Beautycounter On 'National Radar' With Regulatory Reform Mission

Upping its bid to disrupt the cosmetics market, Beautycounter hosted a congressional briefing Nov. 17 to advocate stronger industry oversight, putting its weight behind the Personal Care Products Safety Act in particular. The direct seller, which has self-banned 1,500 ingredients from its offerings, has seen its sales and following grow rapidly since launching less than three years ago and aligning itself with leading NGOs.

Santa Monica, Calif.-based direct seller Beautycounter is quickly making a name for itself as a leading advocate for tighter cosmetics regulation in the US, building on a strategy that is driving exponential gains in product sales, sales consultants and consumer exposure.

"Safer," "non-toxic" cosmetic branding isn't new, but Beautycounter may well be emerging as the poster child for the movement after launching in March 2013 with the mission "to get safe products into the hands of everyone."

The firm, which sells a growing collection of skin-care, bath and makeup products through independent sales consultants, its website and strategic partnerships with J. Crew, Gwyneth Paltrow's Goop platform and others, hosted a Congressional briefing on Capitol Hill Nov. 17, seizing on the opportunity to promote itself as "a company who is pro-commerce and pro-regulation."

Beautycounter was joined at the briefing by Bryan McGannon, director of policy and engagement at the American Sustainable Business Council, and Mary Kearns, president and founder of handmade soap manufacturer Herban Lifestyle.

"Our main goal in hosting a Congressional briefing was to show how small and mid-sized businesses in the cosmetics and personal-care industry both need and want new, more public health protective laws on cosmetic ingredients." – CEO Renfrew

Beautycounter and its cohorts advised lawmakers and their staff that the time is ripe for a cosmetics regulatory update, and put its weight behind the Personal Care Products Safety Act in particular.

That bill, S. 1014, introduced in the Senate with bipartisan support in April, is the most comprehensive proposal in play for regulatory reform in the cosmetics sector. The product of extended negotiations between leading industry and NGO representatives, the legislation has been met with alarm by small businesses that fear its registration demands and other requirements could put them out of business.

The Independent Cosmetic Manufacturers and Distributors trade group has been one of the bill's most vocal opponents, instead supporting the Safe Cosmetics Modernization Act launched in the House in November (Also see "House Cosmetics Bill Seeks Broad Federal Preemption, Revised 'Cosmetic' Definition" - HBW Insight, 22 Nov, 2015.).

Beautycounter CEO Gregg Renfrew, on the other hand, views the Senate proposal's terms as manageable and necessary. "Our main goal in hosting a Congressional briefing was to show how small and mid-sized businesses in the cosmetics and personal-care industry both need and want new, more public health protective laws on cosmetic ingredients," she said in an email to "The Rose Sheet."

"The briefing was intended to showcase some of the current challenges with our lack of regulation, and I feel like we made progress on educating people on our perspective," Renfrew added.

According to the exec, Beautycounter's "main ask" of Congress was for members to make cosmetic safety a priority. She hopes the effort will bear fruit in the form of a Senate Health, Education, Labor and Pensions Committee hearing on the Personal Care Products Safety Act in early 2016.

In addition to spearheading the briefing, Renfrew met with the offices of approximately a dozen legislators, including HELP committee members Sens. Michael Bennet, D-Colo., and Patty Murray, D-Wash. As the committee's ranking member, Murray could be a powerful ally in getting the Senate cosmetics bill moving.

Renfrew said the reception encountered at offices she visited "was very warm across the board."

"There is a lot of momentum for issues that are good for consumers, our health and business," she noted. "We believe reforming our outdated cosmetic safety laws falls in this category."

The response from HELP members' offices was encouraging, Renfrew said, adding: "There seems to be an increased appetite to take on this issue after the committee has finished pharmaceutical reform."

HELP Committee Chair Lamar Alexander, R-Tenn., has been working for months on draft legislation to reduce red tape at FDA in the interest of speeding drugs to market, similar to the 21^st Century Cures Act in the House, which passed in July (Also see "Cures Excitement May Wane While Senate Works" - Pink Sheet, 10 Jul, 2015.).

The senator's Innovation for Healthier Americans initiative reportedly is expected soon, at which point negotiations may be initiated to reconcile differences in the chambers' parallel bills.

On its website, Beautycounter notes that its fan base "truly delivered" in advance of the briefing by sending more than 8,200 letters to Congress in support of new cosmetics regulations.

"Our movement for better beauty is officially on the national radar," the firm says.

'Disruptor' Calls Industry Safety Into Question

From the outset, Beautycounter has billed itself as an industry-disrupting brand, which has helped to secure funding from private investors, including TPG Growth – the middle market and growth equity investment platform of global firm TPG – under an agreement announced in December 2014.

TPG Growth partner John Bailey stated at the time: "With the company’s fundamental promise of screening out toxic, unnecessary and untested chemicals, its focus on delivering excellent products that deliver on consumer needs and its high-quality and passionate team, Beautycounter is well-positioned to continue delivering outsized growth and evolving the personal-care landscape.”

He also credited Beautycounter's "novel approach to a traditional selling model." With its core safety and integrity message, the direct seller is expanding its ranks and reach while some veteran players in the segment are struggling to retain sales representatives and effectively adapt traditional door-to-door selling to the digital age (Also see "Avon Counting On 'Beauty For A Purpose' To Inspire Reps, Consumers" - HBW Insight, 6 Aug, 2015.).

Beautycounter reported in May that its sales soared 325% in the fiscal 2014 first quarter compared with the prior-year period (Also see "In Brief: Prop 65 Aloe Vera Listing Update; Beautycounter Sales Soar; More" - HBW Insight, 29 May, 2015.). It has now shipped close to 2 million products, supported by more than 11,000 sales consultants, the company says.

Beautycounter's "Never List" comprises almost 1,400 ingredients that are prohibited from cosmetic use in the EU, as well as ingredients the firm has screened and decided to eschew of its own volition.

Certified by nonprofit organization B Lab as a B Corporation, or a for-profit business that meets "the highest standards of verified, overall social and environmental performance, public transparency and legal accountability," Beautycounter has aligned itself with NGOs such as the Environmental Working Group in its messaging regarding the current state of the industry and safety implications for consumers.

"Companies are allowed to use known toxins – ingredients that have been linked to cancer, reproductive issues, hormone disruption – without telling us," the company asserts on its website.

Along with MyChelle Dermaceuticals, Beautycounter is a "founding member" of the new EWG Verified program, which offers certification to the NGO's in-house safety standard and an associated product seal to help consumers avoid cosmetics containing potentially hazardous ingredients (Also see "'EWG Verified' Personal-Care Safety Seal Builds On 'Skin Deep' Platform" - HBW Insight, 4 Nov, 2015.).

Without pointing fingers at specific competitors, Beautycounter's marketing calls personal-care industry practices into question and contributes to a trend that some experts say is detrimental to the sector's health – namely, promoting products for what they don't contain, rather than what they do (Also see "Podcast: Preservatives Crisis Calls For Marketing Revolution" - HBW Insight, 28 May, 2015.).

Beautycounter says it has self-banned 1,500 ingredients from its products, "all while ensuring our products perform and that they're as indulgent as any luxe shampoo, lipstick or oil in the market."

The company's "Never List" comprises almost 1,400 ingredients that are prohibited from cosmetic use in the EU, as well as ingredients the firm has screened and decided to eschew of its own volition. These include phthalates, sodium lauryl sulfate and sodium laureth sulfate, hydroquinone, toluene and oxybenzone, as well as preservatives parabens, formaldehyde, methylisothiazolinone and methylchloroisothiazolinone.

According to the Beautycounter, there is a "dearth" of information supporting the safety of many cosmetic ingredients. "Only about 10% of the 10,000 ingredients used in the skin-care industry" are adequately studied, the firm suggests.

"We do not assume that the absence of data means a chemical is safe. It simply means we don't know about the potential health impacts," Beautycounter explains.

The firm considers safety data from industry, academia, government and nonprofit health sources as it screens ingredients, focusing on links to cancer, developmental toxicity, hormone disruption and infertility. The company's website includes a full glossary of featured ingredients that made the cut.

Beautycounter's trajectory and positioning invites comparisons to another certified B Corp, The Honest Company, whose earnest, good-for-you positioning – and celebrity connection through co-founder Jessica Alba – has fueled meteoric top-line growth and drawn similar attention from the investment community since its debut in 2011 (Also see "Honest Company To Launch Color Cosmetics On Back Of $100 Mil. Financing" - HBW Insight, 28 Aug, 2015.).