The Lipstick Effect: 4 brands redefining luxury beauty

Luxury beauty giants are struggling to stay relevant in an era of rapidly evolving technology, shifting beauty standards, and increasing consumer demands. Recently, three of the world’s biggest beauty conglomerates, Estée Lauder Companies, Shiseido, and Coty, reported a drop in fourth-quarter sales. Meanwhile, L’Oréal reported a modest 2.5% increase, missing analysts’ forecasts. Beauty conglomerates can’t agree on the cause of their sales drop. Some mention lower orders from retailers, while others attribute the decline to customers stocking up at year-end. Many cite the economic climate — marked by inflation and uncertainty — as a key factor, alongside external challenges like natural disasters and social media disruptions. But perhaps the truth is simpler. While these brands continue to innovate in areas like distribution and technology, their storytelling and product offerings no longer resonate with today’s consumers. The ability to inspire beauty as self-expression and creativity seems to have faded. Over the past year, platforms like TikTok have reshaped the marketing landscape, with niche and newer brands gaining momentum by offering more authentic, relevant, and emotionally resonant experiences. An opportunity remains for brands who are able to tap into the “Lipstick Effect”, which suggests that during downturns, people seek affordable luxuries for emotional comfort, as seen with red lipstick during the Great Depression. Today, amidst ongoing crises, a modern version of this effect is evident as consumers turn to indie beauty brands, which thrive by offering personalized, high-quality products tailored to niche markets. Great luxury brands create lasting memories and celebrate life’s milestones. They stand out in times of difficulty and contribute solutions for a society in need. The most successful brands are mastering the art of turning data into compelling stories, addressing modern needs, and offering much more than just a product. Below are examples of brands that have embraced this approach, showing how purpose, innovation, and authenticity are reshaping the luxury landscape. Rare Beauty: Embracing community and authenticity At this year’s SXSW, Katie Welch, CMO of Rare Beauty, discussed the brand’s evolution into a billion-dollar success. Founded by Selena Gomez in 2020, Rare Beauty quickly gained traction through social media, particularly TikTok. Rather than relying on traditional advertising, Rare Beauty focused on building a loyal Gen Z audience through influencer partnerships and genuine community engagement. Rare Beauty’s commitment to mental health and inclusivity sets it apart from other beauty brands, aligning closely with today’s societal concerns, such as loneliness and social health, which were also highlighted at SXSW 2025. Early on, the brand pledged 1% of its sales to the Rare Impact Fund, which provides mental health resources to underserved communities. During the pandemic, Rare Beauty maintained its connection with its audience through virtual “Rare Chats” and continued to address the loneliness epidemic, establishing a Rare Beauty Mental Health Council. This focus on purpose-driven marketing resonates with the brand’s mission to foster self-acceptance and empower individuals to embrace their true selves. Rare Beauty’s financial success has had a significant impact on Selena Gomez’s net worth, which reached $1.3 billion by 2024. With projected annual sales of $350 million, the brand is set for sustained growth. Future plans include expanding into international markets and launching new product lines, ensuring Rare Beauty remains a key player in the beauty industry. While Rare Beauty isn’t traditionally considered a luxury brand, its dedication to inclusivity, authenticity, and mental health advocacy redefines what luxury can mean in today’s world. It demonstrates that a brand’s true value lies in its ability to make a genuine impact. Rare Beauty is truly rare, setting a new standard for what modern beauty brands — and luxury — can represent. Rhode: Responding to consumer concerns Love her or hate her, Hailey Bieber’s skincare brand, Rhode, has quickly carved out a niche in the beauty industry with its “less is more” philosophy. Focused on simplifying skincare routines, Rhode offers high-performance, multifunctional products created with natural, effective ingredients. Since its launch in 2022, the brand’s “skincare first” approach has been pivotal to its success, with products like the Peptide Lip Treatments and Peptide Lip Tints helping Rhode establish itself as a dominant force in lip care. Despite offering cosmetics, Rhode stays true to its core skincare philosophy, blending beauty with efficacy. In addition to Hailey's own influencer success, Rhode’s growth has been fueled by its ability to create products that resonate deeply with consumers, all while remaining accessible and fun. A prime example is the Peptide Lip Shape, which doubles as both a lip liner and contour, reflecting Rhode’s playful yet practical approach to beauty. This product responds directly to consumer demand for multifunctional, easy-to-use items that seamlessly fit into everyday routines. Rhode’s strategy shows how brands can co-create products by listening to their audience, even when it means embracing vulnerability. When influencer Golloria George pointed out that the Pocket Blush didn’t work for deeper skin tones, Rhode responded by collaborating with her to develop two new shades, “Date Cake” and “Plum.” This partnership, announced on TikTok with cosmetic chemist Ron Robinson, highlighted the brand’s commitment to inclusivity and authentic engagement. For the luxury beauty industry, Rhode offers valuable lessons in prioritizing simplicity, inclusivity, and customer engagement. The brand is redefining storytelling by addressing real consumer needs in a fun, approachable way. RAS Luxury Skincare: Delivering farm-fresh ingredients In India, where the personal care market is projected to expand from $31.5 billion in 2024 to $35.5 billion by 2028, startups like RAS Luxury Skincare are capitalizing on the growing demand for high-quality beauty products. Founded in 2017, RAS operates on a vertically integrated model, managing every step from ingredient farming to final product manufacturing. Each product features rare, organic ingredients sourced directly from its own farms, ensuring top-tier quality, sustainability, and efficacy. Scientifically-backed formulations deliver skincare in its “purest, most effective form,” as the brand describes. And this is resonating with India’s young beauty buyers. RAS recorded a 140% compound annual growth rate over the past year, with its DTC channel accounting for over 50% of its revenue. In January 2025, the brand raised $5 million in Series A funding, led by Unilever Ventures. Looking ahead, RAS plans to expand its retail footprint with 50 new exclusive outlets across India over the next three years. For luxury brands, RAS’s success highlights the growing importance of products that not only perform well but also align with consumer values. As the beauty landscape shifts, luxury is no longer defined by exclusivity alone, but by a brand’s ability to address local needs and communicate a meaningful, purpose-driven message. La Beauté Louis Vuitton: An entry point for young consumers On March 5, Louis Vuitton unveiled its new beauty line, “La Beauté Louis Vuitton.” By expanding into beauty, the brand offers luxury products at a more accessible price point, making it easier for younger shoppers to indulge in high-end items without straining their budgets during uncertain economic times. The new beauty line will be available in 115 stores worldwide, targeting emerging markets where demand for luxury beauty products is growing. As it expands into more countries, Louis Vuitton has the potential to strengthen its global presence, creating new opportunities to connect with customers across diverse regions and enhance its worldwide appeal. However, Louis Vuitton isn’t the first luxury fashion brand to venture into beauty — brands like Saint Laurent, Chanel, and Dior have already made their mark. Given the fierce competition, the LVMH house aims to stand out by collaborating with renowned makeup artist Pat McGrath. Partnering with a high-profile figure like McGrath serves as a powerful marketing strategy, enhancing both credibility and desire around Louis Vuitton’s new beauty line. As younger consumers increasingly seek ways to connect with luxury brands, the beauty market is becoming a crucial battleground, making Louis Vuitton’s entry one to watch closely. Redefining luxury beauty: From aesthetics to authenticity Today’s consumers are no longer just buying products; they’re investing in their self-worth, wellbeing, and personal transformation. Luxury beauty has evolved beyond aesthetics, offering real value through authenticity, purpose, and lasting impact. However, as the market becomes increasingly fragmented, the challenges become more complex. Brands must innovate while truly understanding their audience — their emotions, lifestyles, and motivations — to stay relevant and connected. It is within this complexity that opportunity thrives. Brands that learn to craft a value-driven story, embrace sustainability, respond to consumer needs, and integrate inclusivity and a holistic approach to beauty into their core will find their way forward. Can brands rise to the challenge and truly redefine beauty in a market that demands more than just products? Beyond Luxury Group is a futures advisory firm that guides decision makers towards a more purpose and experience driven luxury. Carolina Soares is the Head of Content and Business Intelligence at Beyond Luxury Group. A former Googler with 11 years of experience in insights and trend analysis, she later transitioned into consulting for leading brands. Carolina has a sharp instinct for translating complex data into meaningful insights and crafting compelling narratives that help shape more desirable, forward-thinking futures. Carlota Rodben is CEO and Founder of Beyond Luxury Group and host of the Beyond Luxury Podcast, ranked among the top #2 globally in its category. A best-selling author, she has written Beauty As It Is and Beyond Luxury: The Promise of Emotion, two acclaimed books exploring the future of beauty and luxury. Formerly at CHANEL, she founded the Open Innovation Team in Europe and later led New Concepts for the Global Open Innovation Team. Carlota lectures at institutions including NYU, Glion, ESADE, IE, and Regent’s University London, is a sought-after advisor and thought-leader on innovation, futures thinking, and purpose-driven strategy in the luxury industry.

The Lipstick Effect: 4 brands redefining luxury beauty

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Published March 27, 2025

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The Lipstick Effect: 4 brands redefining luxury beauty