PORTFOLIO COMPANY NEWS
November 4, 2016 - Algenist has crossed the bridge from skin care to makeup again.
After a foray into makeup in February with Concentrated Color Correcting Drops under the Reveal umbrella, the brand has broadened its reach beyond skin care by adding Concentrated Luminizing Drops to the Reveal lineup. Priced at $38 for 0.5 oz., the highlighting drops formulated to color correct while addressing skin concerns and giving faces a healthy glow have entered Sephora, Ulta Beauty and QVC.
"We are not doing makeup like a MAC or Lancôme. They are bringing makeup to the market in a fashion way. We bring makeup that has skin-care benefits, and that covers and treats at the same time," said Algenist chief executive officer Frederic Stoeckel. "We want to be a beauty brand with a cutting-edge positioning from Silicon Valley in skin care or in makeup."
No matter the category, Algenist leverages the discoveries of San Francisco-based TerraVia, its former parent company and a specialist in harnessing the power of algae. The Concentrated Luminizing Drops contain a so-called AlgaCorrecting Complex with red, blue, green and golden algae to combat discoloration, dullness and redness. They also incorporate ultrafine pearls for brightening and alguronic acid, an ingredient exclusive to Algenist that tackles fine lines and wrinkles.
"We didn't decide makeup is on fire, so we should go into it. We realized microalgae is amazing for color correcting, and that's how we came to makeup," said Stoeckel. "What's key for us is not to do it in an opportunistic way, but to do it in a way that is truly bringing something new to the market."
Opportunistically or not, when Algenist unveiled Concentrated Color Correcting Drops, it hit upon two major themes in the beauty industry: color correction and hybrids translating skin-care principles to makeup and vice versa. That was a winning recipe. QVC and Sephora's stocks of the drops were depleted in two weeks. "It helped that color correcting became a big trend for the year, but we didn't anticipate that," said Stoeckel. "Even Sephora was surprised by our sales. We were out of stock because the forecast wasn't as high as the success. The product was right on trend with the benefits that people were looking for."
The venture into makeup is drawing Millennials to Algenist, which started five years ago with antiaging products geared toward older customers. In the beauty market, Millennials are particularly keen on color cosmetics, and it doesn't hurt to encourage their purchases that Algenist's hybrid products are cheaper than its skin-care merchandise. Among Algenist's skin-care bestsellers are the Retinol Firming & Lifting Serum priced at $102 for 1 oz. and $156 for 2 oz., and the Genius Ultimate Antiaging Cream priced at $75 for 1-oz. and $112 for 2-oz.
Once younger customers are introduced to the brand through makeup, Algenist's goal is to guide them to skin-care products with prices, textures and fragrances tailored to them, most notably the Splash Absolute Hydration collection priced from $48 to $58 with three items: Replenishing Gel Moisturizer, Replenishing Sleeping Pack and Replenishing Emulsion. "If you provide products that are a bridge between skin care and makeup, it is an opportunity to educate about skin care," emphasized Stoeckel.
Makeup accounts for roughly 10 percent of Algenist's sales, according to Stoeckel. On top of the Concentrated Color Correcting Drops and Concentrated Luminizing Drops, Reveal's assortment includes Color Correcting Radiant Primer, 6-in-1 Color Correcting Concealer and Color Correcting Anti-Aging Serum Foundation. Last year, the brand generated about $23 million in product revenues. Earlier this year, private equity firm Tengram Capital acquired it for around $20 million.
"Is it my dream to have makeup take over skin care? No. It is my dream to be strong in both categories," said Stoeckel. "The big question is how do we build from here. It would be an easy path to develop tons of Reveal products. That's not what we are doing. We are developing products that make sense for our positioning and the benefits we can deliver."