What are beauty products? Who buys them? Where are they sold? What factors matter most to people who shop for beauty products?
The answers to these questions are evolving, which means beauty brands and retailers can’t simply keep doing what they’ve been doing for the past few years. The second edition of our annual report, The State of Fashion: Beauty, dissects the dynamics of today’s beauty industry, whose core segments—skin care, cosmetics, hair care, and fragrance—are expected to constitute a $590 billion market by 2030.
We discussed the 2025 edition’s key themes in a recent webinar, excerpted in the latest episode of the McKinsey on Consumer & Retail podcast. An edited transcript follows. (Subscribe to the podcast.)
Kristi Weaver: Thank you for joining our session on The State of Fashion: Beauty report. For this report, we interviewed or surveyed more than 15,000 consumers in 13 markets—substantially increasing our coverage compared with the first edition—including deep dives in Australia, Brazil, China, France, Germany, India, Italy, Japan, Saudi Arabia, South Korea, the United Arab Emirates, the United Kingdom, and the United States. We also interviewed and surveyed more than 100 executives, including executives at beauty brands, owners, retailers, and investors. We supplemented these interviews with McKinsey’s proprietary market model, which includes detailed forecasts across regions, price tiers, and channels.
My name is Kristi Weaver. I’m a senior partner in Chicago and I lead our global beauty, personal care, and wellness practice. Joining me today are three of my colleagues: Sara Hudson, a partner in London who leads our European beauty practice; Megan Pacchia, a partner in New York who coleads our North American practice; and Alexis Wolfer, an associate partner in Southern California who also coleads our North American practice.
Growth beyond the four core segments
Kristi Weaver: We’ll start with some of the statistics from this year’s report. First, beauty continues to be an exciting and thriving category. We expect beauty to be a $590 billion market by 2030, inclusive of the four core segments of beauty: color cosmetics, skin care, fragrance, and hair care. We expect beauty to continue to grow at 5 percent over the next five years, which is a bit more muted than the 7 percent growth rate from 2022 to 2024—but that period saw inflationary-driven price growth as well as incredibly strong volume growth. So, 5 percent is a bit lower but still a healthy mix of volume and price; beauty is still one of the darlings of the consumer industry. Overall, we expect growth in all the core segments, although skin care will be 40 percent of the sector’s total market value.
We also expect real prioritization in terms of market growth. Fifty-one percent of executives surveyed plan to prioritize expansion into North America, and about 70 percent of executives anticipate very high growth in India and the Middle East. Finally, we see growth continuing to shift online, with over 30 percent global e-commerce penetration projected by 2030, driven by a combination of pure plays, e-tailers, and the resurgence of marketplaces.
Another of this year’s findings was the continued expansion of beauty to categories outside the core four. This implies that the beauty market, in addition to the $590 billion in the core, has another $820 billion in many other categories, including aesthetics injectables, men’s shaving, sun care, bath and shower, beauty supplements, and spa services. Some of these are growing faster than the core four.
In particular, men’s participation in beauty and self-care is steadily expanding. We’ve seen a twofold acceleration of men’s participation in this category, which is driving growth in men’s shaving. Sun care also has received significant interest over the past couple of years and is expected to continue to grow at an attractive growth rate—nearly 8 percent—largely driven by innovation.
One thing we did in the first edition of the report and replicated in this edition was identify five industry-shaping dynamics. I’ll list the five and then my colleagues will go through them in detail. The first core theme is the fragmentation in consumer behavior and spending power around the world. The second is the resurgence of the importance of true value. The third theme is what we call “beyond the founder.” The fourth theme, which we’re calling “marketing’s balancing act,” is about the return to brand marketing and originality. Finally, as beauty is the darling of the consumer industry, everyone wants a piece of it, and therefore we’re seeing channels at a crossroads.
Consumer fragmentation and the search for true value
Sara Hudson: Hi, everyone. On the theme of consumer fragmentation, we’re seeing not just differences between countries but also differences between consumers in the same countries. To capture growth across the globe, brands will need to keep in mind the cultural and structural differences in beauty engagement. There’s quite some variation across regions. And it will not be enough to just have a country strategy; consumers’ preferences are fragmenting, even within markets. For example, in the US market, there is no single trend that everyone subscribes to, but rather a number of trends taken up by different consumer groups.
To ensure you find and reach the consumer groups that resonate with your take on beauty, you will need to engage much more in hyperlocalization—segmenting consumers much more granularly. Crucially, effective consumer segmentation is not by demographics but by attitudes. Segmenting purely by demographics—age, gender, ethnicity—doesn’t yield definitive or helpful outcomes, as consumers’ preferences are not really tied to these factors. Instead, in our research, we consistently find that consumers’ attitudes shape how they engage with beauty: for example, whether they value organic, natural, clean, or science-backed claims.
The second theme in our report is true value. We’ve seen consumers become much more focused on not just price but also value, which has benefited mass and “masstige” brands. Years of inflation have left a mark on consumer spending power. At the same time, consumers are inundated with choice and a wide range of quality across all price points. As a result, mass players have gained ground over the past few years. Consumers can find mass products that are more elevated than before in quality, formulation, texture, design, and presentation. Challenger mass brands have seen success with bold marketing that’s fun, entertaining, splashy, and instills trust in consumers.
Mass has also seen a higher consumer focus due to inflation, and it’s an entry point for new beauty consumers, such as Gen Z and men. This has been true, especially in skin care and makeup, where the share of mass and masstige has increased by five percentage points globally over the past five years. But it’s not that consumers only shop mass now. Nearly half of all consumers globally like to shop across price points and combine expensive brands with cheaper ones. We see this happening within categories. Overall, we see consumers scrutinizing the value of every product they buy.
In light of this, we see two key priorities. For brands, you need to demonstrate and communicate the differentiated value of your products as clearly as you can. For retailers, because consumers are shopping across price points, you will not be able to capture consumers’ full beauty bag if you stick to brands in only one price tier.
Celebrity founders and the evolving marketing landscape
Alexis Wolfer: The third theme in our report is about the changing role of the founder. Over the past decade, we have seen numerous brands come from prominent, public-facing founders. However, only a few of those brands have managed to reach significant scale. So, while we see that a prominent founder can meaningfully accelerate growth—especially at launch, given the value of earned media—their appeal alone is not sufficient for long-term success.
This is supported, as well, by the consumer research we conducted. When we asked consumers what drives their repeat purchase of brands, founders ranked the lowest of all given options. Moreover, beyond product performance, we see that consumers really value emotional attachment to brands—a shared beauty philosophy, for example, or something that’s rooted in a cultural beauty secret, or a bold and expressive stance on beauty ideals, or colors, or how somebody feels about beauty from the inside out. We also see that a founder can be a double-edged sword. Having a well-known founder can help boost a brand’s awareness from the start and can act as a visible billboard, but it can limit the brand’s growth through overexposure. We do see pushback from consumers on some celebrity-founded brands.
Our fourth theme is “marketing’s balancing act.” We often think of marketing in beauty as being deeply anchored in social media today. However, customer acquisition costs and social media costs have skyrocketed, and the very few platforms that have garnered the most consumer interaction have become overcrowded and increasingly expensive for brands to participate in.
We see through our consumer research that the most popular place for consumers to find their beauty inspiration actually isn’t on social media or brand marketing at all. It’s in physical retail, followed by friends and family, and then online retail. We also see that the effectiveness and the relevance of social media—in particular, influencers—have declined. In the US, China, and Europe, the relevance of influencers has declined by eight percentage points over the past two years.
What does this mean? It means that retail, including and especially physical retail, is a key destination that brands should also think about as marketing channels, not just as shopping channels. And on social media, it’s not just about finding influencers with large followings and putting money behind them. Instead, it’s about originality and content. The creativity of that content should fuel algorithms more than the number of followers does. Experimenting with marketing channels beyond social media is increasingly key for standing out in a crowded landscape.
A word of caution on the marketing landscape: As everybody’s been talking about using generative AI in marketing and it is becoming increasingly popular, we do see that a majority of consumers, especially in the US and Europe, are skeptical of content generated by AI. So, it does have the potential to structurally undermine trust in what people see, and it should be used cautiously.
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Kristi Weaver: Alexis, I’m sending the first question your way: Do you have any information on offline media and influence on the purchase process?
Alexis Wolfer: We do. About 23 percent of global participants in our survey said that they were engaged with offline media—television ads, billboards, et cetera—as part of their discovery process. But it continues to pale in comparison to physical retail, as well as the combined social media channels.
Kristi Weaver: We’ve also got a question about the importance of TikTok and other sources in driving actual sales.
Alexis Wolfer: Sales are definitely telling us that social media is a key channel for purchase. We are seeing brands flourish on TikTok Shop, Instagram Shop, et cetera. And yet, what we are seeing is more promiscuous shopping behavior: We’re seeing a lot of discovery but not a lot of brand loyalty. Sales are also very promotion-driven. So, I think a big question remains as to what the longevity of social media as a channel for a specific brand is going to be. But it will definitely continue to be a meaningful channel for brand discovery.
Competition offline and online
Megan Pacchia: I’ll now talk about our fifth theme: channels at a crossroads. We expect the online channel to continue to grow, reaching about 30 percent of the total market by 2030. Offline, we expect a lot of dynamism. Core beauty retailers are expanding their assortment and broadening the price points they offer, acknowledging that consumers are increasingly shopping across price tiers. And we’re seeing retailers that weren’t traditionally in beauty—such as grocers, hypermarkets, and discounters—starting to look for growth and actively expanding into this space.
Amid all this competition, we see two priorities. For brands, it means you have to be thoughtful about where you want to play and how you will differentiate across your retail partners. For retailers, it means you have to be mindful about defining your value proposition and how you will differentiate to attract the consumers you’re looking for.
As Kristi mentioned at the outset, we did a lot of research, including surveying 100 executives globally to find out what they think is exciting in the industry, where they think the industry is heading, and what they’re worried about. What Sara highlighted—about having a value-for-money proposition irrespective of your price tier—is at the top of that list. Second on that list, unsurprisingly, is AI. As Alexis said, it’s here, there are tons of conversations happening, but 60 percent of consumers globally are skeptical of any content generated by AI. Compare that with China, where 83 percent of consumers believe that AI-generated recommendations are superior to human-generated ones. So, navigating that complexity and the varied views will be really important.
Kristi Weaver: Megan, what are the trends and opportunities in e-commerce?
Megan Pacchia: As consumers shop in the e-commerce channel, they are looking for a couple of things. Convenience is number one, so speed of delivery and a frictionless experience are paramount. Price is number two, so, again, the value equation is important, and consumers expect a real breadth of assortments. More and more people are actually looking to the online channel for discovery, not just the replenishment trip, so brands that can innovate on that front, as well, will be winners.
Kristi Weaver: There’s a question about price tiers by channel. Is masstige growing or shrinking? Where should it live, and where can it live?
Megan Pacchia: There is a real broadening of price tiers across all the core retailers because consumers are no longer shopping in a single price band. They are truly shopping up, down, and across all retailers. In the US, in particular, masstige and entry prestige are certainly feeling the pinch as US consumers are thinking hard about where they’re going to splurge and where they’re going to pull back, so mass will get a bit of a bump from that.
Regional growth trends
Kristi Weaver: There are a couple of questions about Africa. We show that Africa was about 3 percent of global beauty sales in 2024, and the Middle East was also about 3 percent. We forecast the two together growing at a rate of about 10 percent.
Sara, there’s a question about whether we have a view on Latin America.
Sara Hudson: In Latin America, we expect 7 percent overall growth—quite robust—driven by both price and value. We especially see momentum in Brazil in trade-up and experimentation across categories and price tiers. We’re also seeing live commerce starting to take hold in Brazil.
Kristi Weaver: Sara, what do you see for luxury brands in the next five years? Is there going to be an appetite for a $500 face cream?
Sara Hudson: We do still see interest in luxury brands even at these very high price points. They need to be differentiated in a way that makes consumers willing to spend that, and there is, of course, a limited consumer base that has the ability and willingness to spend. But we do see luxury brands continuing to rank highly among consumers’ favorite brands. Given trends in the market and particularly the challenges in China, we think that luxury growth will be more muted. China has traditionally been quite a significant driver of that growth. Brands will need to focus on new markets to get back to higher growth trajectories, while also continuing to focus on the US and Europe as more stable strongholds.
Kristi Weaver: Do we expect China to make a comeback and lead beauty growth, especially luxury beauty?
Sara Hudson: We do expect China to return to more average industry-level growth. However, we don’t expect it to go back to pre-COVID double digits, just given the differing dynamics. I would say we’re more cautious. As to whether Chinese consumers will lead growth in luxury brands, it varies by category. We’re seeing the emergence of Chinese brands that are gaining share, particularly in color cosmetics, in more of the mass category overall, whereas in higher-end skin care, we’re still seeing quite a lot of preference for foreign brands.
Kristi Weaver: There’s a question about brands made in France: “Are they still perceived as the best for efficacy and luxury combined?” We asked consumers which region they believe produces the best beauty, and the US and France were the top responses, with South Korea also advancing, particularly in skin care. So, we still think local brands matter and country of origin matters, except for China, where consumers rank their own country as leading in producing beauty products. France is leading globally in fragrance.
What’s new and what’s ahead
Kristi Weaver: Alexis, what are some of the current trends in fragrance?
Alexis Wolfer: There’s been a real step change in how consumers are engaging with fragrance since COVID. Pre-COVID, you could reliably buy the same scent for someone year on year, if you knew what they regularly wear. That has evolved in the past few years. We’re seeing a lot of this being driven by Gen Z and how they’re engaging with fragrance as a mood booster, as well as layering or wearing different scents at different times of day for different occasions and having a portfolio of fragrance. We’re starting to see that permeate among older generations as well. But we still see a focus on core flagship designer brands; they’re still driving the majority of sales within the category.
Kristi Weaver: Alexis, what innovations are you seeing in longevity beauty?
Alexis Wolfer: It is certainly a big trend. The next frontier of wellness is living longer and looking younger for longer. We’re seeing it a lot, particularly in luxury beauty, but to date, it seems like it’s mostly marketing. There’s limited clarity as to whether there’s actual product differentiation there, but it’s certainly of interest to both brands and consumers.
Kristi Weaver: There’s a question about the wellness trend, with younger generations prioritizing both external and internal beauty. Do we see beauty brands expanding their portfolios to include offerings like supplements or memberships at wellness centers?
We’ve seen a lot of brands wanting to play here. We’ve also seen a lot of retailers thinking about wellness as they broaden their assortment strategies. I do think there’s a real opportunity for brands, but you need a unique value proposition: How can you do it in a way that someone else is not? And how do you do it credibly? But I do think both brands and retailers will continue to look at assortment optimization and expansion, as well as an ecosystem of partners, to capture this trend.
Alexis, how significant have natural or organic ingredients proved to be in influencing consumers’ purchase decisions?
Alexis Wolfer: There’s been real cyclicality on this one. What we typically see over time is that efficacy is the most important and very few people are looking at ingredient lists, and then, all of a sudden, organic and natural become more important for consumers. Efficacy is still important, but it starts to be “efficacy plus ‘what are the ingredients?’” Consumers become willing to compromise a bit on efficacy in exchange for “feeling good about what I’m putting on my body.” Then you start to see it flip again.
We are at an interesting point right now. For the past five years, efficacy has been king and queen and everything in between. Natural and organic were really not drivers of brand or product choice for consumers. Yet, in the past 12 months, natural and organic are starting to pop again for consumers. It doesn’t mean that efficacy doesn’t matter. It means that there is still a bar for it working, and also that consumers care about ingredients and are paying attention to what they’re putting on their bodies.
Kristi Weaver: Sara, what about refillable packs and sustainable packaging? Are they going to help drive growth?
Sara Hudson: We’ve seen many brands attempt refillable packaging. For the most part, it hasn’t really been accepted by consumers. And, in general, consumers are focusing less on sustainability; there’s less willingness to pay. So, with regard to making sustainability a unique selling proposition for a brand, it can be done, but it really has to be something that the consumers see as valuable and not detracting from their overall experience of the product.
Kristi Weaver: Megan, what channels are trending on the e-commerce side? Is it apps? Marketplaces?
Megan Pacchia: Marketplaces are still winning today. Over the past six months, if you look at where the lion’s share of consumer spending went, nearly 30 percent of it went to general marketplaces, Amazon in particular. That said, we’re seeing healthy growth in direct-to-consumer [D2C], with nearly 15 percent of spend going to D2C, as consumers look for authenticity. I think because there’s a bit of skepticism around AI, consumers are going back to the actual brands’ sites.
Social commerce, for sure, is growing quickly. It’s a global trend, led by Asia and China in particular, but we are starting to see a real uptick in India and Latin America. Adoption in the West is slower but certainly on the upswing.
Kristi Weaver: We’ll wrap up with a question about whether the highly volatile and uncertain global environment is expected to test the resilience of this category. The short answer is yes—but we’re all still bullish on this industry. It’s true that the outlook is quite uncertain, so use this opportunity to make bold moves, but also be incredibly dynamic and adjust as new information comes in. The strategy of waiting and playing it safe is definitely the losing strategy. Being able to anticipate consumers’ needs, radically reallocate resources as new opportunities arise, and use this moment to go on offense—those are the keys to success.
