A joint report from Atelier and Accenture estimates the beauty industry is missing out on $86 billion in annual revenue due to innovation inefficiencies. This figure illustrates the cost of slow product development, rigid supply chains, and fragmented systems that hinder brands from responding promptly to market demand.
In an interview with CosmeticsDesign US, Nick Benson, Founder and CEO of Atelier, said the $86 billion figure was derived by “taking real-world revenue gains delivered by our composable manufacturing platform for existing customers and extrapolating that to the entire $674 billion beauty market annually.
“Another way to think about this number is the total value of unrealized competitive advantage.”
Beauty innovation is slowing down
The volume of new product launches in beauty has declined sharply over the past decade. Data from Mintel cited in the report shows that only 46% of global product launches between January and May 2024 were new innovations, down from 63% in 2015. The remainder were product “renovations,” including repackaging or formula updates.
This trend reflects the rising cost and complexity of bringing new products to market. “Brands are trapped in legacy thinking built around archaic relationships and processes from twenty years ago,” Benson noted, “combined with risk aversion that paradoxically makes maintaining the status quo the riskiest strategy when current setups are actively costing market share.”
Four structural barriers slowing the industry
The report identified four key challenges limiting innovation speed and operational resilience:
- System misalignment: Only 13% of companies say their supply chain and manufacturing capabilities align well with their business goals.
- Legacy infrastructure: Just 11% have implemented architected, end-to-end systems.
- Supply chain fragility: 59% rely on sole-sourced or few suppliers, creating risk exposure.
- Data disconnects: 79% of companies struggle to translate customer data into actionable product decisions.
“These inefficiencies aren’t just operational,” Benson explained. “They’re strategic blockers that are actively preventing brands from seizing market opportunities.”
Consumer expectations outpace industry response
The pace of disruption has accelerated 183% since 2019, according to Accenture’s Pulse of Change Index, but most consumer goods companies still take over a year to respond to market shifts. In the beauty industry, this lag translates into lost market share and unmet demand.
Benson emphasized the urgency: “Across all industries, but especially in trend-driven ones like beauty, the ability to rapidly meet changing consumer demands can make or break a company.”
A cited example from 2024 illustrated this mismatch: according to the report, Prada’s Astral Pink lip balm sold out within hours after a viral moment but couldn’t be restocked quickly due to supply chain constraints, which underscored the risks of slow responsiveness.
Composable manufacturing as a strategic lever
The report positioned composable manufacturing as a model for accelerating time-to-market and defined the concept as a system that “virtualizes physical manufacturing resources into a unified network with modular building blocks.”
“Traditional manufacturing locks brands into rigid supplier relationships and linear processes,” Benson said. “Composable manufacturing virtualizes physical manufacturing resources… eliminating the false choice between speed, quality, and cost and enabling rapid response when disruptions occur.”
A case study in the report detailed a global cosmetics client that cut its product development timeline from 12–18 months to three months using this approach, resulting in a revenue uplift of 12.8%.
A new innovation metric: The innovation multiple
To better quantify innovation ROI, the report introduced the Innovation Multiple, which is a ratio of a SKU’s gross profit to its total innovation investment, including R&D, sampling, and staffing costs.
“The Innovation Multiple gives brands a data-driven metric to replace gut-feeling decisions with performance-based partnerships that optimize resource allocation,” Benson explained. “Soon, we’ll be launching this publicly for our partners to calculate and optimize.”
Three strategic moves for brands
To close the innovation gap, Benson recommended three immediate actions:
- Audit supplier concentration to reduce sole-source dependency.
- Adopt data-informed manufacturer selection over traditional relationship-based sourcing.
- Build multi-shoring capabilities to withstand global disruptions.
“Brands must immediately audit their supply chain vulnerabilities,” he concluded, “because as we’ve seen with COVID, Suez, and current tariffs, these problems will never end.”
