Small cosmetics brands stand out from the beauty market by targeting millennials

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The beauty industry is filling with new faces.

Driven by millennial shoppers, who buy more cosmetics and skincare than any other demographic, independent brands have experienced tremendous growth in recent years, seizing market share from established big names.

Upstarts connect with a new generation in a number of ways. They focus on organic ingredients, personalized service and product personalization, such as the serum intended for a specific skin type. They also sell largely online and rely heavily on social media and influencers for marketing, where many millennials turn for product advice.

A beauty boom

At stake is a share of the global cosmetics market, which is expected to reach $ 805.61 billion by 2023, up from $ 532.43 billion in 2017, according to Orbis Research.

In a 2017 cosmetic industry report, Deloitte said “small is the new big,” noting that “global brands are losing share as small brands and disruptors gain. “

To get a feel for the forays of independent brands, look at the prestige side of the cosmetics market, a $ 78 billion share that encompasses brands that aren’t typically sold in drugstores, such as Shiseido and Clinique.

From 2010 to 2015, the top 10 premium brands fell from 46% to 40%, according to Deloitte. Independent niche brands, meanwhile, grew by more than 25% versus 20% during the same period.

The gains made by independent brands are not limited to the prestige niche. They are also making big gains in makeup, the fastest growing segment of the overall global beauty industry. Make-up “has always been dominated by giant conglomerates, but the fastest growth belongs to independent brands,” said Nini Zhang, vice president of luxury, beauty and clothing at Credit Suisse. “In color cosmetics, independent challenger brands only represent 10% of the market, but are growing four times faster than their historical competitors. “

But how long will independent brands remain independent is an open question. Large cosmetics companies are trying to cling to independent success by buying stakes in smaller brands. “Historic companies and investors have invested $ 3 billion in independent beauty brands over the past decade,” said Ms. Zhang.

A balancing act

The history of True Botanicals shows the path taken by some of the best newcomers. The skin care line, launched in 2013, has proven to be one of the most successful independent brands. Like many newbie cosmetics makers, it highlighted its green appeal, but went one step further by getting all of its non-toxic essential oil products certified Made Safe, an organic certification on steroids that ensures the products do not contain any harmful chemicals.

True Botanicals also uses common independent strategies to connect with clients. The company combines online sales with personalized customer service that includes online skin consultations with an expert. And the company has courted social media influencers and celebrity Olivia Wilde, who regularly talks about the benefits of the line in her social media posts.

While the company doesn’t give exact revenue figures, it says it doubled its sales volume in 2016, nearly quadrupled in 2017 and more than doubled again in 2018.

The company also says it has 30 employees in 2018, up from four in 2015. And it just did something few retail brands are talking about these days: open a physical storefront in San Francisco.

In 2017, Unilever Ventures, the venture capital and private equity arm of Unilever, acquired a minority stake in True Botanicals. Olivier Garel, director of Unilever Ventures, said he loves the vision, ethics, quality ingredients and the ability of True Botanicals from True Botanicals to interact with customers.

True Botanicals founder Hillary Peterson said some clients are concerned that business investment destroys the company’s green commitments. “Every now and then someone will say that I can’t buy your product because Unilever has invested in you,” says Peterson.

But having the corporate power behind the brand, she says, gives True Botanicals the power to potentially change the industry by developing “green” chemistry and finding natural alternatives that other brands might consider using. .

Mr. Garel of Unilever says, “We support and learn from each other as we grow the business.

Other big independent winners in recent years include Glossier; Korean manufacturer of Hanacure face mask kits; and Ordinary Co., which is part of a company that Estée Lauder bought in 2017. Like True Botanicals, they tend to focus on non-toxic ingredients, personalized products, and customer service.

However, this is not a universal formula. Glossier, started by beauty blogger Emily Weiss, tends to focus more on efficacy than ingredients.

“Our priority is to create the best products and experiences for our customers,” says Ali Weiss, unrelated to Emily, senior vice president of marketing at Glossier. “In some cases we are able to achieve this with an all-natural formula, and in others we make the decision to add safe synthetic ingredients… What is consistent is transparency with our customers. .

Although he did not follow the usual path, Glossier found success. In 2018, the company exceeded $ 100 million in annual revenue and acquired one million new customers. It closed a $ 52 million Series C funding round in February 2018 and opened two physical storefronts, one in Los Angeles and one in New York.

Ms. Westervelt is a writer in Kings Beach, California. Send an email to [email protected]

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