Consumer Brand Investing in 2025

The world of consumer brands has been chaotic, to say the least. One minute, everyone’s chasing the next direct-to-consumer unicorn; the next, the entire sector is out of favor. For a while, a product with a clever marketing hook could raise millions, regardless of unit economics. But now, we’re seeing a return to fundamentals.

So is now a good time to invest? Consumer brands encompass a broad category, so it’s hard to generalize. Investing in consumer brands requires understanding the category and operations just as much as the brand itself. Many funds often struggle because they underestimate the level of operational complexity required to build a lasting brand. It’s not just about a great product, marketing, and timing. It’s also about supply chain, distribution, and manufacturing efficiency. 

Recently, I had the privilege of sitting down with a group of seasoned investors who are deeply embedded in the consumer brand ecosystem. The mood about consumer investing was a mix of cautious optimism and skepticism. Some saw an opportunity in the market reset as a chance to invest in solid businesses without the frothy valuations of the past. Others pointed out the headwinds such as higher customer acquisition costs, increased competition, and a consumer whose preferences are shifting faster than ever. Let’s explore some of the trends (past and current). 

Jeffersonian lunch with consumer focused investors in NYC

The Consumer Brand Influencer Playbook is Changing

It used to be that a strong celebrity partnership could drive brand adoption overnight and sustain it all the way to an exit. Take George Clooney and Casamigos as an example. But today, consumers are more skeptical. They reward authenticity, and they can tell when a partnership is forced. The best brands aren’t just throwing money at influencers; they’re building long-term relationships with creators who genuinely love the product.

This shift underscores a broader evolution in brand building. In the past, loyalty was driven by consistent product quality coupled with smart branding and marketing. Now, trust and relatability are paramount. Consumers, especially younger generations, can quickly sense a paid promotion. 

In addition, a few investors in the room shared stories of celebrity-backed brands that never reached scale or struggled to sustain it because their audience was too tied to the influencer’s personal brand rather than the product itself (e.g. Jessica Alba’s Honest Company facing growth struggles post IPO). Generating massive initial buzz is one challenge; maintaining long-term momentum is an even greater one.

Finally, one wrong move, one celebrity scandal, and an entire brand can collapse (e.g. Yeezy line fallout). That’s why relying too heavily on an influencer-driven brand can spook investors.

Consumer Brands and the Digital Advertising Shift

Beyond influencer marketing, another major challenge for consumer brands is the shifting digital advertising landscape. The reliance on paid ads has become more complex, especially after Apple’s privacy updates in 2021 turned paid marketing on its head. It upended the assumptions that once drove performance marketing, such as customer acquisition costs, lifetime value, and the predictability of scaling through digital ads. 

Some brands are rethinking their entire approach, finding new ways to reach their audience beyond paid media. Top look for ways to embed themselves into their customers’ lives, creating products and experiences that feel personal and meaningful. As one participant put it, “it’s not about selling a product; it’s about becoming a part of someone’s story.”

A great example of this strategy is Glossier. It built its brand by leveraging community-driven content, word-of-mouth, and user-generated content to fuel its growth. They interacted directly with customers on social media, responding to comments, and incorporating customer feedback into product development. They prioritized a “skin first, makeup second” philosophy that resonated deeply with their audience. Products were designed to fit effortlessly into consumers’ lives: minimalistic, easy to use, and aesthetically pleasing enough to be part of everyday rituals.

Glossier’s approach wasn’t just about selling beauty products; it was about helping consumers feel like they were part of a movement, a community, and a shared lifestyle. Their customers became brand evangelists, posting about Glossier products as part of their daily routines. As a result, the company scaled to become a $1+ billion brand with a cult-like following, all while spending far less on traditional paid marketing than competitors. 

Consumer Brands and The Rise of AI and Automation

One of the most striking takeaways was the transformative role of AI in shaping the future of consumer brands. Historically, launching a company required significant upfront investment in marketing, operations, and staffing. Today, AI is leveling the playing field.  

Larger, more traditional organizations often struggle to integrate these technologies due to resistance to change and concerns about job displacement. As one investor noted, senior executives in some industries view AI as a threat to their roles, slowing down adoption. For startup consumer brands, this mentality presents an opportunity. 

For example, one investor shared an example from their portfolio: a kitchenware brand that uses AI to test multiple products simultaneously for consumer adoption. Instead of launching one or two products a year, they can now launch and test six or more. By leveraging AI-driven analytics, they identify which products resonate with consumers, optimize messaging, and refine their offerings in real time. This approach not only reduces costs but also accelerates time to market.  

Another participant highlighted how AI is reshaping sales and operations. Gone are the days of hiring large sales development teams to prospect and qualify leads. AI tools like chatbots and data-driven personalization can now automate customer interactions and many support processes, allowing companies to operate with leaner teams. This shift is enabling early-stage companies to compete with established players without the burden of heavy operational costs.

This is a game-changer for small businesses, and I think we’re just beginning to understand the impact that it has on entrepreneurship and capital markets. 

Venture Capital vs. Real Economy

For investors, the question of where to allocate capital is more complex than ever. We’ve seen a broader trend toward real economy investing, where the emphasis is on building durable, self-sustaining businesses. While venture-backed models still have their place, there’s a growing recognition that not every brand is suited for hypergrowth. For many, a more measured approach is more appealing.

Is there a winning formula? Established consumer brands are presenting interesting opportunities where strong companies that were previously overvalued are now trading at reasonable multiples. Many companies that burned through VC cash without achieving profitability are struggling, but are quickly taking advantage of AI to fix its problems. Is there an opportunity for these “fallen angels” to achieve their original vision, or is it better to bet on new and completely unproven companies that are being built lean from the ground up?

Many founders are scaling businesses with far less capital than before. The idea that every great brand needs to raise a massive Series A is gone. More founders are choosing to bootstrap or raise from alternative capital sources instead of giving up large equity stakes too early. 

For investors, the challenge is identifying which brands are real and which are just riding a short-term wave. The past decade was filled with brands that looked great in their first few years but lacked staying power. The next wave will belong to those who can balance growth with sustainability. The future belongs to those who can adapt and stay true to their core values.