Do you remember the “lipstick index?” Also known as the “lipstick effect,” it is an unproven economic theory that says when consumers sense the economy is in or heading for a downturn, they buy “affordable luxuries,” like beauty products—lipstick, nail polish and perfume.
The Lipstick Index is not just about lipstick. Rather, at times like these with still high inflation, and higher prices due to increased tariffs, consumers can’t afford to buy a car or a house but can afford small luxury goods.
According to Circana, a global consumer research firm, the “prestige beauty market grew by 2% to $16 billion in the first half of the year, while mass [market beauty products] grew 4% to $34.6 billion.
In its article on the resilience of the beauty industry, Women’s World Daily (WWD) spoke to Larissa Jensen, a global beauty industry advisor at Circana, who believes that units are an indicator of demand and says dollars and units grew in the category. Jensen adds that while “the market has continued to slow down every year, this does speak to the resilience of the industry. We look at other industries, and looking at all the other industries, beauty was one of two to grow in unit sales.”
Online beauty sales are growing
Jensen told WWD that “Pure-play e-commerce platforms are performing so strongly that they are capturing share. But brick-and-mortar remains the dominant sales channel for beauty” because “consumers want to touch and feel and browse to look at products.” She recommends that beauty companies “need to adopt an omnichannel strategy because you can’t go all-in on one and not the other.”
Beauty sales by category
Not all categories share the same growth trajectory, so let’s explore a few:
Fragrance
Fragrance and hair products are category leaders in the prestige beauty categories, both experiencing 6% sales growth. Fragrance rang up $3.9 million in sales, driven primarily by mass market products which grew 17%. Luxury fragrance is not always affordable, so many prestige brands are offer smaller, less costly versions like minis and body sprays.
There’s a good opportunity for entrepreneurs here as Jensen says, “Artisanal brands continue to do well.”
Hair
A $2.3 billion market, hair product sales are growing in both the mass and prestige categories. Prestige products make up a smaller share of market (15%) in this category, (the opposite of fragrance sales), but Jensen says there’s a lot of innovation.
Hair wellness, which includes strengthening products, scalp care, and other treatments such as stylers and leave-ins, is a strong performer in this category. Jensen points out the “Products that address hair thinning and promote hair growth are growing at double the rate of hair.” Out-of-shower treatment sales are growing too—scalp care is up 19%. And Jensen says there were a lot of new products launched this year.
Makeup
Makeup sales are more challenging. Jensen told WWD she attributes this to retail stores closing on the drugstore side of the business. But she’s “bullish” about prestige makeup sales, because that where consumers go to treat themselves. Lip treatments, like balms and lip oils “are doing amazing,” she says.
Prestige eye makeup made a big comeback, led by mascara sales.
Skin care
Mass market products had a better year than prestige goods, growing 4% compared to a 1% dip in the higher priced category. But she says the decline is nothing to worry about since “mass-stige” brands that span distribution in both channels are performing well.”
Body care and sun care product sales are still rising, although facial skin care isn’t faring as well. A relatively new category, essentially created by entrepreneurs—whole-body deodorants—“are performing exceptionally well,” says WWD.
Positive outlook
While the year is far from over, with holiday sales looming, Jensen told WWD that she’s feeling “optimistic” about beauty sales, for the rest of 2025 and into 2026.
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Photo courtesy Curated Lifestyle for Unsplash+
Rieva Lesonsky is President of Small Business Currents, LLC, a content company focusing on small businesses and entrepreneurship. You can find her on Twitter @Rieva, Bluesky @Rieva.bsky.social, and LinkedIn. Or email her at Rieva@SmallBusinessCurrents.com.
