Indie Beauty Trends – Beauty & Money LA

Richard Kestenbaum is co-founder and partner at Triangle Capital LLC which specialises in mergers, acquisitions and capital-raising for consumer-related businesses.

This article first appeared on Forbes.com

The Beauty & Money conference taking place in Los Angeles on April 25th 2019 ran a competition to find 12 beauty startups they think are the most interesting. They had 18 judges identify the most interesting and pick 12 winners and the winners are described below. (Full disclosure: I was one of the 18 judges.) What’s so interesting about the winners is that their focus tells us where the beauty industry is going. I’ve met or spoken with every one of the winners and here are the broad categories they fall into:

Science

Almost every new beauty company talks about the science involved in their products. Elizabeth Kopelman of Frisson Beauty, an industry consultant with deep industry knowledge, says “when you say science, it’s about performance…ingredients must deliver immediate, tangible results. This will be transformative for skincare…and that’s where brands are going to break out of the pack.” Kopelman points out that American skin care is moving in the direction of Asian skincare. She says Asian skincare is, “extremely technical,” which sets it apart. “[In China,] there’s a confluence of skin care technology plus rituals and [now] we’re seeing it [in America] too,” she told me.

Direct-To-Consumer

In a large number of consumer product channels, multi-brand retail is declining. No one knows what the future is for multi-brand retail in beauty, but there’s a good chance that we will see more brands sell more direct to consumer. Kopelman of Frisson Beauty points out that direct-to-consumer is “very difficult to get right in beauty.” She says it’s challenging to “engage authentically with a purpose and not just regurgitate what’s out there…because it has to be original, fresh, new, and it’s hard to sustain that.” She points out that Kylie Jenner, who needs no help with name recognition, chose to sell her beauty brand with Ulta rather than selling direct-to-consumer without a retailer involved.

The Spotlight Award Winners

Amareta is the first skin care company to create products for different stages of women’s monthly hormonal cycles. Amareta recognizes that skin changes during a normal woman’s cycle and different days call for different ingredients. From that beginning, Amareta has expanded with a collection for pregnant and postpartum women. Amareta is a small company but 60% of their customers return to make another purchase.

All the virtues that consumers want in clean beauty are expensive. But as Marta Cros, the founder of APTO Skincare,  told me, “we are clean beauty for $5 to $25.”  The way they do that is by integrating their laboratory, product design and production factory into one integrated business. That increases efficiency, reduces leftover inventory and keeps the profit from all three levels inside one, integrated enterprise, keeping costs down. That allows APTO Skincare to offer innovative, price-competitive, clean beauty products in channels like Free People, ipsy and Walmart at prices that competitors can’t match.

Chella is an eyebrow-focused beauty business founded by a former NFL player. When the founder was a young boy, he’d put on his football uniform and felt invincible. He recalled that as a boy, he’d watch his mother get the same feeling when she put on her makeup and that enabled her to be successful and retire by age 40. Chella was formed to give women the same feeling of confidence that the founder’s mother had. The biggest growth in the business is coming from online sales, particularly direct-to-consumer on the Company’s own website and on Amazon.

The cofounder of Chuda Skincare previously worked for the designer Donna Karan who told her, “unless you can do something different, don’t bother.” She cofounded Chuda with Dr. Elena Ocher who was practicing in Europe and discovered a 1000-year old formula that was administered by a family who were court physicians to the Czars of Russia. It is made of pollens, oils and propolis only found in the Caucasus Mountains and never shared before outside the family. A chemist helped turn the formula into a cream that creates a “healing dome that provides skin with all the nutrients, vitamins, essential fatty acids and antioxidants it needs…and prevent outside environmental aggressors while you have the product on.” Chuda has won the QVC Beauty Quest Award for 2018 for being the “next big thing in beauty” and the Oprah Fall Beauty O-Wards 2018.

Hero Cosmetics uses hydrocolloid acne patches discovered in Korea, with non-irritating ingredients, to treat acne blemishes. Hero Cosmetic’s patches have better absorption and adhesion than its competitors and they are medical grade. All of those features are disruptive to the acne treatment market which is based on harsh chemicals that dry skin. The company’s philosophy is to bring customers new, effective skincare products that have gentler formulations without parabens, sulfates and other harmful ingredients to find mild to moderate acne. Hero Cosmetics products are cruelty-free, vegan-friendly and don’t harm the earth.

Karuna means “compassion” in Sanskrit and the company says it was the first to bring sheet masks to the United States. Discovered in Asia in 2007, sheet masks create a protective barrier so Karuna’s clean ingredients can be as effective as possible. The composition of the sheet masks themselves are critical to product performance. Karuna’s masks are made of high-quality, biodegradable fibers, including natural wood pulp and Japanese cotton fiber, which are more breathable and retain more serum to enhance efficacy. Karuna plans to diversify in 2019 by adding everyday skincare products to its product line.

Nectar Bath makes bakery-looking soap treats for the bath from sustainable and vegan-friendly ingredients. The Company has nine stores of its own, primarily near its headquarters in Las Vegas, where it creates its own environment in high-traffic areas. Nectar’s strategy of colorful, clean, eye-catching products in its own stores is complemented by store associates who are dancing, singing karaoke and having scrub parties. Nectar has also embraced personalization and experience with customers choosing their own fragrances and mixing the product for themselves which they buy and take home from the store.

Patricks is a three-year old brand that has won several international hair and packaging awards. You can find it at luxury retailers including Harrod’s, Mr. Porter, Neiman-Marcus and Selfridges. The formulations have active ingredients that address hair growth, hair loss and scalp health for men. It’s packaging is inspired by elements from high technology electronics and luxury cars. Patricks is launching a skincare line with pharmaceutical-grade ingredients to improve the look and feel of men’s skin.

Let’s say you were a consumer product company that wanted to give consumers samples. If you just hand them out on the street, you have no idea who got them, what their reaction is, or whether they’re the right people for you to target. That’s what Sampler is intended to fix. They will connect you digitally to the consumers who want to sample your product so that you can follow up with the consumer and turn them into customers and evangelists for your brand. Ritz, Garnier, Maxwell House and Kool-Aid are some of the brands that have used Sampler and beauty is a key market opportunity for them.

SkinSAFE provides personalized product recommendations to consumers with sensitive skin or who are concerned by products’ confusing ingredients. SkinSAFE uses its proprietary data to analyze products and tell consumers which products will work for them. SkinSAFE then analyzes what other products would work for that consumer, makes recommendations, and sells the product to consumers. It is a personalized shopping tool to help consumers avoid bad reactions and save money.