The beauty industry in India is growing exponentially—why are brands still shutting down?

For years, beauty was among the most dependable sections in global consumer markets. According to McKinsey’s 2023 State of Beauty report, the global beauty industry outpaced most other discretionary sectors during economic slowdowns, prompting many investors to call it “recession-resistant.” That confidence has started to waver.

Ami Colé, REN Skincare, Bite Beauty, Becca Cosmetics, Flower Beauty and  Youthforia—brands once hailed as disruptors, have shut down in the past few years. Estée Lauder Companies and Coty have reported weaker quarters, while. Louis Vuitton Moët Hennessy’s beauty division posted its first profit dip in years. 

Moreover, layoffs are now routine across conglomerates such as Estée Lauder,Unilever, and Procter & Gamble. Globally, McKinsey projects that beauty’s growth rate, once seven per cent between 2022 and 2024, could slow to five per cent over the next five years. The numbers are clear: what looked like an endless boom may now be entering its correction phase.

Inside the beauty industry in India’s era of too much choice

Rising disposable incomes, influencer culture, and post-pandemic self-expression have all collided to create the beauty boom, says Cindy Palusamy, founder of CP Strategy. “Beauty stopped being just about products; it became about identity, agency, and participation,” she notes. But democratisation quickly led to oversupply. 

In the past decade, the beauty market has grown crowded to the point of exhaustion. Low-entry barriers and high consumer enthusiasm led to an avalanche of new brands, many chasing the same aesthetic and audience. With so many labels vying for attention, visibility itself has become currency. While well-funded players with sizeable marketing spends are able to flash up on a consumer’s radar, smaller, bootstrapped brands often can’t and disappear before they build stability.

Khanak Gupta, founder of Sohrai Beauty, terms the market  “suffocating” if you don’t have deep pockets. “Big brands are sharks,” she says. “Some spend ₹10 lakhs a day just on Meta ads. For smaller, bootstrapped brands, even being seen becomes a challenge.” 

“BEAUTY STOPPED BEING JUST ABOUT PRODUCTS; IT BECAME ABOUT IDENTITY, AGENCY, AND PARTICIPATION” –– Cindy Palusamy 

The problem isn’t always product quality, it’s model design. Many brands are built for launch velocity, not business longevity, says Shamika Haldipurkar, founder, d’you. “An over-reliance on paid performance marketing, inflated burn justified under brand building, and a lack of repeat behaviour from the very beginning is a fatal combination,” she says. “A lot of brands aren’t failing, they’re just running out of oxygen before they’ve truly built value.”

The same fragility is playing out globally. Ami Colé’s shutdown underscored how even well-funded brands can struggle once visibility costs exceed sustainable margins. “Undercapitalised brands can’t win at scale because the upfront costs of retail, marketing, inventory, and working capital needs stack up fast,” explains Zahra Khan, founder of skincare brand, Good People.

India’s beauty landscape has split along two strategies: scale and sustainability. Venture-backed brands continue to expand across categories and price points, while a smaller set of independent labels like d’you, Aminu, and Purearth focus on longevity and proof of concept. 

In the Indian beauty market, reach is cheap, loyalty isn’t

At one point, reaching an Indian beauty consumer meant the brand had to be stocked at local beauty stores. As social media took over as the main discovery platform, geography began to collapse and buying behaviour reshaped. YouTube and TikTok built curiosity; Instagram turned it into sales. Meta reports that 92 per cent of Indian shoppers now discover beauty brands in India through its platforms—almost half on Reels. 

That reach, however, is deceptive. Algorithms make visibility easy but loyalty elusive. “It is easier than ever to reach [to consumers], but more difficult to be memorable,” says Sunanda Khaitan, Vice President, Lakmē. Vivek Sahni, co-founder and CEO, Kama Ayurveda, agrees, “With so many brands competing for attention, it’s no longer just about reaching the consumer—it’s about engaging them in a meaningful way.” 

Anshita Mehrotra, founder, Fix My Curls, attributes the challenge to the entry barriers being very low. “Making your content stand out today has to be a balancing act—does one choose trendy music or create a trend? Both work, but both are a gamble. I think the only way to reach a consumer is to consistently harp on the same message every day.”

“AN OVER-RELIANCE ON PAID PERFORMANCE MARKETING, INFLATED BURN JUSTIFIED UNDER BRAND BUILDING, AND A LACK OF REPEAT BEHAVIOUR FROM THE VERY BEGINNING IS A FATAL COMBINATION” –– Shamika Haldipurkar 

Social media has widened the gap between reach and retention. “With shoppers becoming more informed, experimental, and results-driven, traditional brand loyalty is fading,” notes Tanya Rajani, Associate Beauty & Personal Care Director, Mintel India. “Consumers no longer commit to a single brand out of habit; instead, they continuously explore options that promise better efficacy, innovation or value.” 

A report by Smytten corroborates this further: only 10 per cent of Indian beauty consumers today are brand loyalists.; E-commerce has expanded the impulse shopper segment, with 72 per cent of Indians admitting to frequently trying new online-first beauty brands rather than staying loyal to one.

“Even small lifts in 90-day repeats increase profitability,” says Khan. “Yet, many founders spend 80 per cent of their budget on net-new eyeballs, running on an unending hamster wheel of performance marketing and the fragility of ad-only growth.”

The beauty industry in India now faces a different consumer: curious, informed, and harder to impress. “Beauty has always been a high-trial, portfolio category,” says Khan. “What’s changed is the abundance of ‘good enough’ products.” While loyalty, though rare, isn’t impossible, notes Sahni. “Loyalty is no longer built on just good products; it’s about building trust, transparency, and an ongoing relationship. We focus on creating experiences and products that accord deeply with our customers.”

Today’s consumer sees experimentation as an opportunity, notes Palusamy. “They’re testing and learning rather than committing, and that is consumer power. Loyalty still exists, but it’s now earned daily through performance, transparency, and alignment with values. If a brand makes customers feel seen, understood, and delivers results, they’ll return. If not, there’s always another option a few clicks away.”

The sameness problem in the beauty industry in India

In today’s beauty industry—in India and globally—packaging has become an Instagram flex. Quirky fonts, eye-grabbing colours, and a social media aesthetic have turned design into a social currency. What began as visual storytelling now defines perception and desirability. 

Approximately 67 per cent of Indian beauty consumers aged between 18 and 35 say that packaging influences their shopping decisions. The Indian cosmetic packaging industry, valued at $1.5 billion in 2024, is poised to expand at a compound annual growth rate of 6 per cent. Most beauty brands in India now invest heavily in how their products look and feel. Aesthetics no longer serve as a sole moat, they’re simply the new baseline.

Mehrotra realised the packaging for her brand’s products wasn’t resonating with Gen Z consumers. “At first, I focused on low quantities and cheaper labelling to afford print on thousands of units, but my main focus remained on what was inside,” she says.  “[But when] I began thinking if I would buy my own product at Sephora, I knew that I wanted to make the brand scream ‘pick me, you'll love this’ no matter where we were placed.” Updating the design more than the aesthetics for beauty brands is about the product looking as credible as it performs. “Everyone is judging a book by its cover, so why not get that right too?” asks Mehrotra. 

“WITH SHOPPERS BECOMING MORE INFORMED, EXPERIMENTAL, AND RESULTS-DRIVEN, TRADITIONAL BRAND LOYALTY IS FADING” –– Tanya Rajani 

The democratisation of design has flattened distinction. Aesthetics that once served as a competitive edge, now make them inseparable and harder to monetise. “Cool” is not a moat, it’s just a moment, says Haldipurkar. “Virality can give you demand, but only product truth gives you retention. We respect hype, but can’t build a business on it.”

Beauty routines are getting simpler—and so is shopping

Much like any other industry, new translates to exciting in the beauty space too. Innovative products, user-friendly formulations, convenience-maxxing packaging systems—the last decade has played a pivotal role in shaping up novelty in the beauty industry. Competition and saturation made innovation the industry’s default growth strategy. Today, little feels untried, or unseen. Add the overconsumption of beauty, fuelled partly by the ‘lipstick effect,’ where small luxuries become emotional pick-me-ups, and fatigue was inevitable. 

“Culturally, beauty has shifted from being seen as an indulgence to being understood as a significant industry—a legitimate space for innovation, creativity, and commerce. But data doesn’t capture fatigue,” says Palusamy. “Consumers are fatigued with the “me-too” brands. Where there’s novelty with credibility—new formats, diagnostics, or better delivery systems—consumers still show up,” adds Khan.

Sahni calls this shift “micro-minimalism”. “People are moving away from overly complicated, multi-step regimens and are looking for products that are effective, efficient, and tailored to their specific needs,” he says. Khaitan agrees, “It’s one thing to watch influencers put ten layers of products and hit the like button, and another to actually adapt them.” According to her, hybrid and multi-benefit products, designed for Indian skin and climate, now drive conversions. 

While the last decade was driven by excess—more steps, more claims, more novelty—today, people are looking for fewer, but higher-trust decisions, says Haldipukar. “Not minimalism for aesthetic reasons, but for cognitive peace.” Consumers are reallocating to categories that deliver sensory payoff or visible results, adds Khan. 

According to Mintel, while consumption for skincare and hair care products, used more regularly and recurrently, has increased significantly over the last three years, colour cosmetics have slowed down.Unlike other categories, scaling make-up brands with minimal SKUs is not pragmatic—multiple shades, textures, and sizes are non-negotiables today. This means significant inventory costs, just to have the sheer number of  options on your website. 

Colour cosmetics is also a category that doesn’t necessarily involve loyalty—it’s easier to try a new lipstick than a new serum. “Skin, hair, and body care [categories] are more habit-driven and science-legible, so they retain better once you prove efficacy, but the same can’t be said for colour cosmetics,” says Khan. This explains why most beauty brands that shut down belonged to this category. 

India’s beauty industry is facing a reality check

India is the fourth-largest beauty market in the world, and as per Nykaa’s Beauty Trends report, the Indian beauty industry is poised to touch $34 billion by 2028. Beauty is still one of the healthiest categories in consumer businesses, says  Khan. “Global beauty is expected to keep compounding at a CAGR of 5 per cent, so investors and founders see real headroom, especially in skincare and fragrance, and in underserved price tiers and regions.” Khaitan agrees, adding, “The per-capita consumption of beauty and personal care is still much lower in India than in many countries like Indonesia, China, and the USA.” 

“BRANDS THAT TAKE FUNDAMENTALS FOR GRANTED MIGHT FACE CONSTANT CHALLENGES”  –– Sunanda Khaitan

Search data and D2C dashboards all point to emerging spaces for heightened opportunities, highlights Palusamy. “Entrepreneurs are responding to two strong forces: data suggesting unserved niches and the power of storytelling through platforms like Instagram, Snapchat, and YouTube. The question is whether founders can pair a strong story with a product that truly works—and break through the clutter.”

The business of beauty hasn’t lost scope; it’s just become exceedingly  brutal, demanding sharper execution and smarter capital. Lakmē launched a 9-to-5 collection previously, and has now pivoted to active-based skincare; while the former solved a longstanding problem of longevity in make-up, the latter positions the legacy brand as Gen Z-friendly too. Khaitan explains that the brand has maintained its relevance for over seven decades. “We have always served consumers with superior products, created keeping in mind diverse Indian skin types and climates. We remain culturally relevant and do it with a business model that’s profitable year-on-year.” These fundamentals haven’t changed—agility, stronger innovation, micro-consumer segmentation, and new digital pathways have simply been added to the mix. “Brands that take fundamentals for granted—like poor product quality, lack of understanding of Indian consumer needs, or unviable business models—might face constant challenges,” she adds. 

There is room for more—but only for beauty brands that are built like businesses, not campaigns, opines Haldipurkar. The past few years have witnessed a silent surge in brand closures and dissolutions; with every beauty brand chasing the same script, just in different fonts, the outcome was predictable. 

A 2025 report by McKinsey reported India’s beauty industry still has a 78 per cent growth potential. But success is only viable when long-term goals like research and development, innovation, transparency, community, and sustainability define long-term growth instead of short-term hype. “The next wave of beauty in India will belong to those who create complete ecosystems of product, meaning, and emotion,” says  Palusamy. 

While starting is easier than ever, lasting takes clarity, discipline, and something genuinely distinctive. “The market still rewards originality; it just no longer forgives the ordinary,” concludes Palusamy.