragmented discovery landscape.
Against that backdrop, for the latest edition of our ongoing series posing questions relevant to indie brands, we asked 11 founders, executives, consultants and investors the following: What are you seeing specifically that is tripping mid-sized brands up? Which pressures are structural versus cyclical? What can brands in this revenue range do to regain momentum? How should smaller brands prepare themselves now to avoid getting stuck in the middle later?
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Rose Fernandez Beauty Executive and Strategic Consultant, Cosmo Innovation Group Small- to mid-sized beauty brands are being squeezed from every direction: rising costs, tariffs, consumers with short attention spans or, frankly, those who just want fewer things, tightening capital and narrowing distribution options. The brands that will survive this won’t necessarily be the most innovative from a product perspective. They’ll be the brands that are no longer using a playbook designed for much larger brands with much greater budgets and awareness.
Discipline is what matters right now: scrutinizing marketing spend more closely and reallocating it to tight priorities. NPD pipelines are also being reevaluated. Maybe one launch versus two—or none at all—may make more sense. Leadership is more commonly fractional, which allows for that narrow focus and tighter budgets, while the implementation of AI tools is filling gaps and offshore resources are helping build truly lean teams. This is the adaptation that is required.
Brands without a Sephora or Ulta partnership to anchor awareness and trial are strengthening the conversations they’re having with their direct customer. What is critical here is that the brand is having the right conversation in email and social through creators. Email and creators are not broadcast tools, but important for delivering informative exchanges that educate, entertain and make the customer feel like they are genuinely inside the brand. The same goes for events and activations. These don’t need to be spectacles. People want connection, not production value.
What is really important here is a fundamental shift from breadth to depth: fewer SKUs, tighter creator rosters, smaller but more loyal audiences and meaningful content. None of this works if the product isn’t genuinely great. The brands that get it will build real growth: the kind that compounds.
- David Whitcroft Managing Partner, Crew Finance
This more competitive environment, with more brands launching into a relatively flat market, makes the middle of the curve the hardest place to be. Scaled brands have more resources, while niche or early brands have a smaller audience to speak to. It is a structural change over the past 10 years. Combined with the operational complexity of navigating tariff uncertainty and the working capital issues that have bottlenecked brand growth, you can see why brands must run harder to stay in place.
At this inflection point, there is also a migration to omni and wholesale/retail channels. That again causes the company to orient to new challenges for the team across product development, supply chain and resourcing. Additionally, it's a harder fundraising environment, so brands are not able to spend their way out of problems.
We believe smaller brands should be focused on their long-term goal. What does the company look like 10 years from now? How will you launch new doors and fund that working capital need while keeping the brand love of your customer?
- Ada Polla Co-Founder and CEO, Alchimie Forever
The beauty industry as a whole is indeed facing a number of structural pressures and challenges that are impeding fast growth for small- and mid-sized brands. From a social media perspective, rising customer acquisition costs, constant algorithm changes, platform updates and the emergence of AI influencers mean that social media is no longer a silver bullet for growth (unless you are a TikTok-native or influencer-launched brand).
While social platforms provide a critical connection to the consumer for brands of all sizes, larger brands likely have more opportunities to connect with their audience (i.e., through POS or brick-and-mortar touchpoints, big influencer and paid media budgets, wider distribution). Smaller and mid-sized businesses, which may lack the wide distribution or large budgets of bigger brands, rely heavily on that connection to drive many aspects of the marketing funnel. It's a good reminder not to put all your eggs in one basket.
From a brick-and-mortar perspective, the distribution landscape has shifted dramatically over the last few years. Between Saks’ bankruptcy, and Ulta and Nordstrom launching marketplaces, the distribution playbook has been upended.
In addition to this landscape change, multi-brand specialty retailers have countless brands knocking on their doors at all times, which means that existing brands are constantly at risk of being exited. While launching in Ulta or Sephora has typically been seen as the “end all be all” for a small- or mid-sized brand, many have launched, struggled and exited within 12 to 24 months. Without the resources and budgets of larger companies, succeeding in retail is increasingly difficult.
We are also facing both assortment complexity and supply chain challenges, which is dampening the appetite for small- and mid-sized brands to continually launch newness despite the fact that new products have always been one of the easiest ways to drive revenue growth.
And, speaking of newness, we are definitely in an overcrowded marketplace despite numerous beauty brand closures over the past couple of years. Yet we continue to see new brands being launched, mostly by trendy influencers and brand incubators aiming to leverage the latest trend (for example, acne care and K-Beauty).
- Carolyn Thielman Founder and Fractional CFO, Thielstyle Consulting
What I see tripping up mid-sized brands is a mismatch between the infrastructure they’ve built and the economics of today’s growth. Many brands in the middle have invested ahead of scale, building teams, systems and overhead designed to support higher volume. That strategy worked when growth could come quickly from new distribution or expanding a small base.
But the market has shifted. Customer acquisition costs are higher, retailers are demanding more margin, and product discovery is fragmented across platforms. Growth simply takes more effort. And when growth slows, brands can be left with infrastructure designed for a larger company but without the sales volume to support it, putting pressure on cash flow.
To regain momentum, brands in this range need to clearly separate investments that service growth from investments that drive growth. Too often those get blended together. In tougher markets, growth doesn’t disappear, it becomes more granular. The companies that move forward are the ones that get sharper about their niche, pricing strategy, value proposition and product positioning. It’s essential to put your resources into these drivers.
A strategic approach is to start by defining what a high-growth scenario would actually require operationally and financially. Then, align spending with current market realities and identify the gap:
- What investments truly drive growth versus simply support existing demand?
- How quickly can inventory and operations flex if demand increases?
- What spending is needed to support growth?
- Where should spending be variable to sales and at what levels should we invest?
For smaller brands, the lesson is to stay disciplined about scaling infrastructure. It’s not just about increasing revenue, it’s also about knowing when not to chase it. Build the capabilities that drive growth first and let the organization expand as the revenue proves it out. That’s the best way to avoid getting stuck in the middle later.
- Brystal Balathazar Founder and Fractional CMO, BrandSpark Consulting
The middle-market squeeze is real, and what makes it particularly painful is that it looks fixable from the outside. These brands have viable products, real customers and a national retail presence. The problem isn't the brand. It's that the economics of the industry have shifted underneath them, and the growth playbook that got them to $10 million is often the very thing working against them at $30 million.
What's tripping these brands up is a combination of retailer leverage and strategic diffusion. A mid-sized brand inside a major retailer is essentially running a second business dedicated entirely to satisfying that partner: co-op spend, markdowns, promotional compliance. That cost structure rarely makes the growth headlines, but it quietly hollows out the margins that should be funding innovation.
At the same time, many mid-sized brands have stretched themselves trying to capture more shelf space, more consumers, more categories. The result is a bloated SKU count and a diluted point of view. In a market where the consumer has infinite choices, a brand without a differentiated reason to exist gets skipped, regardless of distribution.
Some of this is cyclical and will self-correct. But retailer leverage and the fragmentation of discovery are structural, and the brands navigating this well have accepted that. They have stopped trying to out-spend the conglomerates and started out-thinking them. They are building brands people genuinely love, not just brands people happen to buy. That distinction is incredibly important.
In this environment, love is a financial moat. It comes from a point of view distinct enough to stand out in a market that has largely defaulted to clinical sameness. It comes from knowing your core customer so deeply that you are solving needs she hasn't yet articulated.
The brands doing this well are not learning about their customer through quarterly data pulls. They are in her comments, in her DMs, at the events she actually attends. They build products in response to what she is telling them, and she rewards that attention by bringing everyone she knows. That kind of organic advocacy is the only marketing that is truly inflation-proof.
For brands at every stage, the strategic gift of this moment is clarity. The market is telling you exactly what it will reward: a differentiated product with genuine efficacy, a core customer who is deeply understood, and a business model that doesn't require scale to be profitable. Get those three things right and everything else—the right retail partner, the right capital, the right growth trajectory—becomes significantly easier to find. The brands who do that foundational work now will enter the next cycle with real leverage and real options.
- Andrew Ross Senior Advisor and Venture Partner, XRC Ventures
Mid-sized beauty brands stall because the growth drivers that got them to $20 million to $75 million have natural ceilings, and they haven't yet built the capabilities for the next phase. Every brand has multiple S-curves. The first one is usually powered by a distinctive idea, strong product development on one to two hero SKUs, a viral moment on TikTok and/or one big break on distribution, typically a Sephora or Ulta launch or an Amazon ramp. Sometimes it’s just one of those things.
Those can carry a brand a long way. But, at some point, you run out of gas. Your hero SKU matures. Your initial retail footprint and the trial that comes with it slow to repeat. Your next increment of growth requires either a second major retailer, with the channel complexity that creates, assortment expansion or—heaven help you—going international. Each of these demands different capabilities than what got you your first wins.
This is the structural challenge. Incremental growth gets harder the bigger you are (simple math), and more of your growth levers have to work together to achieve it. To jump onto the next S-curve, the first diagnostic question is whether you have a business model problem or a consumer problem.
If it's a business model problem, it is solvable. You have a consumer who loves you, but your commercial engine isn't firing on enough cylinders at the same time. NPD, full-funnel marketing, pricing and promotions, in-store execution, multi-channel management. These all need to work in concert, not in isolation.
But before any of that, you need the foundation: data and analytical insights, then often people who've operated at the next level of scale, then repeatable processes around planning, forecasting and promotional calendars. It's boring, important work, and it is often really hard for founders to recognize that what and who got you here won’t take you where you want to go next. That often includes the founder themselves. It's the work that separates a $30 million brand from a $150 million-plus brand.
If it's a consumer problem, you have a harder road. And there are really three versions of this. The first is the most painful: You were a product moment that thought you were a brand. The trend moved on and so did the consumer. Accept it or redefine yourself.
The second is that you built real equity, but lost your core consumer through drift: too much undifferentiated NPD, inconsistent messaging, a retail strategy that diluted your positioning. Go back to basics and edit back to the core.
The third is the one nobody wants to hear: Your brand built genuine loyalty with a real consumer, but that consumer segment is smaller than your growth plan assumed. Your SOM was $50 million, not $500 million, and no amount of execution will close that gap. That requires a different conversation still, often about profitability, capital structure or exit timing rather than growth acceleration.
Almost everything tripping up mid-sized brands right now is structural, not cyclical. Yes, tariffs are a giant pain and pressure gross margins, but you’re not in the steel business. The only meaningfully cyclical pressure I'd point to is funding constraints, which can legitimately starve a brand of incremental investment on both infrastructure and attractive ROAS demand creation if the timing or VC groupthink is wrong.
For smaller brands preparing now to avoid this trap later: build the boring operational infrastructure and have the difficult talent conversations before you need them. The brands that get stuck are the ones that ride the first S-curve on founder intuition, a great product, virality and one retail relationship, then discover at $25 million that they have no demand planning, no promotional analytics, no real understanding of unit economics by channel and a marketing function that's at best entirely bottom-of-funnel performance spend. The time to invest in that capability is at $8 million to $15 million, not after you've already stalled.
- Brian Fox Krawczyk Founder and Chief Creative Officer, PointNine Fragrance
Mid-sized brands should closely observe how small startup brands leverage social media influencers and creators, as well as social media advertising, to grow revenue. They should also watch how large brands scale for success to achieve cost efficiencies and retail leverage across all demographics.
They need to focus not only on their bestsellers, but also on cutting SKUs that no longer sell to increase their overall gross and net revenues. As creative designers in beauty, fashion and fragrance, they must realize that, while their products are all their "babies,” not all "babies" grow up. Some exceed expectations, while others fizzle out due to market oversaturation and consumers' drive to always find the next best product.
Mid-sized brands also need a "splash of cold water" to open their eyes to the fact that the U.S. and global consumer markets for mid-range-priced products are slowly disappearing due to economic inequality. Brands that offer lower-priced options better aligned with consumer needs and feature new raw material technologies and consumer-driven innovation are doing very well. Just look at E.l.f. Cosmetics, NYX Professional Makeup, Milani, L.A. Girl and Maybelline. These brands offer clear roadmaps for what mid-sized brands should be doing.
I am sorry to say that the beauty world is full of creative hubris. Creative hubris is the overestimation of one's creative abilities or the infallibility of one's artistic vision, leading to excessive pride, inaccessibility or failure. It manifests as one's work prioritizes intellectual ego over public connection. Trust me, our consumers can see and feel this disconnection. The pressures are structural and cyclical, fueled by creative hubris and founders' or employees' unchecked egos.
Founders and employees of mid-sized brands should reengage with the creative and innovative drive that inspired them to establish their brands or pursue opportunities at distinguished, aspirational organizations. They need to regain confidence in their artistic abilities and remain open to new inspiration for their product, fragrance and fashion dreams.
They also need to stop using turnkey solutions from both contract manufacturers and packaging houses. They need to dig deep to orchestrate the creation of each and every one of their products. This is what smaller brands do that brings them attention.
Smaller startup brands need to take a cautionary lesson from these faltering mid-sized brands and focus only on what makes them unique to consumers. They should never lose sight of their brand mission, feel or integrity.
- Lindy Firstenberg SVP, Beauty and Luxury, AlixPartners
The fantasy of being a $1 billion company is not necessarily out of vogue, but it certainly has been superseded by trying to stay alive past growth stage. Emerging brands need a few hero products to be differentiated enough to unlock early distribution. No one is saying that’s easy, but it is accessible, especially as the focus centers on proof points versus a proven thesis.
But to unlock growth stage, brands need more sophisticated and involved capital investors that are looking for growth with margin expectations. That’s a hurdle many brands don’t jump. Some of it is of the moment: (a) it’s harder to differentiate in this highly saturated environment, (b) brands are over-extending their product assortments earlier, (c) channel entry is more expensive than ever, and (d) capital investors are doing more diligence for this stage than before.
Today, there is a brand out there to solve nearly every problem imaginable. In many instances, consumers learn what might be a problem from brands. Just think of the NAD craze du jour. So brands need to really narrow down—and then double down—on their strategic edge. Pick a high-velocity problem or niche to target and build a cult community. Ignore trends and stick to your thesis.
When you’ve established your community, it’s incredibly seductive to want to give them everything, and before you know it, you’ve launched several franchises before reaching scale stage. Anchor on one or two distinctive hero products and innovate off those rather than constantly launching net-new products or concepts. Think of how Hero Cosmetics stuck to their core pimple patches and iterated on those for years. Only after growth did they start to add other formats. Your heroes are what enable you to get in the room—and, God willing, negotiate—with retailers.
With your community and your heroes locked, distribution immediately becomes the primary focus. You’ve likely started with one or two channels: DTC, TikTok Shop, Amazon, maybe a niche player. Gather first-party data and use this moment to test and learn. But keep in mind 60% of beauty, health and wellness sales still happen in-store. Find that partner and build with them. The cost of entering new distribution channels has never been higher, and the retailers you are looking to get into don’t slim down their negotiations just because you’re small.
The investment flow process has been turned on its head. Venture is writing larger check sizes, capturing more upside, and private equity is writing smaller ones, de-escalating risk. With more players writing growth equity checks, the diligence process has certainly ramped up and become more competitive.
Sometimes this is to the advantage of the brand; sometimes it is not. There is a big temptation to focus on what scaled players can offer: optimized unit economics, EBITDA expansion and predictable cash flows. But when you are at growth stage, focus on growth. You want your intentional product expansion, high growth rates and unit economics trending positively.
Not getting stuck in the middle comes down to knowing your brand niche, delivering your heroes to that community, finding the right retail partner with brick-and-mortar to scale together and receiving capital from an investor that has the right expectations for your brand, one that can guide you to scale, not force you there prematurely.
- Karen Young Founder, The Young Group
Mid-sized brands are stuck in the middle like the proverbial middle-child. They aren’t shiny, new and compelling, and they aren’t well known or well established with a solid performance history.
I constantly tell my startup clients, getting into the market isn’t the hardest part (yes, it’s hard). It’s scaling, surviving and thriving that require massive amounts of time, energy, expertise, flexibility, vision and yes, money. The hurdles become higher. The competition is steeper and more plentiful. It’s harder to stand out. If the brand hasn’t built a solid community when it hits mid-level, it will cost much more to do so than as a small startup.
I don’t have a hard fast script for addressing this stuck-in-the-middle syndrome. Sometimes, after reaching this point, brands become a bit complacent, thinking they’ve arrived. Surviving and thriving today requires constant reinvention, while remaining true to the brand’s DNA. That’s a tall order.
Brands often become impatient, branching out for growth’s sake, losing sight of their focal point, clouding their marketing message. I advise them to continue to act like a startup. Remember what lean and mean felt like! Continue to tighten the brand focus and stay on track.
Don’t try to please everyone. It’s impossible. Listen to your consumer. Understand how far she/he will allow the brand to stretch. Don’t go beyond that. This discipline is one of the most powerful lessons a brand can learn, and it will be one of the most difficult challenges a brand will face time and time again.
Conclusion: Think like a small brand. Be flexible, agile and ready to pivot. Stay focused. Don’t overextend. When growth happens and you find you’ve become a mid-sized brand, don’t veer off course. You have a long way to go on this journey.
- Carrie Steinberg Fractional CMO
Mid-sized beauty brands are operating in an incredibly crowded landscape, where many brands are starting to look and sound the same. The biggest challenge is differentiation.
While some pressure is structural, i.e., brands are expected to drive demand for both DTC and retail partners, the brands that win will get back to basics, focused on a clear point of difference, strong product story and deep understanding of their consumer, with marketing that consistently reinforces that positioning. For smaller brands, building that clarity early, before expanding assortments or channels, is one of the best ways to avoid getting stuck in the middle later.
- Amber Williams Fractional Chief Brand Officer and Advisor, Prestige Beauty
What I see consistently tripping up brands in the $2 million to $50 million range is that they scaled on momentum before they built structural defensibility. A Sephora launch, a viral product, a strong debut season and suddenly the brand is operating at a scale that demands infrastructure it never developed because those early wins made that work feel unnecessary.
When momentum normalizes, as it always does, and there is no proprietary edge to fall back on, no earned authority that makes the category come to them, no product flywheel creating genuine customer retention and dependency, these multimillion-dollar businesses find themselves effectively back at square one despite the revenue on their top line.
Structural pressures amplify the problem when the foundation is not there. Retailer cost-of-doing-business requirements come as a shock at this tier. Customer acquisition costs have not rationalized. Discovery is also fragmented across platforms.
The brands that regain momentum in this range do it by going deeper rather than broader, and my strongest recommendation is to resist the instinct to expand before the core is airtight. The focus should be on fewer launches, a product collection they commit to making iconic and positioning specific enough to function as a signal to exactly the right customer.
That precision is what drives acquisition quality over acquisition volume. The deeper danger for brands at this tier is the temptation to imitate what larger, more established competitors are doing, without the brand equity, distribution leverage or margin structure to compete on the same terms.
For smaller brands preparing now, the work is to build defensibility before you need it to save you. Define what is genuinely proprietary about your brand before distribution masks its absence. Earn authority in your category through substance, not just aesthetics.
Understand your customer so deeply that you develop the products they always needed but did not know to ask for, then build a product flywheel around that insight. The brands that end up stuck in the middle are almost always the ones that optimized for growth before they had something worth scaling.
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