This article first appeared on Forbes.com
The beauty industry has been on a tear for years. There are some submarkets that are exceptions, like the mass beauty markets, but overall the business of beauty continues to defy gravity. Even multibrand stores, which in other consumer sectors have a questionable future, are performing. Stefano Curti, global president of Markwins Beauty Brands, pointed out to me that half the growth in beauty is online. But that implies that half the growth is in stores. It’s hard to find another market segment where that’s true.
There are three unique circumstances that continue to prop up the beauty industry:
I caught up with Jennifer Hessel, an industry consultant and L’Oreal alumna, who told me there are four major trends that the fastest-growing, young brands are taking advantage of now:
There’s a conference in New York at the end of this month called Beauty & Money that crystallizes all of the above trends. Beauty & Money puts investors and young beauty companies together. In advance of the conference, the organizers ran a competition with a panel of beauty industry experts to choose 12 startup stars. All those companies fit into the above trends. Here they are:
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Hello Ava: The idea is Stitch Fix for your face. You pay $10 (usable as a credit for purchases), answer questions, and the company use human intelligence and data science to find the best products for you. Right now, it only sells other people’s brands but over time it is planning to develop its own. Hello Ava refer to itself as “the brains behind your beauty.”
Patchology: It took the patch technology that’s used by big pharma for transdermal drug delivery and applied it to skin care. Its CEO told me it can “deliver millions more molecules per centimeter than creams or lotions.” That is resonating with consumers. The company is in Neiman-Marcus, Nordstrom, Saks, Blue Mercury, Urban Outfitters, Madewell, Sephora (EU and Russia), Harvey Nichols (U.K. and Hong Kong) and many others. Plus, it has over 65,000 Instagram followers.
EirNYC: Eir (the name is the Norse god of healing) makes unisex skincare products for people with an active lifestyle who want clean, natural, sustainable products that also alleviate inflammation and pain. Eir believes there are no other products that address the markets of both beauty, wellness and pain relief simultaneously. It is produced in Brooklyn, New York.
Olive + M: I met Mariska Nicholson, the founder of Olive+M, at the Indie Beauty Expo. She has a culinary school degree and thought about beauty products the way most people think about food, wanting to create a line that was “simple and effective.” She told me, “Olive + M wanted to be born and she just chose me as her person.” Olive+M makes all-natural, olive oil-based skin and body products she calls “food for your skin.” The products are targeted at all users and the brand has plans to introduce a men’s line and mommy-baby products as well.
SiO Beauty: SiO uses medical grade silicon to create wrinkle-smoothing patches that stay on your skin comfortably as you sleep; when morning comes your skin is smoother, firmer and more hydrated. SiO is in a subsector of the burgeoning mask market and its product is primarily under $2 to use per day. Sales reportedly tripled in 2017 and tripled again so far in 2018. SiO markets primarily through social media and micro-influencers (under 100,000 followers) who post about the product because of its efficacy. Its Instagram following has doubled since January.
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Urban Skin Rx was previously profiled on Forbes.com and is the first company to win the Beauty & Money Spotlight Award twice. Founder Rachel Roff opened a spa in Charlotte, North Carolina 12 years ago and found that although 50% of the women in the south are African-American, Roff could not find products that provided adequate skin care for women with darker skin. Over time she developed a skincare technology she calls Cleartone Advanced Technology and eventually created her own line of products with her unique ingredients. Although she still operates the spa, that business is dwarfed by the skincare business, which continues to grow very rapidly. Most of its sales are on from its website but the product is also available at Target and other retailers.
Kreyol Essence: This company works with farmers in Haiti to produce natural beauty products for dry hair and skin. Kreyol Essence’s signature products are Haitian Black Castor Oil and Moringa Oil and they have hired over 350 farmers in Haiti so far, with almost all their employees being women and 98% of their products being exported. Conscious Company Media called the founder one of the Top Conscious Global Business Leaders of 2018. I think of this company as “farm to hair-and-skin.”
SA.AL & Co. is pronounced Sahl and makes skincare products for men. The CEO told me, “it’s masculine like a Porsche but not like a Dodge Viper, which is overly masculine.” Selling men’s skin care is different than women’s in many important ways, not the least of which is how it’s sold. Retailers who sell men’s fashion don’t sell much skin care and the big beauty retailers don’t sell a lot of men’s products. Instagram is also not effective for men’s skin care. So the company has had its initial success in Europe and is now contemplating a U.S. entry and developing its strategy.
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Doll 10: The founder of Doll 10, a former Mrs. America, told me, “We marry skin care with cosmetics products and take the intimidation factor out of makeup…[we allow women to] get dolled up in ten minutes or less, with clinically proven beauty solutions.” It does it by producing products that multitask, one product performs skin care and acts as a primer, foundation and setting powder all in one. Importantly, of all the Spotlight Award winners, Doll 10 is the most proven out: It has been in business longer than the others and have demonstrated growth and longevity in multiple channels, including QVC. Doll 10 has about 140,000 Instagram followers.
Recess: Recess makes single-use, disposable body, face and deodorant wipes and hair blotters. The products combine clean ingredients, biodegradability and convenience and are suitable for sensitive skin. Body wipes like Recess’ are very popular in Asia. Because so many Asian beauty trends have become popular in the U.S., Recess is attempting to get in front of a coming trend. Right now the products are only sold online by Recess direct-to-consumer.
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PROVEN: PROVEN Skin Care calls itself “beauty with brains” and its CEO told me, “we are…a data and technology company more than a skincare company.” Consumers answer a questionnaire and PROVEN uses artificial intelligence to compare answers to one of the largest databases in the industry that has over eight million testimonials and reviews from over 4,000 scientific journal articles about more than a 100,000 products and 20,000 skincare and beauty ingredients. PROVEN formulates proprietary products relevant to a customer’s genetic background, age, local climate and environmental quality, ethnicity and skin issues and adapt the product as the customer ages and changes. It will be launching in early October.
Vendome Beaute France: The founder of this makeup and skincare line told me she was tired of “monolithic, corporate beauty brands that are boring and interchangeable.” She wanted “poetry, uniqueness and charm,” and on a trip to France was intrigued by the “unapologetic femininity” of French women. She believes that consumers are saying, “I’m paying a lot of money for you, I want you to charm me and romance me.” Thus was born Vendome Beaute France. The products have been sold on the company’s site and, not surprisingly, are now getting traction in French department stores and retailers. The products all use aromacology, as the founder says, ”elevating your mood, relaxing you, making you feel better.”
Richard Kestenbaum is co-founder and partner at Triangle Capital LLC which specialises in mergers, acquisitions and capital-raising for consumer-related businesses.