The lipstick effect has remained a robust measure of beauty’s thriving industry presence for the better part of two decades.
It is the theory that consumers are still willing to buy less costly luxury goods to make themselves feel good when they have to make cost savings in other areas.
The story goes that it was first coined by the late Leonard Lauder, the billionaire heir and son of Estée Lauder Companies (ELC) co-founders Estée and Joseph Lauder, who cited a jump in sales of lipstick after the 9/11 terrorist attack in the US in 2001.
And it was also a means of tapping into a luxury house’s offering via beauty, without having to spend thousands-of-pounds on fashion items.
But while the lipstick effect continues to be thrown around in 2025, is the term still accurate in today’s radically different climate?
Changing faces
The lipstick effect phenomenon is still very much present within beauty, as prestige beauty sales continue to hold weight this year, particularly in Europe.
Across Europe, prestige beauty sales increased 8% between 2023 and 2024, according to a report by market research firm Circana, with Spain and Italy seeing the highest growth at 11% and 10% respectively.
“Although there are some signs of sales slowing down in 2025, Europeans continue to invest in beauty products that make them feel good,” Circana said in its report.
“It is one of the reasons why sales of prestige beauty products have stayed surprisingly resilient in the face of cost-of-living pressures.”
And in the UK, the beauty industry made a total GDP contribution of £30.4bn to the economy in 2024 – a 9% increase compared to the year before, according to the British Beauty Council’s updated Value of Beauty report.
Yet, there are signs of change, as the term’s namesake beauty item, lipstick, has been overtaken by concealers to be the second-biggest make-up segment in France.
Concealers accounted for 8% of make-up unit sales in 2024, and by comparison, lip colour made up 7% of sales, found data by Circana.
Concealers have taken over lipstick-use in France
It is also not just lipstick and cosmetics that are potentially losing their lustre, as beauty is shifting towards no longer being the sole “narrow beneficiary of shopping impulses”, Renee Parker, co-founder and Director of Strategy for advisory firm Invinci Group, tells Cosmetics Business.
“I would say that psychological desire as a need is as present as ever, but beauty is potentially not as uniformly the beneficiary or recipient of that behaviour,” she adds.
“Customers are not necessarily buying lipstick or high-end beauty, they are investing in their gym memberships, going to
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