Need a quick refresher on the latest Trump tariff developments? Scroll to the bottom for a brief summary.

The looming introduction of tariffs has everyone in the beauty industry asking the same question: who’s in the best position to navigate these challenges—established industry leaders or fast-growing emerging brands? While both face unique hurdles, they also have distinct advantages. Success will depend on how effectively each group can play to their strengths and adapt to the new landscape.

Let’s break it down. Read on and let us know who you think will come out on top.

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Established Brands: Playing to Their Strengths

Why they’re well-positioned: 

Big beauty brands have the resources, expertise, and infrastructure to not only survive but thrive in times of disruption. Here’s why they might have the edge:

  • Global Reach: Larger players often have diversified manufacturing networks, allowing them to shift production away from regions impacted by tariffs. This flexibility helps them mitigate rising costs.
  • Operational Expertise: Experienced procurement teams excel at sourcing alternative materials, while R&D departments can quickly reformulate products to offset tariff impacts without sacrificing quality or profitability.
  • Financial Savvy: Robust financial systems enable big brands to analyze the profitability of individual products and make data-driven decisions. This ensures they can prioritize high-margin items and absorb tariff-related costs without significantly impacting consumer pricing.

Challenges: 

While their scale offers clear advantages, established brands may face difficulties maintaining the level of agility and emotional connection that smaller, emerging brands are known for. They also may feel the double impact of retaliatory tariffs impacting international business.

AlixPartners POV: 

Established brands can be well-equipped to weather the tariff storm. Their ability to leverage global infrastructure, streamline operations, and protect pricing stability positions them to maintain—if not grow—their market dominance.

 

Emerging Brands: Agility and Innovation as Key Advantages

Why they’re well-positioned:

Emerging brands may lack the scale and resources of their larger counterparts, but their adaptability and creativity give them a fighting chance. Here’s why they could succeed:

  • Flexibility: Many smaller brands rely on outsourced production, giving them the agility to quickly switch suppliers or adapt operations to new circumstances.
  • Customer Loyalty: Emerging brands excel at storytelling and creating strong emotional connections with consumers. By leaning into values like sustainability, transparency, or unique formulations, they can maintain loyalty even if price adjustments become necessary.
  • Digital Innovation: From TikTok trends to micro-influencer campaigns, emerging brands are masters at leveraging digital platforms to build awareness and engagement without massive marketing budgets.

Challenges:

Higher costs resulting from tariffs may force price increases, which could erode their competitive edge. However, their ability to innovate and adapt will be critical to overcoming these obstacles.

AlixPartners POV: 

Emerging brands bring a combination of resourcefulness, authenticity, and agility to the table. If they can maintain their core values while addressing operational challenges, they have the potential to thrive despite tariff pressures.

 

The Verdict: Who Comes Out on Top?

The reality is that both established and emerging brands can find ways to succeed in this challenging environment. The key lies in strategic adjustments. Beauty companies must take proactive steps to reassess and strengthen their operations in several critical areas:

  • Supply Chain & Procurement: Diversify manufacturing and sourcing to build resilience.
  • Packaging Optimization: Explore cost-effective materials and designs to offset rising costs.
  • Product Line Refinement: Focus on high-margin and high-demand products to maximize profitability.
  • Pricing Strategy: Find the balance between protecting margins and maintaining consumer trust.

Both groups bring distinct strengths to the table. Established brands benefit from scale and efficiency, while emerging brands excel at innovation and consumer connection. Who will win? Only time—and strategy—will tell.

Curious about how tariffs might impact your business? Our extensive experience and proprietary tools—like our Global Trade Optimizer—provide unmatched insights into your exposure. We’ll help you navigate the challenges and craft tailored mitigation strategies for the short, medium, and long term. Let’s work together to turn uncertainty into opportunity. Contact us today to get started!

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Tariffs 101: A Quick Refresher

President-elect Donald Trump has announced plans to implement additional tariffs, including a 10% increase on all goods imported from China, starting January 2025. China may respond with its own retaliatory measures, which could include imposing tariffs on American goods, restricting market access, or devaluing its currency.

The beauty industry is expected to feel the impact of these developments, with increased costs and shifting consumer demand reshaping the competitive landscape. Brands of all sizes will need to reassess their strategies to stay ahead in 2025 and beyond.