During a lazy May bank holiday, Alex Epstein, founder of customised shampoo business Concoction, received a call on his mobile. He recognised the US dialling code but not the number and, as he was on holiday, almost declined to answer. Thankfully, he did answer, as on the line was the CEO of Aspire Brands, a major consumer products company with shelf space in thousands of retailers across the US. The deal, which is now signed and due to begin in March 2016, has the potential to take Concoction from a tiny startup to a major brand.
“Out of the blue, my phone starts ringing with this American number,” says Epstein. “It was the CEO of this beauty company in the US. He said: ‘I’ve read about you online and how you’ve been on this trade mission and I am interested in bringing Concoction to the US.’ We’ve now won a full chain listing with Ulta, the biggest beauty retailer in the US. It means we will be in over 800 stores in 48 states.”
Brain wave
The deal is the result of five years’ hard work, which all began in 2010 when Epstein caught a glimpse of the future while travelling in south-east Asia. A visit to a Nike ID store inspired a “brain wave” for a new beauty product, and he then spent the next few years making it into a reality. “It was all about customisation – creating your own trainers,” says Epstein. “I thought: ‘Wow – this is the dawn a new consumer age where people will be able to customise everything.’”
It was three years before Epstein was ready to launch his product, a customised shampoo which enables consumers to make their own concoction from a choice of scents, base blends and serums. Epstein says he researched the market intensely and identified a clear gap in the market with women who were unsatisfied with their current shampoo.
“They find it frustrating that they can never find the right shampoo. They might want something which gives volume but also something which gives them scalp care as well. Also, sometimes women don’t like the fragrance of the off-the-shelf products and people said it was appealing for them to pick their own,” he says.
Epstein became increasingly certain that his original vision was right and that his plans for the beauty industry mirrored changes taking place in other sectors. “I was sure customisation was going to be the future of beauty,” he says. “The iPad generation don’t just consume, they co-create. Customisation is becoming more and more mainstream.”
Epstein approached a number of experienced players in the beauty industry – Will King of the King of Shaves male grooming company, Millie Kendal of Ruby and Millie cosmetics company, and shoe retailer Harvey Jacobson. They would each invest in the business and also be able to provide invaluable support and advice when the US deal was being proposed. “They really made me understand how important it was to refine the product,” says Epstein. “The beauty industry is quite brutal. Millie and Will could be quite critical in a way, and it was through constant feedback that we kept refining it.”
Launch
After three years’ hard work, Epstein got off to a great start, with a high-profile launch in Selfridges in August 2013. Concoction also gained a listing in Boots and exported to destinations such as Australia and Dubai. However, the business was also taking orders on its UK website from the US and Epstein wanted to head stateside.
“Ever since the start, I was always aware that the US beauty market is a force to be reckoned with. In comparison, it’s like having 50 UKs all joined together. For a company that can do it right, it’s a terrific opportunity.”
Epstein won a place on a trade mission to Atlanta organised by the Guardian, and sponsored by UPS, and travelled with a group of British entrepreneurs to the US. Here he met representatives from advertising agencies and major brands such as Coca-Cola and Triumph.
“There was a wide range of people and we met with experienced business leaders and marketing experts,” he says. “There were also some really senior people from UKTI who gave me some brilliant information. You have to make trade missions work and it was a great publicity opportunity.”
During the trip, Epstein was able to focus hard on the US consumer, and began to question whether the Concoction brand was right for the US. Now, as the brand enters the territory in earnest, it will be marketed under another of the company’s trademarks: ‘Shampyou’. “It was a slogan we were already using,” he says. “When we did research with US consumers, we found that it resonated better with them.”
Although Epstein didn’t meet Aspire on the trip, the resulting publicity caught its attention. The deal means Concoction will be licensing out its IP and Aspire will handle the manufacturing and distribution.
“I’ve realised that if you look at this strategically and look at what we are good at then we are great at ideas. We are alchemists and great at creating an experience for our customers. But what we aren’t so good at is manufacturing, distribution and logistics,” says Epstein.
By licensing, the business can grow without making enormous investments or taking on new staff, or even setting up a US office. “We don’t have to hire more staff. That’s the beauty of licensing,” says Epstein. “Aspire are our US outpost. I hope to get to the point in the future where we can set up a Shampyou boutique there.”
Epstein says his shareholders – King, Kendal and Jacobson – were all instrumental in supporting this approach and providing advice on how it was to be done. Epstein says it would have been daunting without them. He says the deal has the potential to take his small business into the big league, but says it’s key that such a deal is only done with the right partner.
“A lot of the negotiations were about making sure we all had the same vision for the brand. There were also discussions on territory and royalties. There’s got to be the right chemistry,” he says. “You’ve got to share the same vision for the business. If you don’t have that then it’s not going to happen.”
Sign up to become a member of the Guardian Small Business Network here for more advice, insight and best practice direct to your inbox.
