Key Takeaways:
Despite its proximity to the world’s largest beauty market, Canada remains one of the most under-examined ecosystems in global beauty. Overshadowed by the scale, capital, and celebrity machinery of the US, Canadian beauty is often treated as an extension market, almost like a smaller, quieter version of its southern neighbor. That framing misses the point.
Canada’s beauty industry operates under fundamentally different conditions. Think of a vast geography with a comparatively small population, higher logistics costs, limited access to venture capital, and a consumer base that is notably more skeptical, value conscious, and loyalty driven. Those constraints have shaped a generation of brands that are operationally disciplined, margin aware, and structurally resilient, qualities increasingly prized in a post–“growth at all costs” era.
“There really isn’t much coverage about the beauty industry in Canada; how that’s going, what’s happening, the manufacturing, the supply chain, the market,” Connie Lo, co-founder of Toronto-based Three Ships Beauty, said to BeautyMatter. “But Canada is a big superpower.”
A Market Defined by Geography and Capital Discipline
Canada’s first challenge is structural. The country’s population, roughly equivalent to California’s, is spread across one of the largest landmasses in the world, with the majority concentrated close to the US border. That imbalance makes national distribution disproportionately expensive.
“Our population is densely packed in one part of the country,” Laura Thompson, co-founder of Three Ships Beauty, told BeautyMatter. “But it’s so spread out over such a large area for relatively few people compared to the US that Canadian brands have to be more resourceful.”
CEO of Canadian brand Bushbalm, David Gaylord, agreed. “The landscape of where beauty is sold is not as broad or diverse as the US, which can make channel expansion slower or, in some cases, not worth the effort,” he said. “That is one reason we focused on landing Ulta Beauty in the US first, because it can accelerate our ability to scale toward our goals.” He added that in Canada, many brands prioritize Shoppers Drug Mart or Sephora; meanwhile in the US, there are more large-scale retail paths and more ways to build volume.
That resourcefulness extends to capital. Canada’s venture ecosystem is smaller and less beauty-specialized, particularly for consumer brands. “We don’t really have VC funds here in the same way that you have them in the US,” Thompson explained. “At some point as a Canadian brand, you kind of have to decide how closely you want to work with US investors.”
The result is a market that produces fewer unicorns, but more profitable, durable businesses. Three Ships Beauty, for example, has raised C$6.5 million ($4.7 million) since launch, generated more than C$16 million ($11.6 million) in topline revenue last year, and is profitable. “Having started the company with less than four grand, we’ve really ingrained in our team the importance of profitability and ROI of every dollar we spend,” Lo said.
To be better financially placed, Bushbalm works with BDC (Business Development Bank of Canada), a bank for Canadian entrepreneurs, to access favorable lending. “On the venture side, there are simply more firms and more capital available in the United States,” said Gaylord. “There are also second-order effects. For example, some US investors want to benefit from QSBS [Qualified Small Business Stock] tax advantages, and being a Canadian entity can limit that,” he continued, adding that in most cases, it is still straightforward for foreign investors to invest in Canadian companies, although small frictions can add up.
If capital scarcity shapes how brands build, Canadian consumers shape how they sell. Across categories, founders describe Canadian shoppers as more skeptical than their US counterparts, making them less persuaded by celebrity endorsements or influencer virality, and more focused on proof, ingredients, and outcomes. “Influencer and celeb PR converts really well for our US marketing,” Lo explained. “But in Canada, it’s, ‘Okay, cool, that person used your product. I want to read the reviews. I want to know the science. I want to know why you used this ingredient.’”
That dynamic is echoed by Dealbodies founder Krys Lunardo. “Canadian customers want more information. They want to know, ‘Is this a Canadian brand? Who are they? Who stocks them?’” she said to BeautyMatter. “They rely more on trusted retailers to validate brands.” The upside of that skepticism is retention. “Once you do convince them to try the product, especially if you have a good one, they will stick with you,” Lo added. “They’re very loyal.”
Retail as Credibility Infrastructure
That demand for validation has elevated the role of retail in Canada—not just as a sales channel but also as a trust mechanism. According to reports, the Canadian retail market was valued at $834.55 billion in 2025, projected to grow at a CAGR of 4.90% between 2026 and 2035, reaching $1,346.50 billion by 2035. The closing of Hudson’s Bay last year remains a void, with shoppers Drug Mart and Sephora getting increased traction.
When Three Ships Beauty began expanding beyond DTC, it was highly selective about partners. “We wanted to align ourselves with really reputable, credible retailers,” Lo explained. “If you’re discovering a new brand online and you’ve never heard of it before, you want to smell, touch, and feel the product, ideally in a store you already trust.”
Whole Foods Canada was an early national partner of the vegan beauty brand. Credo Beauty and Detox Market followed, chosen for their rigorous standards and emphasis on in-store education. “Being a newer brand, education in-store is critical,” said Lo. “You can’t just launch and pray your product gets off the shelf.”
Dealbodies followed a similar path, scaling to around 60 retail doors largely through word-of-mouth and wholesale traction. “[Customers think] ‘If those major retailers carry this brand, then it must be trusted, and then we will support that brand,’” Lunardo said.
Despite retail’s importance, DTC remains central to many Canadian brands’ economics. For Three Ships Beauty, 70% of revenue last year came through DTC, with 80% of those customers based in Canada. “DTC is really the engine that drives the business for us,” Thompson said. “It gives us a big advantage compared to brands that are very reliant on retail, especially with foot traffic being down.”
Dealbodies’ split is closer to 50/50 between Canada and the US, a balance that became risky during recent tariff disruptions. “When the tariffs came in, that was very detrimental,” Lunardo opened up. “We lost customers and temporarily lost a retail partner.”
Brands like Bushbalm, expected to make up to $30 million in 2025, have most of their manufactured goods covered under the Canada-United States-Mexico Agreement (CUSMA), which grants a better tariff position than many US counterparts. “That could change in the future, but today it is a real advantage,” said Gaylord.
Manufacturing: Canada’s Quiet Advantage
While Canada may lack capital density, it has a robust, often overlooked manufacturing ecosystem, particularly in provinces such as Ontario and British Columbia. “We actually do have a very strong manufacturing landscape within Canada,” Thompson emphasized. “Many US brands manufacture their products here, which people don’t really understand.”
Three Ships Beauty works with four Canadian contract manufacturers, producing all but two of its SKUs domestically. “You can find manufacturers that do runs as small as 500 units, and others that are fully automated and pushing hundreds of thousands a day,” Thompson explained.
That proximity offers agility, quality control, and cost advantages, particularly when paired with a weaker Canadian dollar. It has also strengthened the “Made in Canada” narrative, which gained momentum amid recent trade tensions. “There’s been a huge surge in support for Canadian businesses,” said Thompson. “It’s this sense of national pride, [as] people feel like they’re helping their neighbors.”
The US remains the inevitable next step for many Canadian brands, but it comes with complexity. Shipping costs, customs clearance, and the removal of the de minimis exemption have forced brands to rethink logistics. “It’s just easiest to set up a US 3PL,” Thompson said. “Every foreign brand shipping into the US has to do that now.”
Dealbodies has responded by refocusing on Canada while preparing for Europe. “As a small brand, we can’t just figure this out as we go,” Lunardo said. “We need a plan.”
Despite its track record of producing brands like MAC, Deciem, Ilia, and now a new generation of founder-led independents, Canadian beauty still battles perception issues. “A lot of people think Canadian brands are small, boring, or not as smart,” said Lo. “That’s just not true.”
Lunardo agreed. “The biggest misconception is that Canadian brands are boring or offer the bare minimum,” she says. “Over the past five years, that narrative has shifted. We’re being put on the map as powerhouse brands.”
What distinguishes Canadian beauty today is not scale, but substance, as it focuses on disciplined growth, informed consumers, strong manufacturing, and brands built to last. As the global industry recalibrates around profitability and resilience amid tensions in high-margin markets like the US, Canada’s beauty market may prove less of an outlier, and more of a blueprint.
