Have Incubators Outlived Their Purpose?

A few days ago, our intrepid beauty correspondent Daniela Morosini broke the news that Luxury Brand Partners was exploring the sales of two of its six portfolio brands, Patrick Starrr’s One/Size and IGK Hair, via investment bank The Sage Group.

One/Size, launched in 2020, and IGK, created in partnership with salon professionals Chase Kusero, Aaron Grenia, and brothers Leo and Franck Izquierdo in 2015, join a competitive group of brands jockeying for acquirers’ attention.

While not as splashy as some of the other labels in the market, like Rare Beauty, Summer Fridays and Glossier, One/Size and IGK boast sound financial profiles. IGK is expected to hit $80 million in revenue, buoyed by strong specialty retail partners and its direct-to-consumer business. Its adjusted earnings before interest, tax, depreciation and amortisation is expected to be close to 20 percent of net sales for 2024. One/Size, meanwhile, is projected to reach $115 million in revenue and adjusted EBITDA is 40 percent of net sales. That’s incredible given that chief executive Tev Finger said Luxury Brand Partners would invest just $10 million in One/Size over three years when it debuted in 2020.

Luxury Brand Partners, who had its pick of conglomerates in its heyday, might struggle to find homes for One/Size and IGK. Though smaller, IGK could find a buyer first, given the glut of colour brands for sale. Starrr’s One/Size has formidable numbers and sell-out SKUs like its On ‘Til Dawn mattifying waterproof setting spray, but only few buyers could afford its price tag.

Why is it so hard for incubated brands to find success today?

When Miami-based Luxury Brand Partners was established in 2012, it quickly became one of the most prominent beauty incubators in the business. The established player in the field was Maesa, which was founded in 1997 in Paris. However, while Maesa preferred to own the lines it built for the long term (it still co-owns Drew Barrymore’s Flower Beauty, which was founded in 2013), LBP perfected the art of building desirable, one-of-a-kind assets and selling them to beauty’s biggest players.

LBP was filling a market need; the biggest conglomerates had for a long time struggled to build successful brands in house, and were on the hunt for acquisitions. Between 2016 and 2018, the incubator created and sold Becca, Oribe and Pulp Riot to the Estée Lauder Companies, Kao and L’Oréal, respectively.

Since those transactions, it became much easier to launch a beauty brand and attract a big player’s attention. There were independent and venture capital-backed upstarts, enabled by low customer acquisition costs and the DTC-beauty boom, as well as competing incubators. A-Frame and Beach House Group have created many influencer- and celebrity-led lines like John Legend’s Loved01 and Tracee Ellis Ross’ Pattern Beauty, respectively. Smaller firms like Slate Brands have focussed squarely on Gen-Z. Oftentimes, if a celebrity or influencer doesn’t find a home with one incubator, they can easily hop to another.

Few of these ventures have had the creation-to-sale success that LBP did in its heyday. There are too many brands on the market, and customers have become more sceptical of build-a-box beauty lines.

Amyris, which was fast and furious in its incubation process with lines as far flung as Rosie Huntington-Whiteley’s colour cosmetics line, Naomi Watts’ Stripes and “Queer Eye” star Jonathan Van Ness’ hair care brand JVN, imploded last August. Forma Brands, the incubator behind Morphe, Jaclyn Cosmetics and Ariana Grande’s R.e.m. Beauty filed for bankruptcy months earlier. One exception to the recent carnage is The Center, which sold masstige skincare line Naturium, created with Susan Yara, to E.l.f Beauty for $355 million last year.

The biggest threat to incubators is replicating a tired formula and the talent they work with, who have watched their predecessors run into trouble, are determined not to make the same mistakes.

Kristin Ess of Kristin Ess Hair and Shelby Wild of Playa sued Maesa and Morphe, the beauty incubators that own their respective businesses, at the end of 2022. Van Ness said only now, post-Amyris, does he own a chunk of his business. More recently, Andrew Fitzsimons bought back his two-year-old, namesake brand from Maesa in a bid for full creative control.

Fitzsimons told The Business of Beauty he doesn’t regret working with an incubator like Maesa. But said he would advise creators to insist on owning their lines from the outset.

“Beauty incubators are like old school record labels, where they will see people who already have an established career, they just market them,” he said. “A record label has a lot of artists; they’re splitting their resources. When an artist is independent, they can actually do their own thing.”

Since officially parting with Maesa last month, Fitzsimons has hired a six-person, all-female team based in Ireland; he is in the process of hiring executives in all territories where the line operates. While arguably more difficult, the founder hopes to find this iteration of the line more creatively fulfilling.

Referencing Taylor Swift’s blockbuster rerecorded albums, “Fearless,” “Red,” “Speak Now” and “1989,” he said. “This is Andrew Fitzsimons Haircare, Andrew’s version.”

Here are my top picks from our insight and analysis on beauty and wellness this week:

1. Patrick Starrr’s One/Size and IGK Hair Explore Exit Options

Beauty brand incubator Luxury Brand Partners, owner of the premium cosmetics and hair care lines, has tapped The Sage Group to suss out their options. By getting to this stage, they’ve reached a tier many incubated brands don’t.

2. The ‘Unbookable’ Beauticians With Years-Long Waiting Lists

Practitioners like Iván Pol, known for his ‘Beauty Sandwich’ technique, Joanna Czech and Harriet Westmoreland are so oversubscribed, to get an appointment, you might need a private concierge.

3. Bobbi Brown Is Now the Host of This Zoom Meeting

Jones Road, the makeup artist-backed beauty label, is built on feedback, insights and suggestions from its community. But sometimes, its founder has to push back.

THE BUSINESS OF BEAUTY NEWS IN BRIEF

Shiseido Wins Max Mara Fragrance License. The Japanese beauty conglomerate will develop, produce and manufacture fragrances for Max Mara, which has not sold perfume since it discontinued a line of scents launched in the mid 2000s.

Celine extends bath and body range. Created by artistic director Hedi Slimane, the products feature some of the house’s signature scents. A more robust selection of cosmetic products will debut in January 2025.

Glossier partners with USA Women’s Basketball for the Olympics. The partnership will see Glossier get its products on some of the contemporary greats of American basketball, who will be in action at the Olympics. The brand will be the women’s team’s first dedicated sponsor since Tampax in 1996, CEO Kyle Leahy told BoF.

Boots chief quits after Walgreens’ sale plan stalls. Sebastian James, who has run Boots since 2018, will remain in the post until November before taking up a new role elsewhere. A successor has yet to be named. Walgreens warned on its profit outlook and said it had no plans to sell Boots, having decided to continue to invest in it.