At next year’s Paris In-Cosmetics show, the Market Focus feature will concentrate on the US beauty and personal care markets and industry experts will discuss the latest go-to trends, challenges and opportunities. The topic is particularly on trend, now that Reed Exhibitions is launching In-Cosmetics USA, which will be held Sept. 7-8, 2016 in New York City.

For many beauty brands, the lure of success within the US market is hard to resist as it can bring opportunities for growth and substantial rewards. However, the reality is often quite different and many executives and entrepreneurs have had their fingers burned as they come to realize that launching in the US beauty and personal care market requires careful research and planning.
Much of the appeal of the US beauty and personal market is due to its size. According to Euromonitor International, the total market was worth $76.3 billion in 2014, up by 14.5% since 2009. The largest product sectors were skin care ($13.7 billion) and color cosmetics ($12.3 billion) which have grown by 18.1% and 21.8%, respectively. Hair care, valued at $11.6 billion, posted slower growth (8.4%) during the period.

In a market dominated by giants, such as Procter & Gamble, L’Oréal, Estée Lauder, Unilever and Johnson & Johnson, indie brands must work hard to get noticed. In Kline’s Cosmetics & Toiletries USA report, 84 independent companies were found to comprise just 3.6% of the market in 2014, yet grew by nearly 15% between 2009 and 2014. Kline maintains that these brands offer value-oriented products, are highly innovative and engaging with consumers, which makes them attractive acquisition targets by major cosmetic companies and private equity firms. Many of them have significantly increased visibility through social media marketing, which have given them the edge over the multinationals with their large advertising budgets.

Such is the growing interest in indie brands that an event was staged in New York in August to bring 80 independent beauty brands together with buyers, media and consumers under one roof. Some notable brands spotted by Kline were Colourpop, which launched in 2014 and has become a social media sensation, as well as Phia, Nügg, Grande Naturals, Modern Minerals and Malaya Organics. All of the participating brands are formulated without potentially toxic ingredients, positioning them in the burgeoning natural category.


First Steps into the US

The US market is like no other due to its scale, diversity and complexity. Brands looking for a relatively trouble-free entry must consider whether they want to target regionally, by state or by city. Trade shows are often seen as the place for small businesses to find a partner, but brand owners may end up disappointed to find that so-called partners are effectively “one man and a dog,” and do not have the infrastructure or expertise to guide new brands within an unfamiliar market.

Kevin Price, director of an interim management professional consultancy called Frattempo, said that brands must have a more researched and considered approach when searching for a partner.

“The first question you need to ask is what type of distributor would fit the brand and this depends on their positioning,” he said. “So whether you want to target drug stores, perfumeries or department stores, it’s important to search for a distributor that already services those categories.”

Price warned that the wrong partner can be as damaging as choosing the wrong market.


No First Move

Stirling Murray, CEO, The Red Tree, has worked extensively with brands in developing international expansion and always aims to put brands together with US distributors who can offer a full service, but only after they are properly established in their home market.

“I would never recommend such a move to brands in the early stages of growth, even though the US is the dream for many brands.
Even then, it should be a step-by-step approach and if it doesn’t work, they should pull out before incurring financial loss,” he warned.

Successful trading with a retailer in one market may provide a leg up into the US, but is not an automatic shoo-in. Price pointed out that centralized retailers, such as H&M may help brands to get representation in other markets, but advised that it always helps to speak to the local market buyer.

“Much depends on how joined up the retailer is. It may open doors but does not necessarily guarantee a listing,” he maintained.
And even with a listing, the brand still needs to commit resources to stock delivery and visiting the store.

Bulldog is a British men’s natural skin care brand that has taken a measured approach to launching in the US where it now sells in the natural care section of natural retailer Whole Foods. The owners of Bulldog first received an approach by Whole Foods to launch in the US in 2008, but deferred till the following year as they did not think they were ready.

Simon Duffy, co-founder of Bulldog, explains: “We were initially offered 40 stores, which wasn’t massive, but it brought a lot of complexities. There was no big process or due diligence on our part as we were a very young brand, but we saw Whole Foods as an excellent way to start.”

Since then, Bulldog’s owners have made it their business to visit often and build good, lasting relationships with its US partners. Six years on, Duffy affirms that Bulldog is the leading brand now in natural skin care in Whole Foods in the US and has made it onto the top shelf.

“We wouldn’t rule out doing something bigger, but need the right partner at the right time,” said Duffy, nothing that Bulldog now sells in 14 markets worldwide and has recently received an “exciting” offer to launch in another market. “But we’re not ready. You can spread yourself too thin and it becomes an exaggerated risk. More important is to get to a level of stability in the home market,” he said.

Take small steps is probably the best advice to any entrepreneurial brand seduced by the idea of going global. Better to launch well in one area and grow organically than risk becoming overstretched by the sheer scale and complexity of the US market.

The next In-Cosmetics show will take place in Paris on April 12-14 and the marketing trends presentations will include sessions devoted to the US beauty and personal care market.