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Late 2017, TSG Consumer Partners (TSG), a leading private equity firm, announced they had acquired a minority state in one of the world’s fastest growing beauty brands, Huda Beauty, founded by Huda Kattan, along with her sisters Mona and Alya and husband Christopher Goncalo in Dubai in 2013. TSG has experience in growing consumer-sector brands to international level and includes among its clients familiar names Smashbox and IT. The plan is to put Huda Beauty on an international footing over the next few years.
Using her experience as a celebrity makeup artist and beginning with just a beauty blog 2010, Kattan launched Huda Beauty in 2013 after spotting a gap in the market, with just one product- false eyelashes. The brand now boasts a full range of products and can be found alongside many long-established international brands in retail outlets such as Sephora, Harrods, Selfridges and JC Penneys.
Her presence and influence on social media is phenomenal, with an Instagram following of over 24 million, and she has been named by Forbes in the ‘Top 2017 Influencers in Beauty’ and made the list of TIME’s ‘25 Most Influential People On The Internet’.
Compare this with another start-up by a young French chemist, Eugéne Paul Louis Schueller, and again beginning with just one product; hair dye. Founded in 1909 it took over a century to create one of the world’s largest and familiar beauty products companies; L’Oréal.
Kattan and others such as Sal Ali, founder of Farsali, and Kylie Jenner are the new breed of brand-builders that are reshaping the landscape for the beauty and cosmetics sector. A single blogger, albeit with some backup assistance to start with, can create a brand over the course of a few years and build an empire to challenge names that have been synonymous with beauty and cosmetics for generations; despite those bigger names having all the resources behind them that this implies.
Social media has changed the way brands are created, emerge and survive in the current competitive market. Upcoming entrepreneurs have access to a worldwide platform and have become adept at using it to position, promote and build new brands.
Establishing a recognisable brand had long been seen as Nirvana for a fledgling beauty product company as it guaranteed market share, ensured customer loyalty and a willingness to pay a premium. Brands were developed over time; establishing a sense of permanence in a changing world; building relationships with the consumer, earning trust. For the consumer it guaranteed quality, a perception of prestige and after-sales service.
The impact of this rise in new brand builders can be seen in two significant ways. The opportunities that the internet and social media bring with them means that more entrepreneurs than ever before now have a platform to launch their own ‘brand’; generally beginning with just a single product. Branding cycles are now faster than before and can be created in a few years rather than over decades. The flipside is that just as a brands can emerge seemingly overnight, they can also fall out of favour equally as quickly. The brand is becoming more of a fad, based on an innovation, gap in the market or even a celebrity figure; attracting consumers who have no loyalty to the brand and often continue to purchase merely out of habit.
It’s also easier than ever for consumers to discover new brands, many of which position themselves as anti-corporate and anti-consumerism. They are generally based around a founder who personifies the brands ideals.
Consumption cycles are increasing and the desire for brands rise and fall quickly. This increasingly competitive landscape is forcing many companies to rethink their roles and market strategies.
Does this spell the end for big brands?
Some long-established companies have reacted by assimilation of smaller brands. In 2017 there were 52 acquisitions of small brands by multinationals; the greatest number in a decade. Most of these were private brands and the overriding reason for purchase appeared to be based on the size of the social media fan base, according to investment bank Financo LLC. Hoovering up smaller brands based on audience likes or thumbs up is a risky strategy as a small brand can so easily fall out of favour, leading to being dropped and replaced by another equally short-lived. The result is brand churning.
Others companies are adding influencer marketing to their strategy in the hope of benefiting from the element of celebrity-influencer endorsement. When Estée Lauder launched their spin-off brand, the now discontinued The Estée Edit, they collaborated with Kendall Jenner who has over 100 million followers on Instagram.
To survive brands will have to adapt and continually refine their market strategies, become more personalised, more authentic and connect with their customers on an emotional level. Consumers want brands that resonate with themselves and can incorporate into selfies. Self-branding will be the norm and the trend of celebrities launching their own brand will increase. Influencers will increasingly work to brand themselves; even as they promote other brands. More emphasis on innovation and product development and connection with consumers by larger companies will enable them to become less dependent on influencers and smaller brands for market share.