This week, I checked in with IBM execs and market analysts to learn about the industry-wide potential behind the new partnership between L’Oréal Group and tech juggernaut IBM. I also spoke with the founder of Silicon Valley startup Potion AI, which is providing AI-powered formulation competition for smaller brands and manufacturers amid this sea change.
Additionally, beauty incubator Maesa sells its European and Middle Eastern operations, the Brazilian beauty market heats up, and executive moves at Victoria Beckham Beauty, Estée Lauder Companies and Glow Recipe.
L’Oréal Group makes strides in AI-powered formulation with new IBM partnership
There’s a race underway to use artificial intelligence to improve the way everyday consumer products are made.
This can be seen in healthcare with the development of new pharmaceutical drugs. According to early analysis, the use of AI could save 20% on R&D costs, which could equate to billions of dollars saved per year. AI is also being used in the fashion industry by brands like Merrill and Puma to find and test more eco-friendly processes.
When it comes to beauty, Estée Lauder Companies’ partnership with Microsoft and OpenAI is one to watch: It strives to harness AI for product formulation, regulatory compliance and more.
Now, L’Oréal Group is entering the race with a new partnership with IBM, one of the largest tech companies in the world. Announced on January 20, the partnership is primed to help L’Oréal Group reach its goal to source mostly bio-based or circular materials by 2030.
“Almost all the major players in the beauty industry are using AI-based technology to accelerate the research and development process [right now],” Madhav Pitaliya, Coresight research analyst, told Glossy. “Basically, AI is helping them to analyze vast amounts of data [around] ingredients, formulas and consumer preference.”
The blueprint for this technological advancement lies in the healthcare sector. “Drug discovery is a very tedious task but when AI [was introduced], drug discovery timing was reduced significantly,” Pitaliya said. “We are likely to witness something similar in the beauty sector.”
This means sourcing raw materials — including identifying and analyzing environmental concerns and labor practices across a supply chain — as well as formulating and testing can all happen faster. In turn, avoiding problematic ingredients, staying in compliance with evolving retailer clean beauty standards and regulatory compliance can all happen with the click of a button.
The new tech, called an AI foundation model, leverages IBM’s generative artificial intelligence (GenAI) technology to build a custom model for L’Oreal. However, some IBM GenAI tools are open-source and, therefore, available to companies for free.
“We are living in an incredible moment where different companies are sharing [advancements in] the digital research field,” Guilhaume Leroy-Méline, IBM distinguished engineer and CTO of business transformation, told Glossy. “I like to say that AI generates so humans can accelerate.”
“This partnership will extend the speed and scale of our innovation and reformulation pipeline, with products always reaching higher standards of inclusivity, sustainability and personalization”, said Stéphane Ortiz, head of innovation métiers and product development in L’Oréal’s research and innovation department.
The first big achievement could be around personalization, IBM’s Leroy-Méline told Glossy. For example, using public data and a company’s internal data collected over years, a chemist could create a product made specifically for a small or underserved consumer base then accurately forecast the quantity needed.
In theory, an AI foundation model could look at a certain demographic, like South Asian women, American tweens or those living in extreme cold. It could then factor in data around historical use cases and sales trends of competing products, cultural considerations like religion or values, hobbies, seasonal supply chain shipment limitations, active tariffs, sales data to predict where and when this demo shops most, and anything else important to the creation, sale or afterlife of the product.
Still, it won’t be perfect or at lightning speed — yet. “I like to say that alone we go faster, but together we go further,” said IBM’s Leroy-Méline. “There’s so much opportunity to explore and apply with AI technology these days. Partnerships like these really put into perspective the art of what’s possible.” IBM offers open-source tech and, similarly to its L’Oréal partnership, is available to build AI foundation models for all brands, as well.
There is also fresh competition popping up now, like Potion AI. “I would predict that you could launch products in about half the time [than without an AI tool],” said Hejab Malik, co-founder and chief product officer of Potion AI, an AI-powered platform that helps contract manufacturers, indie chemists and brands formulate faster. The Silicon Valley-based startup launched in April 2024 and its client base has grown 47% month-over-month, Malik told Glossy.
“Contract manufacturers that use our tools report saving 10-20 hours at the beginning of a project,” Malik said. “If you apply that across the board with product development, you can really see how time savings equals cost savings.”
Potion AI was trained by first aggregating public and private data around scientific knowledge, educational resources, popular product formulations and ingredient data, then formulation data obtained from brands and manufacturers was added to the mix. “In AI model training, you need both failure data and passing data to really fine-tune our models,” Malik told Glossy.
Translation: Potion AI can read and remember known product recipes, cross reference them for new safety data or clean beauty compliance lists at top retailers like Sephora or Ulta Beauty, and create a benchmark to start new product formulation immediately.
Malik told Glossy that a big time saver is early formulation. The company’s AI helps brands create fewer product iterations to save time, money and resources.
While Potion AI doesn’t share its client list, execs from brands like Olaplex and Arcaesa, manufacturers like Luluble and THG Labs, and ingredient supplies like Botanigenics and 3V Sigma have all publicly recommended the platform on LinkedIn.
Potion AI does not publish its rates but strives to keep costs very competitive as it grows, Malik said. “We’re marketing [platform] adoption [now], not trying to squeeze money from one company,” she said.
Job loss is, of course, a growing concern with AI. “People think their jobs are going to get replaced, but we think [it’s actually the] manual, repetitive tasks that will get replaced so that those same people can hopefully do more creative and innovative work,” Potion AI’s Malik said.
However, Coresight’s Pitaliya told Glossy that jobs like supply chain analysts, demand forecasters and inventory managers are likely to be reduced eventually if this tech continues.
IBM is publicly traded and reported 3% growth in 2024 to reach $63 billion in revenue. L’Oreal Group reported $45 billion in revenue for 2023, up 7.6% for FY 2022.
For 2025, Malik suggests all brands get comfortable with their company’s data — how it’s collected, stored and analyzed — as well as the use of AI agents. “I can tell you from being in Silicon Valley, the thing [to understand] in 2025 is AI agents,” she told Glossy. “You used to have software that humans could operate, and now it’s going to shift to AI agents operating the software with oversight [from the human].”
Executive moves:
- Lauren Edelman is the new CEO of Victoria Beckham Beauty. Edelman joined the company in May 2023 as global CMO. She’s succeeding Katia Beauchamp in the CEO role. Victoria Beckham Beauty launched in 2019 and is privately held. Edelman’s CV includes nine years at Chanel and four years at L’Oréal.
- Michael O’Hare, evp and chief human resources officer at Estée Lauder Companies, is set to retire on April 1. A successor has not yet been named. O’Hare has been with ELC for 13 years.
- Mallory Goodman is the new svp of brand for body-care brand Maëlys. Her CV includes Glow Recipe, Korres and Estée Lauder Companies.
News to know:
- Activists have called for a boycott of Target after the company announced its plans to roll back its DEI initiatives. Target is one of many companies reversing diversity-, equity- and inclusion-focused corporate initiatives, many of which were implemented or expanded in 2020. According to reporting by Time, corporations like Amazon, Walmart and Meta have also rolled back similar initiatives. Corporate DEI was under fire for much of 2024.
- Estée Lauder Companies-owned MAC cosmetics launched a splashy campaign on Tuesday starring Martha Stewart, Julia Fox, Tiffany “New York” Pollard, Odell Beckham Jr. and more celebrities, all in various states of undress. The “I Only Wear MAC” lipstick campaign centers around the company’s expansive lineup of nude lipsticks.
- In a second news-making campaign last week, ELC announced that model Paulina Porizkova will return to Estée Lauder as its global brand ambassador. She held the role from 1988-1995. Her return to the conglomerate is centered around a pro-aging campaign called “Because of my age.”
- Announced Monday, Canada-based personal care manufacturer kdc/one has acquired Maesa’s European and Middle Eastern operations. Maesa is a New York-based incubator behind brands like Kristin Ess, Being Frenshe, Hairitage by Mindy McKnight and Fine’ry. “With this transaction, I am excited to continue to strengthen Maesa’s focus on innovation and redefining the consumer experience in beauty through leading innovation both on our existing portfolio of brands and launching exciting new ones,” Piyush Jain, CEO of Maesa, said in a statement. “This strategic move will enable Maesa to continue to accelerate our rapid growth globally.”
- Japanese skin-care brand Damdam has raised $3 million in seed funding from Silas Capital, the private equity firm that has backed Ilia, Makeup by Mario, Vacation and others. Damdam launched into select Sephora doors in August. Its products are priced between $38-$68.
- It was a big week for the derm-focused skin-care market. Cult peptide brand Medik8 launched a $92 serum DTC called Liquid Peptides Advanced MP Serum, while Dr. Diamond Metacine opened DTC pre-orders for its new InstaFacial Infusion serum. In addition, Ilia Beauty launched a barrier cream called Barrier Build through Sephora, while a new skin-care brand called Erly debuted at the retailer. These launches are part of the growing dermocosmetics market, which is anticipated to grow from $39 billion in 2023 to an anticipated $112 billion by 2034, according to new data released Friday from Research and Markets.
Stat of the week:
The beauty market in Brazil is heating up, according to new data released on Friday from Technavio market research company. According to the firm, the cosmetics market in Brazil is estimated to grow by $5.5 billion between 2025 and 2029. This growth is led by e-commerce sales, according to the report.
In the headlines:
Glow Recipe launches skin-care-based makeup. Innovations propelling the future of the over $40 billion aesthetics industry. Biotechnology firm DPP Technologies showcases date palm pollen in skin-care brand Skin By Noor.
Listen in:
Fitness entrepreneur-turned-brand founder Amanda Kloots joins the Glossy Beauty Podcast to discuss Proper, her new supplements brand in partnership with The Center.
Need a Glossy recap?
Estée Lauder Companies partners with MIT to drive ingredient innovation across sun-care and biodegradable product formulations. Puig reports double-digit growth in 2024, with fragrance driving the charge. Inside Make Up For Ever’s play for Gen Z and Gen Alpha. The Mane Choice gets a rebrand and names its first global ambassador. Sephora’s 2024: record earnings, Sephoria wins and global growth. How beauty brands are using Lunar New Year to forge customer loyalty.
RSVP now:
Register now for Wednesday’s consultative rundown of the latest need-to-know beauty business trends by Glossy’s beauty reporting team. Register now for the February 5 live virtual event.