When times get tough, people do the sensible thing in the supermarket: they trade down.

They switch to supermarket own-brands across food categories without much internal drama. No one is standing around in the food aisles clutching store brand soup and wondering what it says about their identity.

Food is essential, yes, but, bizarrely enough, food brands are not. 

Private label packaged food was valued at US$415.5 billion market globally and is expected to grow to US$582 billion by 2030 – it’s growing faster than the overall F&B industry. And this makes sense, because times have been tough a lot recently, and consumers are very good at asking that one brutal question: “Is this branded product actually worth the price?”

Often, their answer is no. Store brands have grown up. They are no longer the sad country cousins of branded food. Many are good quality, offer enough variety, and are cheap enough to make the premium harder to justify.

Beauty behaves differently.

Even though we need food to live, people are far more reluctant to trade down on what they put on their skin, hair, and body. Private label cosmetics, compared to F&B, is worth US$10.6 billion. This means that private label F&B is roughly 40X the size of private label cosmetics in absolute terms, even though food is only about 2X as large as cosmetics. Interesting, but so what? 

Well, for starters, it just highlights how different the beauty consumer is from the food consumer. The food shopper looks for value, the beauty shopper is looking for proof, reassurance, and transformation from a teeny tiny little bottle of serum that is at the going rate of a black market kidney (...I assume).

This asymmetry seems like a quirky little footnote about consumer psychology, but it may explain one of the more interesting shifts happening in the food industry right now. 

A couple of the world’s biggest food companies and ingredient suppliers are moving further toward beauty, wellness, and health. At first glance, this looks like portfolio rationalization. A bit of pruning here, an acquisition there, the usual corporate gymnastics.

These companies are not just chasing beauty as a category. They are chasing beauty’s economics. Because beauty has something conventional packaged food is finding harder to hold onto: emotional loyalty, premium pricing, faster innovation cycles, and consumers willing to pay for a promised outcome.

People compare food, but they want to believe beauty. And that is a much more attractive place to be if you are trying to protect margins. But belief is not automatic. Beauty’s margins depend on credibility, specifically trust, proof, and permission to make these claim. And that is where things get complicated for food companies trying to move into this space.

While food companies are fretting about affordability and keeping prices in check for consumers, beauty is A-OK. Better than, in fact.

In 2025, across a year of tariff anxiety, falling consumer sentiment, and an economy in which lower and middle income households were visibly pulling back on discretionary spending, the US beauty market grew in two directions at once. 

Basically, this means that people weren’t just paying more for the same amount of product – they were actually buying more of it, in some segments.

The categories that grew are also very telling. 

Mass retail fragrance grew 15% in 2025, three times the growth rate of skincare, and the standout performer across every category in the mass channel by a fairly dramatic margin. 

This is an aside, but honestly, the fragrance numbers delighted me. 

Fragrance is such a good example of what beauty does so well. It is not strictly necessary. It doesn't solve hunger, clean the house, pay rent, or make anyone a better person, despite what some people on #PerfumeTok may suggest. But it does make people feel something – indulgence, memory, confidence, mood management, aspiration in a bottle. Something vastly different from, say, demolishing a big bag of crisps by oneself. 

Beauty has become exceptionally good at products that sit at the intersection of physical attractiveness, mental wellbeing, and self care, framed as both pleasure and maintenance, a treat and an investment. The investment idea being that looking good makes you feel good too. There’s an emotional stickiness here that sells itself. That’s what food companies should be paying attention to.

The larger point is that beauty has trained its consumers to think in outcomes, and it has done so in two ways that food hasn’t managed to.

First, it has made consumers comfortable with science-y language. This is the same consumer who may reject a packaged food because the ingredient list contains something they “can’t pronounce”, but will happily build a skincare routine around niacinamide, azelaic acid, hyaluronic acid, ceramides, peptides, and retinaldehyde. Long ingredient names in food trigger suspicion. In beauty, they signal efficacy. 

Second, beauty has normalized routine and repeat use. That famous 10-step Korean skincare routine became a meme, but it did something important: it made frequency feel like self-improvement rather than effort. Conventional packaged food has mostly trained people to think in meals, snacks, convenience, taste, and price. Beauty has trained people to think in visible outcomes and patient (and consistent) little acts of maintenance. That is a very different – and commercially much more interesting – relationship with a product.

Globally too, the picture is consistent. The beauty and personal care market is expected to reach US$636.2 billion in 2026, and is projected to grow at a CAGR of 5.14% through to 2031, with premiumization, functional products, and wellness-adjacent positioning driving growth across regions. As GLP-1 weight loss drug adoption expands and biosimilars make these drugs more accessible globally, the side-effect economy is likely to follow. This means that the beauty tailwind the US is experiencing now could start playing out in other markets in the coming years. 

That beauty can now be considered both identity and health spending cuts across economic strata. Food companies want in because beauty brands have achieved what conventional packaged food is struggling to do. Make the premium feel worth it.

And it’s already happening.

Beauty-from-within is not new, but it is becoming more established as a functional food trend and opportunity. Consumers are increasingly looking for skin, hair, hydration, aging, and vitality benefits through what they eat and drink, in addition to what they apply.

The category is also moving beyond powders and capsules. Beverages, snacks, bars, smoothie mixes, and even ready-to-eat formats are starting to position themselves as part of a beauty-supporting diet.

This puts beauty’s logic into food’s formats. The products are not selling taste or convenience alone. They are selling a promised outcome. Collagen is still the obvious anchor, but a whole range of other traditional beauty ingredients are also gaining attention for links to skin elasticity, hydration, hair strength, antioxidant support, and healthy aging.

Beauty-from-within shows how functional food can borrow beauty’s commercial logic: clear benefits, active ingredients, repeat use, and a premium consumers can justify. Just so we’re clear – food’s nowhere there yet. There are a lot of silly pastel-colored “glow” products, with no overt mentions of dosage and usage. 

But the direction is clear. Food and drink are moving towards a more “what does this do for me?” state of mind.

But the moment food starts promising outcomes, it invites a different kind of scrutiny. Food consumers already inspect labels for sugar, additives, protein, processing, and clean-label cues. Functional food adds another layer of questions: Is there enough of the active ingredient? How frequently does it have to be consumed? Is that format right to actually do anything?

Plus, conventional packaged food is looking far less seductive than ever before. People will always need food, but “people need to eat” is not the same thing as “this is a thrilling business to be in”.

Food is being squeezed from every which direction. There are commodity costs you can’t control, margins are depressingly thin, retailers have all the power and know it. Consumers are tired, value-conscious, and increasingly willing to buy private label. And in many categories, the difference between the branded product and the supermarket’s own has become a little too philosophical for comfort.

Then there is this cheery little chart.

Packaged food companies’ total shareholder returns have been sliding for years. Over the last decade, the sector’s TSR fell from 15.1% to just 2.9%, the lowest among major sectors. Just proving that food is essential, but food brands ain’t.

Beauty has a cleaner story to tell investors with all that fuzzy stuff we talked about. Or, one analyst put it perfectly: “You can sell hope and performance at a premium; calories are harder to upscale.”

If calories are harder to upscale, then food companies have three choices: accept the squeeze, exit the weaker parts of food, or find a way to make food behave less like calories and more like outcomes.

But what are they actually doing in real life?

That is the logic we’ve been seeing in recent months. 

Unilever is moving away from its food roots through its McCormick deal, after years of pruning food brands and spinning off ice cream last year. IFF has launched a sale process for its Food Ingredients business, even though it is a major revenue generator, because the margins are less attractive than areas like Health & Biosciences and Scent. DSM-Firmenich, meanwhile, has divested Animal Nutrition & Health as part of its shift toward nutrition, health, and beauty. 

I don’t think this is the last we’ll hear of such activity from the food world. But it’s also not usually viable.

Unilever has assembled an entire wellness portfolio through acquisitions, including hair growth supplements brand Nutrafol, SmartyPants Vitamins, gummy vitamins brand Olly Nutrition, and functional drink brand Liquid I.V.. The latest addition to this group is Grüns, a startup that’s barely 3 years old and produces gummy bears made from vegetables and fruits. 

Nestlé, which has had a stake in L’Oreal since the 1970s, bought collagen supplement brand Vital Proteins in 2022. They recently launched a range of nutritional drinks to address healthy aging under the brand Nestlé Vital, including skin health, as well as a sparkling water under the Vital Proteins’ brand. Both ranges contain collagen.

These moves are attempts to reach a consumer who will pay more for a product that promises a specific outcome. The products highlight clear benefits, premium format, encourage repeat use, and appeal to a consumer who wants to believe the thing might actually work.

Which sounds great, except there is one rather large problem: credibility.

Many legacy food companies are now racing toward wellness, health, and beauty after building enormous businesses on cheap calories, long shelf life, convenience, and hyper-palatable products optimized for repeat purchase and margins.

That doesn’t mean every legacy food product is evil, but the reputation is there. And reputation matters a lot more when you are selling wellness. It also means the product has to survive a different kind of scrutiny. Not just “what’s in this?” but “is there enough of it to be effective?” This is why many large companies seem to be buying their way into the space. They are not just buying brands, formulations, or growth. They are buying credibility.

The newer, smaller companies were built around a narrow promise and often keep their proposition almost aggressively simple. Grüns, for example, has a tasty gummy alternative to taking a pile of vitamins, just one product for adults, one for kids. Vital Proteins owns collagen.

This is hard for legacy food companies to build from scratch – and that’s why credibility comes at a such a premium. After all, Unilever paid US$1.2 billion to acquire Grüns.

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