Marc N.G. de Mul, PhD, Measured Innovation11.01.19
The pace of innovation in independent beauty brands, known as indie brands, is dizzying. New products often don’t last more than a year before they are superseded by the next new thing. Yet it’s not clear how many of these indie brands generate consumer loyalty and repeat purchase, and without these, indies cannot survive. There are hundreds of indie brands vying for consumers’ attention in cosmetics today. It is not difficult to start a new brand and make small quantities of skin care products with a custom brand name. Indie brands are brands that are independent of the major cosmetics labels; majors such as Estée Lauder, L’Oréal, LVMH, Procter & Gamble, Shiseido and Unilever. Most are sold online only, but sometimes at Sephora, Ulta Beauty and similar beauty-oriented outlets.
Some find their way into department stores such as Neiman Marcus. Contract manufacturers can produce small runs of products that look and feel very professional. This variety of product offerings is a great benefit to consumers. They can generally find a product that meets their needs with a brand identity that speaks to their feelings and beliefs. But can all of these indie brands be profitable? Can the cosmetics market support a large number of brands in the long term? To succeed long term and build consumer loyalty, a brand must have a clear brand identity—a statement of why the brand exists, indeed why it must exist. Consumers should experience the product formulation as different and distinct, by look, feel, and smell. The ingredients and formulation should also support innovative product claims that provide reasons to believe in the brand.
At Measured Innovation, we analyzed more than 200 indie brands to find out if they truly are unique and innovative. We looked at price, positioning, ingredients and product claims to understand the key drivers behind this upstart and fascinating industry. This article is a summary of our findings.
Every indie brand has an origin story to set its products apart from the rest of the field. The brand origin story is often the story of how the brand founders came up with the formulations that are marketed. For example, Biossance, which makes moisturizing creams and undereye lotions, mentions its origins in academia and focus on sustainability. Another example is Dr. Sebagh, who lists his reputation in cosmetic surgery as the motivation for the skin care line.
In the Beginning
Origin stories fall into three categories—ingredient, purity and medicine. Almost all indie brands talk about ingredient purity as a reason for being. They use ingredients labeled as natural, sustainable, nontoxic, clean and organic; terms that are not regulated and are vaguely defined. What does organic mean in cosmetics? The USDA regulates the term for foods, but there is no regulation for cosmetic products.
Many brands describe unique active ingredients, such as the TFC8 technology in Augustinus Bader and B21 Bio-Energic complex in Orlane. There is often not much scientific evidence presented that the active ingredient is effective, perhaps because it costs upwards of $10,000 to confirm the efficacy of an active ingredient in a double-blinded clinical test. In the absence of such evidence consumers have reason to be skeptical of efficacy claims.
Doctor brands are often started by dermatologists and some are very successful, such as Perricone MD and Murad. The involvement of a medical professional gives the brand a lot of credibility. In addition to their skin care product lines, some medical doctors have their own spas and clinics to cater to their customers.
Cosmetic brands can be extremely lucrative to the brand owners. Augustinus Bader sells its signature cream for $265 for a 50ml bottle (1.7floz). There are other brands that command even higher prices. Lancer Legacy Youth Treatment costs $1,000 on neimanmarcus.com. These price points approach the levels seen at the top of the luxury cosmetics segment where, for example, Guerlain, which is owned by LVMH, can command $1,340 for 1.7oz of its Orchidée Impériale Black cream. In the absence of scientific efficacy data, such brands sell on design, reputation and credibility alone. Considering that so much of the brand identities of indie brands is made up of unique product claims that are not supported by credible scientific evidence, how much ingredient innovation is in these brands? Surprisingly, there is quite a lot, and arguably more than in mainstream brands.
Ingredient Innovation
The largest cosmetic ingredient firms that supply the major marketers as well as the contract manufacturers are Ashland, BASF, Croda, Dow, DSM and Nouryon. These large manufacturers invest millions of dollars in the development of new chemicals for personal care, whether natural or synthetic, with commercial success that is not assured. The regulatory environment for cosmetics is complex and differs from country to country. For cosmetic ingredients other than certain naturals and polymers, regulatory approval is required under the REACH program in Europe and under similar programs in China and elsewhere. In the US, regulators are more lenient but safety testing is still expected. The US Food & Drug Administration does not allow drug claims such as “reduces redness” on packaging or in advertising unless ingredients are used that are listed in the published FDA monographs. The FDA has stepped up enforcement in recent years, even on smaller brands. In these regulatory conditions, there have been few launches of new cosmetic chemicals other than active ingredients in the past few years. Most cosmetic ingredient innovations are incremental. Often new ingredients provide only a small performance improvement. Therefore, cosmetic brands differentiate by product formulation rather than novel ingredients, and by new active ingredients of which the efficacy in the final product is unclear. Product formulations in many iconic cosmetics have remained largely unchanged for many years.
Whereas major brands can rely on their iconic products, indie brands must innovate to stand out in the marketplace and survive as a brand. Many do so by claiming unique formulation technology with novel emulsion structures and active ingredient delivery systems. An example is BeautyBio, which claims to contain “Quadralipid” technology. Another is Herbologia which claims a “unique emulsion system” with “nonionic cleansing” ingredients. Products should also have a unique, recognizable texture or fragrance to appeal to consumers and generate repeat purchase. Natural and sustainable brands frequently contain botanical ingredients from unusual plants. These include meadowfoam seed oil in the Angela Caglia line and extract of echinacea in Farmacy’s GreenEnvy. Such unusual ingredients can be expensive which may explain the high prices of some products. As mentioned, scientific data for the efficacy of these active ingredients is generally limited.
Indie brands sometimes offer novel product forms. A recent trend is the use of masks to deliver active ingredients in concentrated form. This trend has been picked up by many indie brands and a variety of mask products is available. Related is the use of unique massaging techniques to apply the products, for example by Eve Lom. Onomie is a brand that developed several unique product forms whose efficacy is backed by credible clinical data. These include a priming serum to apply before makeup, a lip and cheek stick, and a skin refreshing mist spray that delivers antioxidants.
Indie brands are exciting and innovative and provide a much needed spark to the cosmetics world. They lead in product design with novel active ingredients and packaging, even though innovation with new chemistry is still the province of the major consumer product and ingredient manufacturers.
To compete in the growing indie brand market, the major labels and ingredient suppliers must shorten their new product development timelines. The indie brands provide a rich trove of product design trends and ideas for the cosmetics majors to build on with new product technology.
Marc de Mul is a chemical engineer with over 20 years of experience in product development for the personal and home care industry. He has held leadership positions in innovation at BASF, Johnson & Johnson, Unilever and other firms. He is an expert on innovation management, ideation and claims substantiation. He is president of Measured Innovation, an innovation management consulting firm based in Weston, CT. More info: marc@measuredinnovation.com.
Some find their way into department stores such as Neiman Marcus. Contract manufacturers can produce small runs of products that look and feel very professional. This variety of product offerings is a great benefit to consumers. They can generally find a product that meets their needs with a brand identity that speaks to their feelings and beliefs. But can all of these indie brands be profitable? Can the cosmetics market support a large number of brands in the long term? To succeed long term and build consumer loyalty, a brand must have a clear brand identity—a statement of why the brand exists, indeed why it must exist. Consumers should experience the product formulation as different and distinct, by look, feel, and smell. The ingredients and formulation should also support innovative product claims that provide reasons to believe in the brand.
At Measured Innovation, we analyzed more than 200 indie brands to find out if they truly are unique and innovative. We looked at price, positioning, ingredients and product claims to understand the key drivers behind this upstart and fascinating industry. This article is a summary of our findings.
Every indie brand has an origin story to set its products apart from the rest of the field. The brand origin story is often the story of how the brand founders came up with the formulations that are marketed. For example, Biossance, which makes moisturizing creams and undereye lotions, mentions its origins in academia and focus on sustainability. Another example is Dr. Sebagh, who lists his reputation in cosmetic surgery as the motivation for the skin care line.
In the Beginning
Origin stories fall into three categories—ingredient, purity and medicine. Almost all indie brands talk about ingredient purity as a reason for being. They use ingredients labeled as natural, sustainable, nontoxic, clean and organic; terms that are not regulated and are vaguely defined. What does organic mean in cosmetics? The USDA regulates the term for foods, but there is no regulation for cosmetic products.
Many brands describe unique active ingredients, such as the TFC8 technology in Augustinus Bader and B21 Bio-Energic complex in Orlane. There is often not much scientific evidence presented that the active ingredient is effective, perhaps because it costs upwards of $10,000 to confirm the efficacy of an active ingredient in a double-blinded clinical test. In the absence of such evidence consumers have reason to be skeptical of efficacy claims.
Doctor brands are often started by dermatologists and some are very successful, such as Perricone MD and Murad. The involvement of a medical professional gives the brand a lot of credibility. In addition to their skin care product lines, some medical doctors have their own spas and clinics to cater to their customers.
Cosmetic brands can be extremely lucrative to the brand owners. Augustinus Bader sells its signature cream for $265 for a 50ml bottle (1.7floz). There are other brands that command even higher prices. Lancer Legacy Youth Treatment costs $1,000 on neimanmarcus.com. These price points approach the levels seen at the top of the luxury cosmetics segment where, for example, Guerlain, which is owned by LVMH, can command $1,340 for 1.7oz of its Orchidée Impériale Black cream. In the absence of scientific efficacy data, such brands sell on design, reputation and credibility alone. Considering that so much of the brand identities of indie brands is made up of unique product claims that are not supported by credible scientific evidence, how much ingredient innovation is in these brands? Surprisingly, there is quite a lot, and arguably more than in mainstream brands.
Ingredient Innovation
The largest cosmetic ingredient firms that supply the major marketers as well as the contract manufacturers are Ashland, BASF, Croda, Dow, DSM and Nouryon. These large manufacturers invest millions of dollars in the development of new chemicals for personal care, whether natural or synthetic, with commercial success that is not assured. The regulatory environment for cosmetics is complex and differs from country to country. For cosmetic ingredients other than certain naturals and polymers, regulatory approval is required under the REACH program in Europe and under similar programs in China and elsewhere. In the US, regulators are more lenient but safety testing is still expected. The US Food & Drug Administration does not allow drug claims such as “reduces redness” on packaging or in advertising unless ingredients are used that are listed in the published FDA monographs. The FDA has stepped up enforcement in recent years, even on smaller brands. In these regulatory conditions, there have been few launches of new cosmetic chemicals other than active ingredients in the past few years. Most cosmetic ingredient innovations are incremental. Often new ingredients provide only a small performance improvement. Therefore, cosmetic brands differentiate by product formulation rather than novel ingredients, and by new active ingredients of which the efficacy in the final product is unclear. Product formulations in many iconic cosmetics have remained largely unchanged for many years.
Whereas major brands can rely on their iconic products, indie brands must innovate to stand out in the marketplace and survive as a brand. Many do so by claiming unique formulation technology with novel emulsion structures and active ingredient delivery systems. An example is BeautyBio, which claims to contain “Quadralipid” technology. Another is Herbologia which claims a “unique emulsion system” with “nonionic cleansing” ingredients. Products should also have a unique, recognizable texture or fragrance to appeal to consumers and generate repeat purchase. Natural and sustainable brands frequently contain botanical ingredients from unusual plants. These include meadowfoam seed oil in the Angela Caglia line and extract of echinacea in Farmacy’s GreenEnvy. Such unusual ingredients can be expensive which may explain the high prices of some products. As mentioned, scientific data for the efficacy of these active ingredients is generally limited.
Indie brands sometimes offer novel product forms. A recent trend is the use of masks to deliver active ingredients in concentrated form. This trend has been picked up by many indie brands and a variety of mask products is available. Related is the use of unique massaging techniques to apply the products, for example by Eve Lom. Onomie is a brand that developed several unique product forms whose efficacy is backed by credible clinical data. These include a priming serum to apply before makeup, a lip and cheek stick, and a skin refreshing mist spray that delivers antioxidants.
Indie brands are exciting and innovative and provide a much needed spark to the cosmetics world. They lead in product design with novel active ingredients and packaging, even though innovation with new chemistry is still the province of the major consumer product and ingredient manufacturers.
To compete in the growing indie brand market, the major labels and ingredient suppliers must shorten their new product development timelines. The indie brands provide a rich trove of product design trends and ideas for the cosmetics majors to build on with new product technology.
Marc de Mul is a chemical engineer with over 20 years of experience in product development for the personal and home care industry. He has held leadership positions in innovation at BASF, Johnson & Johnson, Unilever and other firms. He is an expert on innovation management, ideation and claims substantiation. He is president of Measured Innovation, an innovation management consulting firm based in Weston, CT. More info: marc@measuredinnovation.com.
