Call it the Great Reckoning. After a few consecutive years of suspiciously explosive growth in the indie beauty scene, an era when virtually everyone you know was slapping their name on a line of menopause skincare or “clean” mascara and blush, 2023 produced a rather epic turning of the tides for small brands.
Although it certainly offers myriad products beyond cosmetics, skincare and bath and body, Rite-Aid’s recent bankruptcy filing certainly isn’t good news for any beauty brands stocked in its stores. Evidently, Rite-Aid has been fiscally leveled by all the dough it’s had to shell out to defend itself against litigation stemming from filling unlawful opioid prescriptions.
This isn’t to say that the big guns were spared from inflation and supply chain-driven financial fallout. Following on the heels of Revlon’s restructuring in 2022, there was the pretty much near-total collapse of Australian natural beauty purveyor BWX, which owns a slew of brands including the well-regarded Mineral Fusion, a “healthy” makeup range with roots in Denver, Colorado.
Forma Brands, the parent company of the once scorching hot Morphe makeup, filed for bankruptcy at the beginning of 2023, promptly shutting its nearly 20 U.S. Morphe stores and ending a beauty licensing deal with pop icon Ariana Grande. Although its lenders Jefferies Finance and Cerberus Capital Management were able to scoop up Forma in exchange for $690M in debt relief just a few months after the filing, allowing it to stay operational, it just announced the shuttering of influencer brand Jaclyn Cosmetics. And the futures of acquisitions Lipstick Queen and Playa Beauty, both snapped up by Forma in just the last few years, are hanging in the balance.
Multi-Brand Incubator Collapse
Alongside BWX and Forma, biotech firm Amyris is another multi-brand corporate entity rocked by recent money woes. In August of last year, it announced that it had secured $190M in financing to stay afloat while it set about both shuttering and/or attempting to sell a roster of consumer brands it had acquired or incubated in recent years. That portfolio includes Costa Brazil, the much-beloved wellness brand by fashion designer Francisco Costa and Biossance, a buzzy range of sustainable skincare steeped in plant-based squalane.
Among the brands Amyris has closed in the last few months are the Gen Z-targeted Eco-Fabulous range of affordable makeup and skincare, Costa Brazil, and Terasana Clinical, a line of serums steeped in cannabinoids that it acquired in 2021. Given the waning interest in weed-based beauty brands, this last bit isn’t especially surprising, even with catchy product names like Skin Mantra Super-Hydrating Facial Oil.
Other brands on the Amyris roster have been lucky enough to find new homes. These include Biossance, purchased by THG for $20M; Rose, Inc., a makeup range created by supermodel Rosie Huntington-Whitely, snapped up by AA Investments for $2.5M; and JVN Hair, centering “Queer Eye” television personality Jonathan Van Ness, which has bought by Windsong Global for a mere $1.5M
Yet Another Celebrity Shakeout
Actress Naomi Watts is another well-known entity thoroughly wrapped up in Amyris’s unraveling – and on two fronts, no less. In 2021, Amyris entered into an agreement to develop a science-backed skincare and sexual wellness brand with Watts that was aimed “unapologetically” at women in the throes of menopause. Dubbed Stripes, it hit the market in 2022, amid a slew of other brands targeted to exactly the same cohort. (Yes, for a minute there, menopause skincare was an extremely crowded field.)
About five months prior to the Stripes launch, Amyris decided to double down on all things Watts and bought Onda Beauty, a combination digital and brick-and-mortar clean retailer she owned with former content creators Larissa Thomson and Sarah Bryden-Brown. At its stores in New York City, Sag Harbor, London and Sydney, Onda Beauty stocked a range of items that met its rigorous healthy ingredients standards.
With the fiscal upset at Amyris, Watts has been forced to find other backers for Stripes. Onda Beauty is back in Thomson’s hands in the U.S. and Bryden-Brown’s abroad. Both the Sag Harbor and London locations have been closed, and Bryden-Brown is re-branding Onda Beauty in Sydney as Lume. So much turmoil and Amyris has only owned the retailer for a couple of years.
Another Hollywood type — Kristen Bell — hasn’t fared much better in the beauty and wellness arena in the past year. Her CBD skincare brand Happy Dance, which she created in partnership with cannabis supernova Lord Jones, ended its 2.5-year run at the beginning of 2023. That’s gotta hurt, especially considering the fact that another brand she developed with her husband Dax Shepard, a line of baby care products called Hello Bello, filed for bankruptcy this past October.
Of course, when you’re as rich and powerful as Ariana Grande, you can afford to buy your beauty brand back when licensing deals start to go south. And that’s exactly what she did, recently handing Forma $15M for its stake in her R.e.m. makeup line.
Small-Brand Money Woes
For brands that don’t have access to anywhere near that amount of capital, the last few years have been rough. Once all the pandemic-related government assistance buffers went away, and serious supply chain issues and inflation set in, many an indie brand founder was left reeling.
On the consumer side of the fence, post-pandemic life hasn’t exactly been rosy, either. All those elaborate, multi-product self-care rituals we got used to during quarantine, coupled with inflation, have led to a Mount Everest of credit card debt, and per the U.S. government, a 13 percent uptick in personal bankruptcy filings in the past year.
Even worse is our ever-growing reliance on “buy now, pay later” opportunities coming at us from apps like Affirm and Klarna. Although you can be charged up to a whopping 36 percent in interest for monthly financing, these micro-loans for, say, a splurge on pricey skincare or a high-tech beauty gadget, usually aren’t reported to credit bureaus.
Got your eye on that cult $2695 Lyma laser but aren’t feeling especially flush right now? Just break that into 12 payments of $225 each with Splitit.
Retailers Feeling the Crunch
In the world of directional beauty retailing, the fiscal hiccups experienced by Onda aren’t even the most compelling indie-store bankruptcy of recent months.
That prize has to go to Brooklyn “curation” legend Shen Beauty, which recently shut its doors after a 13-year run. While founder Jessica Richards promised a pivot to online-only, the website is currently nonfunctional. And within months of Shen’s closing due to a host of reasons including lackluster sales, beauty retailer Cos Bar hopped right into the space, planting its flag in Brooklyn for the first time.
Although it certainly offers myriad products beyond cosmetics, skincare and bath and body, Rite-Aid’s recent bankruptcy filing certainly isn’t good news for any beauty brands stocked in its stores. Evidently, Rite-Aid has been fiscally leveled by all the dough it’s had to shell out to defend itself against litigation stemming from filling unlawful opioid prescriptions.
In other words, the drugstore is in trouble for selling drugs. And now a ton of beauty brands might just be collateral damage.
