Winning in Functional Wellness & Beauty: How Suppliers Can Lead the Fastest-Growing Personal Care Category in 2025

Winning in Functional Wellness & Beauty:
How Suppliers Can Lead the Fastest-Growing Personal Care Category in 2025

A few years ago, a face serum was just a face serum. A night cream? Simply a tool to hydrate skin. But today’s consumers see beauty differently. It’s no longer just about looking good—it’s about feeling good, inside and out. The rise of functional wellness and beauty is transforming personal care, turning everyday routines into holistic rituals that address sleep, stress, longevity, and overall well-being.

This shift isn’t happening in a vacuum. A $285 billion market in 2024, growing at 7% CAGR, functional wellness and beauty is being fueled by evolving consumer priorities, changing retail strategies, and advancements in science-backed formulations. Educated shoppers are actively seeking products that go beyond aesthetics, and major retailers are responding by expanding assortments and investing in brands that deliver real, measurable benefits.

For suppliers, this represents a significant opportunity, says MPG Business Consulting VP Holly Gray, but only if they can align with what today’s beauty and wellness consumers actually want. In today’s On the Pulse piece, Holly provides her insights into the Functional Wellness & Beauty category—including key trends and implications for consumer brands looking to win in this evolving space.

The Consumer Shift: Beyond Beauty, Toward Total Well-Being

The modern consumer is demanding more from their beauty products. The days of simple moisturizers and one-size-fits-all skincare are fading, replaced by multifunctional, science-backed solutions that address broader health concerns. Today, beauty shoppers are also wellness seekers, looking for products that help them sleep better, manage stress, balance their microbiome, and support their overall health.

This convergence of beauty and wellness is being driven by a new generation of shoppers—Millennials and Gen Z—who prioritize long-term well-being over short-term fixes. They want clean, transparent ingredients, but more importantly, they want to know that their products truly work. They read labels, research ingredients, and trust clinical-backed claims over marketing buzzwords. Approximately 67% of Millennials prioritize sleep over other wellness factors, while Gen Z is hyper-focused on stress relief and mental well-being.

And they’re willing to pay for results. Shoppers are moving beyond traditional beauty products and toward ingestibles, adaptogens, and biotech-powered skincare solutions. Supplements that promise to improve skin from within, collagen powders that target aging, and melatonin-infused night creams are no longer niche—they’re becoming the new norm.

For suppliers, this shift requires a mindset change: Products can’t just be effective on the surface. They need to enhance consumers’ lives in a meaningful way

Retail’s Response: The Battle for Wellness-Focused Consumers

As consumer demand evolves, so does retail strategy. Some are aggressively expanding their wellness-driven personal care categories, while others double down on science-backed beauty. The competition for shelf space is fierce, and brands must align with retailer-specific priorities to succeed.

At Walmart and Amazon, for example, functional wellness and beauty products are gaining traction within Better-for-You (BFY) assortments, where skincare meets supplements and clean-label products are prioritized. They understand that the “Better for you” shopper is highly engaged, highly valuable and is investing more than ever in functional wellness. At the same time, Beauty retailers like Ulta Beauty and Sephora are leaning heavily into science-backed brands, offering space to products that blend traditional beauty with clinical efficacy. Drugstores like CVS and Walgreens, on the other hand, are optimizing formats with a strong focus on linking Pharmacy and OTC functional wellness solutions, in convenient retail environments.

What does this mean for consumer brands? Retail partnerships must be strategic. A one-size-fits-all approach won’t work. Instead, brands must tailor their retail strategies, aligning their product positioning, claims, and digital presence with the needs of retailer’s audience, and partner with retailers to leverage their capabilities to engage, educate, and convert shoppers.

Key Growth Areas: Where the Opportunity Lies

While the entire functional wellness and beauty category is expanding, some areas are growing faster than others. Sleep support, stress relief, and microbiome-focused beauty are among the top and fastest growing need states, as consumers better understand their codependence.

Take sleep and stress relief, for example. Sleep-supporting products are up 13% year over year, while stress-relief solutions have surged by 22%. Consumers are actively searching for nighttime skincare infused with melatonin, aromatherapy-based body products, and adaptogenic haircare solutions that help manage stress. These once-niche products are now becoming mainstream, and retailers are actively looking to expand their assortments in these areas.

Another major growth area? Personalized beauty and wellness. Consumers are moving away from generic skincare and supplements, favoring highly customized solutions instead. Brands that can offer AI-driven diagnostic tools, mix-and-match serums, and hyper-personalized supplement regimens will stand out.

And then there’s the rise of GLP-1-driven beauty. With 59% of U.S. adults using or considering GLP-1 weight-loss medications like Ozempic and Wegovy, there’s an increasing need for beauty products that address skin and hair-related side effects. Hydration boosters, collagen-enhancing formulas, and microbiome-balancing solutions are quickly becoming key areas of innovation.

The Digital Imperative: How Consumers Are Shopping

Consumers today don’t just browse beauty aisles—they research, engage, and shop across multiple digital platforms. More than 50% of shoppers research online before purchasing, and nearly half rely on reviews before trying a new brand.

Social commerce is driving much of this engagement. Instagram, TikTok, and YouTube are leading discovery engines, with beauty and wellness brands using short-form videos, experiential AI, and real customer testimonials to capture attention. AI-driven shopping experiences—such as virtual skin assessments and personalized product recommendations—are empowering shoppers to customize their solutions and becoming top conversion drivers.

For suppliers, this means that a strong digital presence is non-negotiable. Brands need to invest in AI, personalized shopping tools, and unbiased educational content to stay relevant. Digital-first storytelling, engaging product information & reviews, and social commerce strategies will determine which brands stand out—and which fade into the background.

Winning in 2025: What Suppliers Must Do Now

The functional wellness and beauty revolution is here, and the brands that move fast and strategically will capture the market. The playbook for winning in 2025 includes:

✔ Developing solutions for top need states—Focus on sleep, stress, microbiome, and GLP-1-related concerns.

✔ Owning digital engagement—Leverage AI, social commerce, and personalized shopping tools to connect at meaningful points across the full funnel.

✔ Building trust with science-backed claims—Clinical validation is a must.

✔ Aligning with top retailers’ wellness strategies—whether it’s Walmart’s BFY focus or Ulta Beauty’s science-driven approach.

✔ Innovating with bioengineered ingredients—For today’s consumer, sustainability and efficacy must go hand in hand.

The future of personal care is not just about beauty—it’s about holistic wellness. And in this fast-moving space, the suppliers who adapt, innovate, and tell the right story will be the ones leading the next wave of growth. For strategies that can drive your brand forward in this exciting, evolving area, reach out to Holly Gray at Holly.Gray@mpgllc.com. Holly has over 25 years of experience in creating innovative commercial strategies, modernizing sales capabilities, and leveraging omnichannel insights to fuel growth and generate profitable joint value with partners. Her expertise includes strategic, long-range customer business planning and shaping category thought leadership across international markets, with a focus on the consumer health industry, most recently in her role as Vice President, Global Customer Engagement at Kenvue (formerly Johnson & Johnson, Consumer Health).