Lianna Albrizio, Assistant Editor 12.05.23
In the era of Gen Z, indie beauty remains king in driving the industry forward. In fact, according to Nielsen IQ and Kline Group, indies are growing 15.7% a year—much faster than larger companies in the $95 billion US beauty and personal care market.
Just what is the allure of these independently run gems? Speed, innovation and connection are key factors driving indie brands, according to Anna Mayo, vice president, NielsenIQ Beauty Vertical. Together, they keep indies ahead of the curve in terms of trends and outflank corporate-owned competitors.
Indies Generate Excitement, Trends and Sustainable Packaging
“We think that indie beauty brands are so important to the industry because they bring a lot of innovation and a lot of excitement,” said Mayo during a Perfect Corp. webinar. “They’re oftentimes the first-to-market with the latest trends, or even creating the trends. Indies tend to push boundaries. They’re able and willing to say and do things that might be a little too risky for an established brand.”
Mayo added that authenticity is also a key to success. It builds relationships with niche consumer groups, and often fills a unique need for these consumers. This strategy involves pushing past taboos to initiate dialogue around a personal care need often with unabashed marketing techniques.
Men’s personal care brand Manscaped recently launched a commercial featuring comedian Pete Davidson to promote its Lawn Mower 5.0 Ultra electronic groin trimmer for men. The commercial features Davidson at a “Ball-ber Shop” with a dream for “smooth sacks.” The trimmer uses a dual head system with SkinSafe technology to prevent nicks for a close shave.
In November, Manscaped and Bright Lights Acquisition Corp., a publicly-traded special purpose acquisition company, entered into a definitive business combination agreement that will result in Manscaped becoming a public company. The company’s profitable business model has allowed it to grow from approximately $3 million in TTM revenue in Q1 2018 to $285 million in Q3 2021 while only utilizing $23 million of raised equity. The transaction includes a fully committed $75 million PIPE from a number of institutional investors, including Funds managed by UBS O’Connor, Shaolin Capital Management, Signia Venture Partners and Guggenheim Investments. The transaction is expected to close in the first quarter of 2022 and is expected to be listed on the Nasdaq under the new ticker symbol “MANS” led by Manscaped CEO Paul Tran.
Given the current climate crisis, many sustainable beauty brands use biodegradable packaging and tout zero waste and plastic-free are examples. (Check out our podcast with Deepti Brambl, founder of sustainable dental care Kaylaan, which specializes in toothpaste tablets that reduce product and packaging waste.)
To that end, establishing solid relationships with shoppers via social media platforms like Instagram and TikTok are essential to customer loyalty and retention, Mayo said. Indie brands capitalize on TikTok’s “Get Ready With Me” videos.
Conscience-driven products is another driver in purchasing decisions, according to Nielsen IQ and Kline Group.
Vegan indie makeup brand Thrive Causmetics is focused on cruelty-free cosmetics that gives back to charity with every purchase.
In regards to charity, inclusivity and mental health support in beauty messaging has been a “powerful tactic,” Mayo said. Examples include Selena Gomez’s Rare Beauty. Its Rare Impact Fund aims to raise $100 million over the next decade to expand access to mental health services and education for young people around the world.
Gen Z-centric indie skincare brand Bubble also works to support mental health awareness. The brand, whose tagline is “Face the Day,” donates 1% of its proceeds to multiple nonprofit organizations that provide emotional support to teens and young adults.
Specific Ingredient-Driven
As we move into 2024, well-versed consumers have equipped themselves with ingredient knowledge that informs their product shopping.
Consumers, consequently, are no longer looking for a hydrating moisturizer, but a moisturizer containing hyaluronic acid, Mayo explained.
“They know what ingredients they’re looking for, they know what they do and they know what’s best for their skin,” she added.
While consumers are gung-ho about anti-aging products, they do embrace the aging process and seek out products that work in sync with the aging body, Mayo said.
The indie phenomenon is even attracting men. Dr. Squatch is a Pacific Northwest-based clean men’s grooming brand. It also happens to be a top-25 company to watch on NielsenIQ and Kline’s list of top indie brands. Now, Dr. Squatch brings new scents and ingredient stories to men’s bathtime rituals.
Frequent Purchases and Experimentation
While the indie landscape is welcoming to cosmetics and skincare – categories that see frequent purchases and experimentation, per Mayo – indie beauty brands are finding their footing in fine fragrance, too.
One example is Dossier, which is taking advantage of dupe culture and encouraging consumers to make scent purchases without smelling them first, specifically on social media.
Another brand to watch is Otherland, a six-year-old brand founded by Abigail Cook, who uses her experience as an art buyer for Ralph Lauren as a driving force in selling fragrances online. The strategy paid off. The brand reportedly reached $10 million in sales last year. Otherland was bought by Curio Brands this past summer.
Indies By the Numbers
With 40% of beauty sales happening online, DTC site sales top $6.7 billion, Mayo said. At the same time, while indies comprise 49% of beauty and personal care sales, they represent just 21% of in-store sales.
“We definitely see these types of brands being able to take advantage of these new selling roots to expand their brands and really, really grow,” she said.
The average US adult spends nearly an hour a day on TikTok alone. No surprise that influencer marketing has jumped 12% year-over-year. More than half of Gen Z and Millennial-aged consumers polled say there are willing to buy a product over TikTok via the TikTok shop. Sales coming through that social platform are “astounding,” Mayo said.
Indie acquisition is also dramatically different today. In 2013, it took an indie brand two decades on the market before it was acquired. In 2023, that amount of time has been cut in half, Mayo said.
For example, Hero Cosmetics, was on the market for five years before it was acquired by Happi Top 50 Company Church & Dwight, according to Mayo.
“Established brands can really look to indies for best-in-class examples of innovation, inclusion, unique packaging and so much more,” said Mayo.
She added that analysts will continue to monitor these indie brands as they “reframe” the marketplace and continue to roll out more trends.
The Top 25 Indie Brands To Watch
According to Nielsen IQ and The Kline Group, these are the top indie brands that are “disrupting the industry” and have the most potential for acquisition in the coming year:
Amika
Coco & Eve
Danessa Myricks Beauty
Dossier
Dr. Squatch
Good Molecules
Haus Labs
IGK
Jones Road Beauty
Juvia’s Place
K18
Megababe
Merit
Necessaire
Osea
Patrick Ta
Peach Slices
Rare Beauty
Raw Sugar
Starface
Summer Fridays
Tower 28
Truskin
Verb Ghost
Westman Atelier
Looking ahead, these indies are expected to continue leading growth over the total beauty category with an average of 19% expected growth in 2028, according to Nielsen IQ and The Kline Group.