Beauty's Uneven Growth: Winners in Hair and K-Beauty, Challenges for Fragrance Leaders

Beauty spending continues but is fragmenting across categories and channels, with affordable, results-driven skincare, hair innovation, and Korean brands thriving while traditional prestige fragrance faces deceleration.

Summary of Who’s Winning Beauty’s H1 Reckoning. Every timestamp links into the original audio.

The short version

• 00:01:28 — Consumer spending on beauty remains strong, but shoppers are becoming more selective about purchases and where they buy, with spending shifting across different platforms like TikTok, Amazon, and Instagram rather than traditional retail.
• 00:04:07 — Dermatologist-backed skincare and affordable skincare lines with proven results are outperforming other categories, with brands like CeraVe and La Roche-Posay doing exceptionally well globally.
• 00:05:07 — Hair care is experiencing significant growth across major companies, driven partly by consumers on weight-loss drugs noticing hair loss and increased attention to scalp health and bond-repair innovations.
• 00:06:06 — Estée Lauder’s stock rose 17% after reporting above-expectation earnings and raising profit guidance, though its core American business remained essentially flat and fragrance growth is moderating.
• 00:08:16 — Fragrance, which has been the only division at Estée Lauder to consistently grow double digits, is now slowing, raising concerns about whether other categories can offset the lost growth.
• 00:14:15 — Korean beauty brands are expanding aggressively in North America and Europe with 50% profit growth, using a strategy of testing brands quickly and cutting underperformers, operating primarily through digital channels and Sephora rather than department stores.
• 00:22:45 — Established mega-brands like Nivea are slowing due to aggressive price increases that retailers resisted and launches that didn’t resonate, showing that size alone cannot protect against deceleration.
• 00:25:01 — Price sensitivity remains a significant factor for most consumers, especially outside wealthy tech-concentrated segments, forcing brands to identify genuine white space and innovation to justify premium pricing and full-price purchases.

In depth

Beauty isn’t slowing so much as fragmenting

The headline framing of this earnings season, as Daniela Morsini describes it, isn’t that beauty consumers have stopped spending — Sephora and Ulta are still packed 00:01:34 — but that the same dollars are being distributed across a much wider set of channels and decision points than a few years ago. Coming out of the pandemic, the category rode a wave of what Morsini calls premiumization, where scarcity mindset and stimulus-fueled spending meant people wanted more of everything: more skincare steps, more fragrances, more products generally 00:01:54. That era is over. What’s replaced it isn’t retrenchment but selectivity: a shopper might discover an unfamiliar Korean brand through a TikTok recommendation, choose a dupe instead of paying full price for a known name, or redirect money that used to go toward serums into a dermatologist’s injectable instead 00:02:48.

That reallocation matters because it breaks the simple narrative that beauty is recession-proof. It’s more accurate, in Morsini’s telling, to say total demand is intact but diffuse — split between TikTok Shop, Amazon, Instagram-driven impulse buys, and traditional retail, rather than concentrated in the department-store and specialty-retail channels that used to capture it 00:02:21. That diffusion is itself a competitive threat to any brand or retailer whose model assumes shoppers will keep coming back to the same familiar shelf.

The winners share one trait: proof, not just promise

Across categories, the earnings that impressed Morsini shared a common denominator — verifiable results at an accessible price, rather than premium positioning alone. She points to CeraVe and La Roche-Posay, both dermatologist-associated and both comparatively affordable, as the standard-bearers of this moment, alongside injectable and laser-adjacent plays like AbbVie’s Botox franchise, whose stock has kept climbing 00:04:46. The logic is that skincare hype cycles driven purely by ingredient trends or influencer buzz have given way to a harder-nosed consumer asking whether a product actually does what it claims.

Hair care tells a similar but distinct story. Morsini attributes some of the surge — visible in strong results at L’Oréal and Unilever — to the unintended side effects of GLP-1 weight-loss drugs, which anecdotally trigger hair thinning and shedding in some users, pushing them toward scalp and bond-repair treatments 00:05:07. But she’s careful not to make that the whole explanation: there’s genuine innovation happening independent of GLP-1s, and a cultural shift in which luxuriant hair has become as much a status and youth signal as clear skin, amplified by the mainstreaming of “miracle” bond-repair products from brands like Olaplex and K18 that raised consumer expectations of what a hair product should deliver 00:19:26. The harder sell, she notes, is anything that gets washed down the drain — shampoo and conditioner — versus leave-in treatments, sprays, and in-salon services where innovation and premium pricing are easier to justify 00:19:39.

Elf Beauty complicates this winners’ narrative. Its topline growth numbers look enviable — up 36% year-on-year 00:16:23 — but Morsini is blunt that this is almost entirely the Rhode acquisition doing the work, while the core Elf cosmetics brand is flat or worse 00:15:26. That’s notable precisely because Elf’s whole positioning has always been the price-value equation that’s supposedly winning everywhere else; Morsini’s read is that plenty of other brands are now executing that same playbook better, and that Elf’s attempt to pass through even a one-dollar tariff-driven price increase backfired badly as a communications failure, given that a dollar hike on a three-dollar product reads as roughly a 20% increase to the shopper 00:16:53.

Estée Lauder’s turnaround: real recovery or a rising tide?

Estée Lauder’s quarter produced a genuine market reaction — shares up roughly 17% on better-than-expected results and raised profit guidance 00:06:06 — and Morsini describes an earnings call staged almost like a brand relaunch, complete with celebratory montage and upbeat music. But she pushes back on taking the stock move at face value, framing the central open question as how much of the improvement is Lauder-specific execution versus a broader Chinese consumer recovery lifting L’Oréal and other competitors simultaneously 00:06:22. Lauder has made real strategic changes — deprioritizing department stores, pushing onto Amazon, refreshing Mac — but its core American business has been essentially flat for the year, and even the one strong recent quarter shrinks to roughly 2% growth once Amazon Prime Day timing effects are stripped out, per Barclays’ estimate 00:07:05.

The more structural worry Morsini flags is fragrance dependency. It’s been the only Lauder division capable of sustained double-digit growth, powered by cult brands like Le Labo, Tom Ford, and Killian 00:08:16, but category-wide fragrance momentum is now cooling, even if only modestly. That raises a question analysts are visibly nervous about: if the one reliably strong division decelerates, are makeup and hair — both currently underperforming for Lauder — anywhere close to ready to pick up the slack, despite management’s assurances about innovation pipelines 00:08:34?

That unresolved tension frames how Morsini reads the collapsed Puig-Lauder merger talks. Investors punished Lauder’s stock and rewarded Puig’s on the news, which she interprets as skepticism that a company mid-turnaround should be looking outward for growth rather than proving its existing plan works 00:09:36. Yet she also argues Lauder genuinely needs acquisitions — the category is built on strategic M&A — and that Puig, despite its enviable fragrance brands, is over 70% dependent on that single, decelerating category and badly needs diversification Lauder could theoretically have provided 00:10:40. Neither company’s path forward is resolved by the story; the deal’s collapse just deferred the diversification problem for both.

Shiseido and Beiersdorf: when scale becomes a liability

Shiseido’s numbers looked strong on the surface — operating profit up 90% — but Morsini insists the real story is nearly the opposite of triumphant: revenue was flat on a constant-currency basis, meaning the profit jump is a cost story, not a demand story 00:11:50. She traces Shiseido’s troubles largely to forces outside the company’s control: geopolitical tension between Japan and China has fueled boycotts of Japanese-owned brands exactly as the Chinese consumer was recovering elsewhere 00:12:19, and in the Americas its acquired brand Drunk Elephant, once a white-hot favorite with a young, borderline-preteen customer base, lost that core audience as trends moved on 00:12:38. Interestingly, Shiseido’s minimal exposure to fragrance — a category liability throughout this downturn — may become a hidden strength if fragrance’s cooling continues, even though it meant missing the tailwind everyone else enjoyed for years 00:13:10.

Beiersdorf’s Nivea offers the clearest cautionary tale about brand concentration risk. Nivea is enormous — still a billion-dollar-plus brand — but its deceleration was severe enough to force Beiersdorf to cut its outlook 00:22:59. Morsini attributes this to a self-inflicted wound: aggressive price increases that retailers resisted, combined with new launches skewed too premium for the brand’s actual customer base 00:23:08. The lesson she draws, and extends explicitly to Shiseido’s flagship line and implicitly to Elf, is that being the biggest brand in a portfolio is not protective — it’s a concentration risk, because a conglomerate’s growth math depends on a brand of that scale continuing to compound at rates that become mathematically harder to sustain the larger it gets 00:23:29.

K-beauty’s real advantage, and the limits of the department-store hype cycle

Morsini revisits a claim she and Sheena discussed earlier in the year — that K-beauty’s US arrival hadn’t lived up to the hype, particularly in brick-and-mortar retail — and updates it with hard numbers: Amore Pacific and APR both posted roughly 50% profit growth, with APR (owner of Medicube) growing over 100% as it pushes into Europe 00:20:53. Her explanation isn’t really about physical retail penetration at all; it’s operational philosophy. Korean beauty companies launch fast, test in-market, and kill underperforming products quickly rather than sinking further investment into them, producing a survival-of-the-fittest pipeline where only genuinely differentiated products — like serums using micro-spicule delivery technology, cushion compacts, and sheet masks — make it to scale 00:21:11.

Crucially, she argues this growth is succeeding despite, not because of, traditional retail expansion. The Canadian-founded Asian beauty retailer Sokoglam (referenced as

Summarised automatically. Listen to the original for the full conversation — this is not a substitute for it.