Markwins is perhaps the largest indie brand in the world, according to its new global president, Stefano Curti. The company, which comprises brands such as Physicians Formula, wet n wild, Bonne Bell, Lip Smacker, and Black Radiance, as well as the recently acquired Lorac, is now poised for further organic growth and primed for new acquisitions—as well as a possible IPO. Here’s what’s next for Markwins.
Internalizing Industry Shifts
Curti has been in the beauty industry for nearly 30 years, including roles at Johnson & Johnson, where he served as global president of the beauty and baby divisions—comprising Johnson’s Baby, Neutrogena, Aveeno, Clean & Clear, Lubriderm and other brands—as well as president, J&J consumer United States, and general manager, Neutrogena.
Curti says he has seen a transition in mindset, investment and recruitment strategies during his career, as well as in the approach toward consumers among beauty players. Markwins is now internalizing these industry shifts by investing in new market opportunities and preparing the company to potentially go public.
Portfolio Breakdown
Markwins’ diverse brands give the company entry into several key market trends. For instance, wet n wild is a leader in the fast beauty sector, says Curti, offering high-quality, affordable color cosmetics. Meanwhile, Physicians Formula represents a triple-physician-approved brand, a plus as expert-backed skin care continues to grow.
As a private company, the company had grown its non-U.S. business by 90%, year to date (at the time of this interview), and is on track to double its global business, including its Amazon business.
Black Radiance is an established player in the multicultural/inclusive makeup market, Curti points out, while the recently acquired Lorac Cosmetics offers a foothold in the luxury end of the market. Markwins is investing in Lorac and leveraging the brand’s light reflection technology across other portfolio holdings to offer a new level of formulation benefits.
Curti notes that Markwins brands like Lip Smacker and Bonne Bell came from acquisitions and that the organization will be making further purchases in the future to generate continued growth.
A $2 Billion Company?
Markwins is approaching $1 billion in sales. Curti believes that the types of investments and access to cash afforded by going public could help propel the firm to the $2 billion mark at some point in the future.
A public offering would also bring higher visibility and enhanced structure to the organization, as well as the resources to bring on new people and capabilities. Curti notes that the IPO route hasn’t been fully decided. Whatever the final outcome, the global president believes that he is fostering an indie brand mentality that favors millennials just entering the industry.
Markwins jointly plans with its store partners and “sprints” when necessary.
As a private company, the company had grown its non-U.S. business by 90%, year to date (at the time of this interview), and is on track to double its global business, including its Amazon business.
wet n wild will soon be launching in the U.K. market, following demand driven by influencers. Europe also continues to be a strong market, followed by Latin America and Asia. Future acquisitions will likely be tooled toward international growth, while U.S. growth is led primarily by existing brands. Markwins will be doubling its marketing investments over the next year, according to Curti.
Acquisitions Accelerating Innovation
Markwins has a history of growing incrementally through the acquisition of brands and new capabilities. The company has been careful to ensure that brands don’t adversely overlap by category, geography, price point, channels, consumer base, etc.
And, when acquisitions like Lorac are made, all brands benefit from newly accessible technologies. Markwins also boasts a robust manufacturing and product development platform in Latin America, the United States and Asia, powered by 18,000 employees.
Markwins’ manufacturing assets give it a competitive advantage on cost and launch timelines. The company’s brands operate on a development schedule of about 18 months, though Markwins is sometimes able to produce new products in as little as three to six months.
Physicians Formula and wet n wild came with R&D capabilities that helped found the organization’s product development center of excellence for segments like skin care, emulsions and powders.
With internal studios and creative and communications teams, the company can move fast. In addition, social media has freed brands to produce less polished videos, which can be produced more cheaply and quickly.
Curti notes that the organization doesn’t rely on traditional 10-year strategic plans. In order to remain competitive, Markwins encourages quick decisions and faster executions.
That said, planning timelines for many physical retailers are still relatively long. Markwins jointly plans with its store partners and “sprints” when necessary, says Curti.
Markwins brands are present in more than 80 countries.
Acquisitions have also included the addition of new IP that can be spread across Markwins brands. For instance, Curti says that Physicians Formula and wet n wild came with R&D capabilities that helped found the organization’s product development center of excellence for segments like skin care, emulsions and powders. This concentration of expertise, paired with strong supplier relationships, will allow Markwins to merge industry insights with internal and external innovation.
The company runs its own innovation incubator, opening the doors to external partners with delivery systems, color cosmetic solutions and other relevant technologies. Curti says he loves innovation and novel ideas and frequently has individuals and small companies reaching out to collaborate. While some multinationals are too impenetrable or unwieldy for tiny organizations, Markwins is scaled to be nimble, make quick assessments and get breakthroughs to market in a timely manner.
Breaking Down the Retail Strategy
In-house product development and manufacturing allows Markwins to partner with retailers that increasingly demand exclusive/limited collections and a greater volume of SKUs to support differentiation. Markwins has developed exclusive collections and limited exclusivities with Ulta, Walmart and others.
Markwins is also working to drive consumers to shop on its owned brand sites. However, Curti says the critical element is to keep volume high, even if it means taking a hit on margin by partnering with external retail partners. The ultimate goal is to keep consumers connected to the brands. As he put it, “Big ideas take care of everything.”
Meanwhile, Markwins continues to invest in sourcing insights, social listening, market research and other data resources. At the same time, its brands will continue to innovate in design and delivery form to boost consumer engagement.
Fans, Not Consumers
Curti believes that brands such as Physicians Formula, which has an ingredient and safety standard that Curti says is more stringent than those for baby products, will continue to perform well in today’s “transparent world.”
This, paired with social listening, will allow Markwins to amass fans, not consumers, says the executive. Because the public has such a strong impact on brands, leaders need to focus on these genuine relationships and high standards.
A Mass and Luxury Beauty Strategy
Markwins has historically been well positioned in the mass beauty sector, and the recent Lorac acquisition gives the company entry into the fast-growing luxury segment.
Curti says that luxury sales in the industry have accelerated, while mass has remained “stable,” especially in color cosmetics. He adds, “Prestige is incremental,” which allows Markwins to achieve further global growth.
To do so, the company is bringing Lorac product development in-house to scale processes, manufacturing and relationships with third-party suppliers.
The Lorac strategy leverages more than 200 SKUs, as well as forthcoming brand innovations, as part of a larger effort to expand globally. While Markwins brands are present in more than 80 countries, most sales take place in the United States. However, its brands have wide global awareness.
For instance, in the United Kingdom, wet n wild’s positive reception by influencers has shaped the brand’s rollout strategy. Markwins will expand its retail partnerships and communications throughout the remainder of 2018 and 2019 as its reach into Europe grows.
As the pharmacy channel begins to freely mix prestige and mass brand offerings, Markwins could expand its entire portfolio through the channel to capture consumers who shop simultaneously across all categories.
Lorac will remain in the prestige channel and reach deeper into the professional makeup artist community. Markwins will fund more retail activations for the brand, expand its HSN partnership and, as noted, invest in the Lorac brand site.
In mass, Curti again stresses the need to help retailers differentiate themselves with limited collections, first-to-market launches and more. Recently, wet n wild found success with Walmart by launching a Zodiac-inspired collection of lip glosses. In-house product development and manufacturing allows Markwins brands to be nimbler in responding to these types of retailer needs, which in turn makes the company an attractive partner.
Meanwhile, as the pharmacy channel begins to freely mix prestige and mass brand offerings, Markwins could expand its entire portfolio through the channel to capture consumers who shop simultaneously across all categories.
As Markwins injects further capital for growth and geographic expansion, this mid-sized private company—perhaps the world’s largest indie beauty brand—is using its flexibility, digitally and socially oriented culture, innovative products, and agile product development to fuel its drive toward its first, and perhaps second, billion-dollar sales results.
