Big beauty is getting nimbler.
Take Revlon’s rollout of Flesh, a brand devoted to flesh-tone makeup for every skin tone. Flesh was put in motion by Linda Wells, the creator of Allure magazine and current chief creative officer for Revlon. She came up with the idea for Flesh in July 2017, but instead of taking years to develop an entirely new brand (one with 12 products and 96 SKUs) Revlon took a leaner, less top-down approach; Wells brought in outside firms to work on everything from product development to manufacturing to packaging and design. Flesh launched online exclusively at Ulta in June and will launch in stores in July but is expected to pull in $40 million to $50 million in retail sales in its first year on the shelf, according to WWD.
Flesh is Revlon’s first foray into brand incubation. The brand was funded and is owned by Revlon but was developed using outside resources like a product manufacturer and design firm. It also provides Revlon with a quick and easy way to reach the younger consumers who are more interested in inclusive and premium beauty brands. With it, Revlon is joining other beauty industry players like L’Oréal, Sephora and LVMH who use both incubators and accelerators to innovate their businesses by providing new channels for acquisition or to keep an eye on market trends and competition.
While corporations used to have the luxury of waiting until an independent brand was firmly established before acquiring it, the rapid changes taking place across the beauty industry are requiring them to act faster and be more forward-thinking about their brands.
“A lot of these programs serve as [research and development] for these big beauty corporations and allows them to create or incubate brands that could be incorporated into their portfolios at some point or give them a view of competitors and trends,” said Anagha Hanumante, an analyst for market research firm CB Insights.
For Revlon, Flesh is emblematic of the rapid development and lucrative nature of incubation.
“I had the resources that were kind of unbelievable, because if you’re an indie brand, you don’t have the resources to tap into business development, lawyers and packaging,” Wells said, adding that she opted to incubate a brand rather than develop it in-house because she wanted it to go quickly to market, and outside resources like a manufacturer and design firm could streamline that process faster.
As the barrier to entry in the beauty market has lowered, combined with the success of indie beauty brands like Herbivore or Glossier, incumbents like Revlon are pressured to develop interesting brands that can strongly compete. Kendo, the incubator formed in 2010 as part of LVMH’s Perfumes & Cosmetics group, is a prime example of creating powerful brands like Kat Von D, Marc Jacobs, Bite Beauty and, most recently, Fenty Beauty. Fenty Beauty, in particular, has reshaped the cosmetics industry by shifting it to be more inclusive following the success of its 40 shades of foundations that garnered it $72 million in earned media value within its first month. If a company like Revlon could replicate even a fraction of Fenty’s success with its own inclusive brand, it would prove a worthwhile investment. One product has already proven to be a favorite: the Fresh Flesh Illuminating Primer, which retails for $32, sold out on its first day.
“It’s definitely clear there is a larger influence of the Fenty effect and for larger brands to modernize, to have more inclusive products,” Hanumante said, adding that the industry can expect to see more brands incubated by legacy companies in the future.
But corporations are the not the only gatekeepers for incubation. There are a number of independent incubators and accelerators to emerge on the market and stake a claim. Seed Beauty, which launched ColourPop in 2014 and Kylie Cosmetics in 2016, focused on taking the fast-fashion business model and applying it to beauty; it provides everything from venture capital to manufacturing which allows it to cut out the middleman and claims it can bring a brand from ideation to creation in five days. More recently, SV Beautytech Acceleration launched in June as the first accelerator unaffiliated with a large retailer or brand, and focuses on companies merging beauty and technology.
“There are definitely opportunities to see more specialized categories for accelerators and incubators. It would not be surprising to see that parse out more,” Hanumante said.