Russia's beauty industry on brink of collapse: Instagram banned, taxes soar, customers impoverished

Russian beauty salon owners are facing a difficult situation: Instagram advertising ban, sharply increased taxes, and Telegram blocking have made business operations nearly impossible. Entrepreneurs are seeking different solutions to survive.

Russia's beauty industry has descended into what could be called a perfect storm by the end of 2025. Salon owners first lost the ability to advertise themselves on Instagram—one of the primary marketing channels in the beauty services market. Subsequently, a tax law reform took effect that multiplied entrepreneurs' tax obligations.

Chain of problems

Following the tax reform, VAT was increased and the state blocked Telegram while regularly cutting off mobile internet. This left salons practically cut off from all major digital communication channels with their clients. The independent news cooperative Bereg, whose material is published by Meduza, surveyed beauty sector entrepreneurs about how the crisis is affecting them.

"The owner is left with nothing"—this is how one salon owner describes a situation where high taxes, declining revenues, and blocked advertising channels have made earning a profit nearly impossible.

Customers' purchasing power declines

The problems are further aggravated by the fact that consumer purchasing power has declined significantly. Under conditions of a war economy, many Russians' real wages have fallen, and luxury services like beauty treatments are the first to be cut in the name of savings. Entrepreneurs are seeking survival strategies—some are switching to cash payments, while others are experimenting with social networks still accessible in Russia.

According to analysts, the beauty sector crisis reflects broader problems in Russia's small and medium-sized businesses. Sanctions, military spending, and digital infrastructure restrictions have together created a situation where many entrepreneurs are considering shutting down operations.