The beauty industry is filled with stories of the entrepreneur who started out with an idea and dream. While many will launch a product, few will actually make it in the competitive world of cosmetics. Cake Beauty is one company that has defied the odds.

Founded 2003, this Toronto-based firm has grown considerably from its early days in founder Heather Reier’s kitchen. With a staff, office and warehouse space that’s tripled in only six years, Cake Beauty sports more than 30 permanent SKUs and a rolling roster of limited edition products sold everywhere from Manitoba to the Middle East and from Alaska to Australia.

Reier’s goal was to create a line of products that was the true marriage of style, innovation and supreme quality.

“Much has changed since my days in the kitchen,” she said, “however my goal and vision remains the same.”

Part of that vision is to focus on natural ingredients and create products that are multi-purpose, evidenced by its hero SKU, Satin Sugar Refreshing Hair and Body powder, a talc-free product that can be used as a dry shampoo and on the body. As a first of its kind in the beauty marketplace, Satin Sugar developed a celebrity following and essentially put Cake on the map.

Heather Reier, founder, Cake Beauty

Among the brand’s newest products is the Milk Made Body collection, a set of products that cleanse, polish and nourish skin. The range includes a hydrating moisture milk, frothing bath and shower cream, sugar scrub and manicure set that includes tools and Cake’s best-selling Velveteen Hand Crème.

All of Cake Beauty’s products are manufactured in Canada, and Reier takes pride in making them as eco-friendly as possible.

“Our 100% paraben-free formulas are 90-95% naturally based so you can feel good about indulging in our luxurious skin treats. We only use plastic bottles and caps and paper tubes and boxes which are recyclable,” Reier said.
Apart from gift sets, the firm uses minimal to no outer packaging beyond the bottle or jar, a look that Reier says works well in an open-sell environment.

That environment is competitive, and some would argue that Reier’s company is just another one of those firms that take a minimalist approach to skin care, ala Bliss or Philosophy.

“Our greatest points of difference are our formulas, ingredients and our multi-purpose product focus,” said Ruth Goudie, director of operations.“We are a stylish brand with ‘farmers market’ formulas that provide results that we stand behind. This has been the cornerstone to Cake Beauty and a big part of our success. In addition, many of our products are designed for the ‘girl on the go’ and are therefore multi-purpose. This sets us apart and been key to our growth over the past few years particularly.”

The Cake Beauty Milk Made Collection.

According to Goudie, Cake’s collection is much tighter than many of its competitors—and with good reason.

“We launch front runners and strategically fill retail shelves with productive SKUs,” she said, calling Cake “the marriage of style and substance.”

It is a combination that has helped grow the company.

“We fared quite well through 2008 and into 2009,” Goudie told Happi, noting that a particular highlight has been the company’s growth via Sephora. “We have benefited from the growth within Sephora as they continue to open new doors across Canada,” she said.

Cake regularly ranks within the top five skin care brands in Sephora Canada and Cake sales at Sephora are up 92% year over year, according to company officials.

But aside from the expansion with Sephora, growth in general “was certainly not a ‘cake walk’ this year,” Goudie noted. Many of Cake’s retailers started to run lean on inventory, scaled back purchases and wanted just-in-time delivery.

“This, in turn, affected our forecasted revenue plans,” she said.

Another component to Cake success has been its stakeholders’ ability to make critical decisions, especially as the recession hit the beauty business. For example, this past summer Cake’s team collectively agreed to move to a four-day workweek and take Fridays off.

“It was the right move that allowed us to reduce expenses, maintain a great team and proactively plan for the balance of the year—not to mention enjoying the additional work-life balance and a nice Canadian summer,” Goudie said.

To further bolster its business, Cake became more promotional over the past year regarding its wholesale and retail operations on cakebeauty.com—a move described by company officials as “essential” in order to compete.

Looking ahead, Reier and Goudie are excited about Cake’s prospects in 2010, pointing to a number of planned product launches.

“Plus, we have some very exciting business opportunities that will increase our distribution,” Goudie added.

Reier, who just had her first baby at the end of 2009, remains committed to steering Cake’s success—which has already been recognized by the industry. Reier confirmed she has been approached by larger firms interested in acquiring Cake Beauty, but the timing was never quite right.

“It is a great complement to have a multinational take interest in what I have created,” Reier said. “I don’t have immediate plans to sell Cake Beauty. That being said, it may make since at some point to partner with a multinational to assist Cake in reaching an even greater potential. I have a lot of passion for the business and a great desire to see it become a larger success.”