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While COO at The Clorox Company and, prior, vp and gm of Burt’s Bees, Nick Vlahos knew the better-for-you category was a key driver of consumer-packaged goods’ future.
The Honest Co. was first launched in 2012 by actress and entrepreneur Jessica Alba, and Vlahos has been at the helm as CEO since March 2017. Since his appointment, Vlahos has committed the brand to reinvest 2% of its revenue into research and development. He overhauled the beauty category in 2018 to have fewer products, new formulations and packaging, simpler names, and lower price points. He also moved the company from a DTC e-commerce strategy to an omnichannel one. Today, The Honest Co. products are sold online and in 40,000 retail locations, including Walgreens, Amazon and Nordstrom, and Boots in the U.K. Vlahos cites international expansion as a significant opportunity for the business in 2022, especially through its partnership with German retailer Douglas.
“As we look to the future, we’re going to continue to partner with the right retailers, both domestically and internationally, to be able to drive our accessibility strategy through an omnichannel lens,” Vlahos said on the latest Glossy Beauty Podcast.
The Honest Co. went public via an IPO in May 2021 at $16 a share. Currently, shares are trading below $7.
Below are excerpts from the conversation, which explain recent updates to The Honest Co.’s beauty portfolio, questions over the company’s fallen stock price and the strategy for international expansion.
Rethinking the beauty portfolio
“Over the last few years, when I joined Honest, we made a significant investment in building out our own internal laboratories to deliver [beauty] formulations that are clean, safe and effective. When you look at the beauty business and where we’ve taken it, where we’re headed, this beauty restage we introduced [in 2021] is about continuous improvement. We had an opportunity to look at our sustainability and our packaging. The restage encompasses about 100 [stock-keeping units] that we ended up touching this past year. We introduced new secondary packaging, which is 100% tree–free packaging made from an upcycled sugarcane byproduct. A secondary component is adding additional items and [product] lines within the beauty portfolio. [For example,] we introduced a Daily Defense collection, a new sub-line within our skin portfolio.”
Taking stock of falling stock prices
“The reason we were able to command the $16 IPO price is because of what the business has been, where it is today and where it’s going into the future. The stock price will fluctuate, and if you look at the market, over 50% of the IPOs in 2021 out of the top 100 are trading are below their offer price. And that’s because of what’s happening within the market when you look at Covid-19, supply chain [constraints] and other challenges. There will be episodic periods where there are things outside of your control that are impacting the overall business. As a good custodian of the business, what’s important is ensuring that you build a great business that can stand the test of time.”
Partnering with Douglas for international expansion
“International is a significant opportunity because that consumer that I talk about — [who is buying] better-for-you [products] and caring more about cleaner ingredients, sustainability and social responsibilities — is not happening only within North America and the United States. We’ve partnered in Europe with Douglas, a key partner for us with our beauty business. They’re a key partner for us in about seven primary markets. But then we’re going to be adding additional markets this year around our beauty or skin products within Europe to continue to drive this accessibility strategy. What you’ll also see more [of in 2022] is us really building out a clear content strategy with Douglas that leads to digital community and advocacy within the different countries we’ve partnered with them on. You’ll also see us driving omnichannel commerce with Douglas both physically and digitally.”
