When personal-care company Johnson & Johnson launched its C&C by Clean & Clear brand in July — an offshoot of its acne treatment line Clean & Clear, which debuted in 1956 — it became the first incubated beauty brand Johnson & Johnson introduced through its new, dedicated in-house team.
The C&C launch via Johnson & Johnson was much quieter than many in the industry expected, but it was the fifth beauty incubator debut by a major personal-care or cosmetics company in less than a year. In November 2017, Unilever debuted ApotheCare Essentials — a botanical-based hair-and-body-care line, the first brand the company launched in the U.S. in decades — followed by the millennial-focused sustainable brand, Love Beauty and Planet, in January. In April, L’Oréal introduced Seed Phytonutrients, its incubated, sustainable beauty brand, and in June, Revlon debuted Flesh by former Allure editor-in-chief Linda Wells, an inclusive 40-shade makeup range following the lead of Fenty Beauty, which was created by LVMH’s beauty incubator, Kendo, in September 2017.
Already, these companies have the scale. According to market research firm Euromonitor International, Johnson & Johnson, Unilever, L’Oréal and Revlon were ranked in the top-10 biggest beauty and personal-care companies in revenue for 2017. But at scale, you can’t move as fast as the digitally native startups that pop up in response to customer want and interest. The solution, for now, is the incubator: By building in-house startup generators, these businesses are looking to innovate outside of acquisition, attract younger customers, experiment with production and messaging, and bring products to market faster in order to compete.
Customer-centric product
Led by small in-house teams with some outside support (for instance, C&C is made up of a team of seven; Love Beauty Planet was created by a group of eight at Unilever; and Seed Phytonutrients was the brainchild of Shane Wolf, L’Oréal’s global manager for Redken, Pureology and Mizani), these incubators are made to respond to newness at rapid speed.
“Shorter product development cycles help beauty brands capitalize on changing consumer preferences,” said Kayla Villena, senior research analyst at Euromonitor International. “With beauty increasingly mimicking the fast-fashion trend, established brands can find inspiration from the agility of emerging brands.”
For example, the Johnson & Johnson incubator, which launched 18 months ago, targeted Gen Z with the C&C launch, tapping 18-year-old identical twin YouTube influencers Brooklyn McKnight and Bailey McKnight for product development and promotion. As a result, the 11-item, trend-driven assortment of pink face masks, camouflage-printed acne spot patches and tropical face wipes are Instagram clickbait, and were thoughtfully priced with the Gen Z consumer in mind (between $8 and $16). Additionally, it launched at Ulta and Amazon, where Gen Z customers shop, versus mass players, like Walmart and CVS, where Clean & Clear is currently sold.
“The beauty incubator launched to uncover new business insights and opportunities in the skin-care category,” said Brian Thibault, C&C by Clean & Clear brand manager. “One of our biggest challenges at Johnson & Johnson was getting busy young adults to establish a routine that allows them to see the results and feel confident that the routine is working.”
It’s a necessary approach to evolve with the changing market, said Steve Wunker, managing director of New Markets Advisors. “Incubators enable companies to speed development, work more with outside companies and break free of process constraints. They are a good way to do things differently, in a quick and scrappy way. It’s critical to get out of the conference room and into the market to find what works.”
It’s not just about speed. Love Beauty Planet targets millennial customers who seek out sustainable products. Seed Phytonutrients set out to accelerate L’Oréal’s ongoing sustainable initiatives, according to Frédéric Rozé, president and CEO of L’Oréal USA.
“For years, L’Oréal has been working behind the scenes to innovate, produce, develop and live sustainably. This companywide mission has enriched L’Oréal with more creativity, innovation and opportunities for in-house entrepreneurship, essential elements that have inspired the creation of Seed Phytonutrients,” he said. “We believe this organizational intelligence will have a cascading effect over time.”
Marketing for a new audience
Aside from responding to changing customer preferences, these companies are also recognizing that in order to resonate, they must master a digitally forward marketing strategy.
For Johnson & Johnson’s C&C, the in-house marketing team put Instagram and the McKnights at the forefront, according to Thibault. “We took a different approach. Because we are a startup incubator brand, we kept the social media team in-house,” he said. “From creative to production and consumer engagement, it’s all done by our internal team.”
C&C doesn’t have a YouTube channel, and it only has 2,400 Instagram followers right now. But by leveraging the McKnights, who have 3.9 million followers on Instagram and 5.6 million subscribers on YouTube, the brand has seen its awareness grow. A YouTube video posted on the twins’ channel featuring C&C now has 971,000 views. C&C has also enlisted its paid team of micro-influencers, who all promote products with the hashtag #ccskincaresquad. Although C&C would not comment on its influencer investment strategy, these micro-influencers, like the McKnights, were paid.
Thibault said YouTube is the next frontier for C&C to deepen its customer relationship. “We know our demo lives and breathes online, so we’re really trying to reach them where they already are engaged. The opportunities are endless,” he said.
Culling customer preferences online has also been crucial for Love Beauty Planet. For its part, it saw such success in its initial January assortment, it expanded its product lineup from 18 items to 45 with new categories like hydro gels, body butters and body dry oils, in August. The deeper assortment came from online crowd sourcing from customers, said Molly Landman, Unilever global brand director. “The asks for deodorants and lotions on social specifically narrowed down how and what we were going to launch next,” she explained. From concept to launch, the product incubation process for these new Love Beauty Planet products took six months.
Testing the waters
It’s a good thing for behemoth companies to pick up the pace. But Wunker explains that incubators can be prone to pitfalls, and personal-care giants should proceed with care.
“Incubators can be hobbled by fuzzy mandates, pet projects, unbalanced pipelines, unstable funding and little ability to actually do things differently. All of these are addressable, but it requires deliberate thinking upfront to create the long-term dividends that a successful incubator brings,” he said. “It’s not always a good match for companies that pride themselves on careful rigor and deliberation.”
While these new beauty incubators may not be the catch-all solution the aforementioned heritage companies need in a highly fragmented market, some are proving financially viable. Unilever reported in April that its beauty and personal-care category grew by 3.9 percent in the first quarter of 2018, buoyed by “purpose-led” brands, like Love Beauty Planet and ApotheCare Essentials.
For now, companies are continuing to invest in said incubators and their brands. Seed Phytonutrients, which started largely through its own e-commerce site and Amazon, expanded its retail presence through health-and-wellness store Pharmaca in August, and Wolf said Seed is ranked No. 2 among other beauty brands in the natural space in terms of engagement across social platforms.
And though Johnson & Johnson wouldn’t reveal sales figures for C&C so far, it plans to release its second incubated beauty brand in 2019. According to Thibault, there’s a plan in place to ensure the incubator inspires change throughout the company.
“The incubator is leading new internal ways of working with design-centric, faster and more cost-effective innovation; and piloting new go-to-market models,” he said. “Learnings from C&C are actively being shared across the Johnson & Johnson organization.”
