When Nicole Fourgoux, operating partner at Stride Consumer Partners, is looking for the next big beauty brand to invest in, she holds out until the perfect moment when culture, innovation and economics align.
“We are literally looking for those inflection points when something changes and brands are taking advantage of it,” Fourgoux said. “The next generation of clean [beauty] is what we are looking at in the market [now].”
On November 16, Stride signaled a tipping point when the investment firm took on minority ownership in Odele, the 4-year-old clean hair-care brand that launched in January 2020 in Target. This comes on the heels of Gwyneth Paltrow’s Goop launch of a diffusion line called GoodCleanGoop in Target and Amazon last month, Naturium’s $355 million dollar acquisition by E.l.f. this summer and the naturals section’s ongoing expansion at Walmart.
“I’m convinced that clean will become the cost of entry [for brands],” Fourgoux said. “Consumers have become so knowledgeable about what clean constitutes and why it is desirable.”
Stride’s investments range from $10 million to $150 million — the amount of Odele’s investment was not disclosed. And its roster includes Drybar, Tatcha, Skinfix and Patrick Ta Beauty, among others. Prior to joining Stride in 2021 as the operating partner for beauty and personal care, Fourgoux spent 24 years with L’Oréal where she served as the svp in the business development and acquisitions group, among other roles during her tenure.
The clean beauty market is worth $8.3 billion dollars and could reach $15.3 billion by 2028, according to market research company Statista.
Over the past few years, Fourgoux has noticed a massive sea change in the desire for clean hair care at affordable prices, thanks in part to legacy mass brands being unable to change fast enough for an increasingly selective consumer. “We’re seeing a lot of efforts from traditional brands introducing clean sublines, but frankly, when we’re looking at the in-market results, they’re still lagging,” Fourgoux said. “It’s much harder to add clean [product offerings] when you try to do it one-by-one than if you start from scratch. It takes longer, and there is a concern about disappointing the existing consumers in performance. … Consumers want the clean-from-conception proposition.”
From its inception, Odele tapped into this white space with thoughtfully formulated products that are free of 1,300 cosmetic ingredients banned by the European Union. Odele’s concern-focused categories include smoothing, repairing and curl-defining collections, and products are poured into design-y, gender-neutral packaging made from partially-recycled plastic. Most of the 25 products in the collection ring in at $11.99 each.
Odele co-founders Britta Chatterjee and Lindsay Holden met in graduate school in Minneapolis, Minnesota in 2008, then met their third co-founder Shannon Kearney shortly after. The three used years of post-grad experience to launch in 2020. Holden was a buyer at Target, Chatterjee worked for Target and General Mills, and Kearney was a project manager for clean hair-care brand Renpure.
“It’s because of our combined backgrounds that we were able to ignore a lot of the things that can really distract early brands,” Chatterjee said. “If it wasn’t essential, it wasn’t critical. … For us, everything, from the very beginning, was about making the most fantastic product that we possibly could because that’s something we felt was missing at mass.”
The Odele team raised $1 million in funding in a friends-and-family seed round in 2019 and used the money for inventory to launch as a Target-exclusive brand the following year. Holden told Glossy the brand did $5 million in sales in its first year in Target and has maintained explosive year-over-year growth ever since: Its sales grew 30% year-over-year in 2022 and 55% in 2023. Odele did $32 million in sales this past year, with 90% coming from its retail partners and the remainder from DTC on its site.
“We don’t think we’ve seen the top, even with our hero SKUs,” said Holden. Those heroes include an air-dry styling cream and a volumizing shampoo, both $11.99. The Odele team expects the brand to surpass $40 million in sales in 2024.
Target beat Wall Street expectations for its third-quarter 2023 financial results, which it announced earlier this month, although it reported weaker discretionary spending in categories like beauty.
Odele entered CVS and Ulta Beauty earlier this year, as well, but it plans to double down on existing retailers in lieu of more expansion. Chatterjee said the brand is prioritizing marketing and hiring leadership roles with the investment. “But as those strengthen, [adding] more retailers will make sense,” she said.
It’s a formula that worked well for Versed, which launched ingredient- and concern-focused skin-care products in colorful, double-tap-friendly packaging in Target in 2019. The line is vegan, cruelty-free and free from a laundry list of conventional ingredients like parabens, silicones, mineral oil, talc and chemical sunscreens. Versed was launched by Katherine Power, the former fashion editor-turned-entrepreneur who went on to launch Merit in 2021.
“The galvanizing force behind launching Versed was recognizing that there was something very special and important happening in the channels outside of mass, but at much higher price points,” said Versed CEO Kerry Sullivan. The movement the team was observing was driven by thoughtfully built products that touted a clean ethos, she said, “but not everybody had access to those kinds of products.”
Versed launched in 1,400 Target doors in 2019, and within six months, it had been brought into every location — nearly 2,000 stores. Sullivan told Glossy that the quick success was driven by an underserved consumer who was clamoring for affordable products made without conventional ingredients.
Versed raised $11.6 million in early-stage funding in 2019, according to Pitchbook. Its best-sellers include the Press Restart Gentle Retinol Body Lotion for $17.99 and Smooth Landing Advanced Retinoid Eye Balm for $19.99. In May of this year, Sullivan told CEW that Versed had a 90% net revenue compound annual growth rate since launch and a 68% growth in net sales in 2022. Versed declined to share its annual revenue.
Sullivan joined Versed as CEO earlier this year after serving as the CMO of Dollar Shave Club and gm of Neutrogena.
To stay competitive in this growing marketplace, Versed will continue to lean into clinical results with clean formulations, or what’s been referred to online as “cleanical.”
“Our consumer wants to know [Versed is] clean and wants that reassurance, but we know they demand more,” Sullivan said. “We are pairing our clean philosophy and our clean guarantee with true scientific innovation. That’s what we have to continue to do and do in an even stronger, bigger way going forward.”
Fourgoux described the usurping of crunchy, health-food-store-esque personal care products with modern, ingredient-focused formulations in aesthetic packaging as “the next generation of clean,” which began in the mid-to-late 2010s.
Honest Beauty launched in Target in 2015 after the success of its baby and body offerings, and Naturium entered Target with an average $18 price tag in 2021 before being acquired by E.l.f. this year. But the appeal of mass distribution has also attracted unexpected brands. Last month, Goop made a foray into Target with GoodCleanGoop, a line of 14 beauty and wellness products priced $19.99-$39.99.
“I always love the idea of being able to make a gorgeous product line that’s more widely available for people who care about ingredients, as well,” said Paltrow, the brand CEO and founder, at a press event at Goop’s HQ in Los Angeles last month. “We all do understand some of the hazards that exist in some of the mass products out there, and I just wanted to deliver something that was just surprisingly amazing … to a much cleaner standard.”
Goop told Glossy that this more affordable line has been in the works for years. “Target had approached the brand a few years back and the team wanted to ensure that if there were to be a partnership, it was with the right products,” said Gina Lucania, vice president of sales and marketing at Goop. “Target has leaned in heavily to beauty and wellness, especially in the clean space, making them a very appealing partner to launch this brand with.”
In the launch of GoodCleanGoop, which is also available on Amazon, Goop casts a wide net of categories with face, body and scalp care, plus four chewy supplements that target immunity, libido, skin and brain health. Target’s “chews,” which sell for $29.99, seem to be modeled after similar chewy vitamins available on Goop’s site for just $5 more. Goop declined to share the line’s sales numbers since launch.
But Target isn’t the only power player here. “Walmart’s investing heavily in modernizing its assortment and trying to cater to that new audience that is looking for better, cleaner, more natural products,” said Sarah Moret, founder and CEO of Curie clean deodorant and body care. “[Our customer] started more coastal because, five years ago, that’s who was buying clean products. Now, our customers are all over the country. Some of our biggest markets are Texas, Florida and Illinois.”
Moret launched Curie, a line of clean deodorant sticks, sprays and body care products, in 2018. It grew quickly, thanks in part to exposure on QVC. In 2022, Moret appeared on “Shark Tank” and secured a $300,000 investment with Mark Cuban and Barbara Corcoran for 10% equity and 4% advisory shares. At the time, she was purely DTC and ready to diversify.
“Over the years, by doing lots of customer interviews, getting tons of feedback and reading all of the reviews, we got a better understanding of who [our customer is] and where they’re shopping,” Moret said. “What we found was that most of our customers were shopping at the Targets and Walmarts of the world.”
Moret entered Walmart earlier this year as part of the retailer’s expanding naturals section and is currently in 4,300 doors, just a few hundred shy of all the Walmarts in the U.S. The deodorant sticks and sprays ring in under $15 — a sweet-spot price point at mass, Moret said. Curie’s largest channel is DTC, and it also sells in select Anthropologie stores and independent boutiques.
Curie’s customer base is primarily millennial and Gen-X women ages 27-45, but its gender-neutral scents and packaging have translated into a 30% male customer base, as well.
Odele, Stride and Versed also attribute much of the growth of clean products at mass to millennials and Gen X who now pull the purse strings for their families. “The millennial generation already had the [habit] of checking the details and making an informed decision about whether that’s what they wanted to put into or on their body,” Fourgoux said. “There’s almost been a back-education, where mothers have learned from their daughters, with respect to these types of things. … The desire for the clean category is driven by information, and it’s [now] cross-generational.”
For Odele’s founders, creating a product that appealed to millennials and Gen X but was affordable enough to share with the whole family was the plan from day one. The name Odele, for example, is a play on “å dele,” a Norwegian phrase that means “to share.”