Alliance Consumer Growth has made a minority investment in SuperOrdinary, a company that specializes in helping U.S.-based beauty brands expand into China.
SuperOrdinary was started by Julien Reis, an industry veteran and the cofounder of Skin Laundry. The distribution business has about 200 employees based in the U.S. and China who work closely with brands to launch into the Chinese market, online and in stores.
The business has worked with Drunk Elephant, Olaplex, Farmacy, Supergoop and The Ordinary, as well as ACG-backed brands Ouai Haircare and Milk Makeup. Reis said business was up 400 percent in the last year, and he expects the business to at least double for 2021, and grow to about 350 employees. The business is also backed by the Puig family.
“We’re focused on making sure the brands we work with look and feel that they’ve been in China for a long time,” Reis said, a process that often includes giving products “local nicknames.”
“We don’t take what we see happening and working in the U.S. market at face value. It’s a lot of data analysis, social listening and making sure we can put ourselves in the Chinese consumer’s shoes,” Reis said.
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For U.S. beauty brands, entering China through cross-border e-commerce sales often makes the most sense, Reis said, as it allows brands to learn what shoppers think of products early on. It also lets brands skirt China’s animal testing rules, which are expected to shift this year.
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“A theme we’ve been seeing developing over the last couple of years has been the absolute importance and growth of the Chinese beauty market,” said Julian Steinberg, managing partner at ACG, which backs Harry’s, Tata Harper, Pacifica Beauty and other brands. “One of the things we realized was just the difficulty for western brands to really navigate the complexities of the Chinese market.”
Steinberg, who backed cruelty-free makeup brand Nudestix as it built its own supply chain in China to circumvent animal testing rules, called SuperOrdinary’s approach “groundbreaking” and “revolutionary.”
“Online-first in China is not going anywhere regardless of the fact that hopefully animal testing goes away,” Steinberg said. “The way to speak to the Chinese consumer first is online, but as it becomes possible for western brands that are cruelty free to be sold in stores, that’ll be another aspect of it that SuperOrdinary has real expertise in.”
“They really take the approach as if they were the entrepreneurs launching these brands from scratch in China,” Steinberg said.
SuperOrdinary’s distribution arm is already growing “unbelievably,” Steinberg said and has the potential to “be a monster of a business.” But the company will also look for joint venture opportunities and develop its own brands via acquisition or incubation.
Reis said the focus for any future deals will be on companies that resonate with Chinese consumers.
“There’s an opportunity for us to truly become the next form of investors in a way where we’re able to provide a lot of feedback to these brands and be able to help guide them on product development and give them a lot of the data that we think is important as they expand,” Reis said.
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