This article first appeared in The State of Fashion: Beauty report, co-published by BoF and McKinsey & Company.
In a crowded and competitive beauty market, patience can pay off for indie brands looking to achieve both scale and longevity, says Byredo founder Ben Gorham, who spent years laying the groundwork for the recent explosive growth of the high-end fragrance label he founded in 2006.
The Stockholm, Sweden-based company’s journey was a slow burn: while the brand operated in key global markets from the outset, its growth potential was limited in the early days thanks to its distribution strategy built on scarcity, with Gorham carefully controlling product supply to keep Byredo aspirational.
The strategy, however, helped catapult Byredo to commercial success, with the brand hitting €120 million ($130 million) in annual revenue in 2021 before selling a majority stake to Spanish fashion and beauty group Puig in May 2022. More importantly, after 17 years on the market, Byredo remains a cult and coveted name in beauty.
While the landscape has changed dramatically since Byredo’s early days, making the jump from niche player to established global name is still within reach for other start-ups, Gorham says: a diversified distribution channel mix, disciplined category expansion and creating relevance in an authentic way can all form part of a winning formula.
BoF: Why was 2022 the right time for Byredo to bring on investment from a big strategic partner?
Ben Gorham: When I look at the strategic phasing for the company, it’s been more in relation to distribution strategies, cash flow needs, the complexities of globalisation — so the investments that I needed to establish subsidiaries — and then marketing. I’ve been at it for 18 years. It’s become clear that the brand and the company have gone through very challenging phases.
I set out to create a global brand from the beginning. In retrospect, at times we may have spread ourselves a little bit thin; operating in every quarter of the globe is complex. When you talk about beauty, you’re also talking about being in stock, you’re talking about logistical challenges, you’re talking about regulatory [considerations], you’re talking about regional preferences, you’re talking about culture.
The challenges that stood in front of us when we partnered with Puig were very much about development and production, so quality at scale. Puig being vertically integrated brought a great opportunity for us to lower our cost of goods but also improve the quality of our products. Puig is one of the few fragrance experts within these larger conglomerates.
BoF: How would you characterise your approach to being a global brand today?
BG: It’s continuing this idea of thinking global and acting local. Communities is a word that’s been thrown around a lot, but I think it’s something that people truly need to focus on. They need to understand the smaller ecosystems. For Byredo, even though we have this global footprint, we’re almost taking a step back in becoming local experts.
BoF: For small beauty brands, a big distribution partner like Target or Sephora can have a huge impact on scale, but Byredo has chosen a different route. How do you think the distribution game has changed for indie brands?
BG: Byredo comes from fragrance, so a lot of our structures were built on a fragrance business. A lot of the potential chains or distribution partners were not doing huge volumes in fragrance. The other thing to remember: today we have a diverse channel mix. That helped us navigate the pandemic, but it’s also helping us navigate skyrocketing [customer] acquisition costs, digital marketing and the turn of social media, the complexities of influencers, the downward turn of American department stores. Our diverse channel mix was how we were able to pivot.
We made a choice at Byredo to identify the clients and then meet them where they are. The reality is that we live in an omnichannel world and customers are online and they’re in retail stores and they’re in wholesale doors. Out of inclusion and for practical but also philosophical reasons, we decided to be in those places and do our best to compete in those places.
Direct-to-consumer was this idea that you owned the customer and you did that through a variety of ways — one of them being digital online and the other one, social, but also retail.
I think for most direct-to-consumer brands, the opportunity lay in digital scalability because retail is costly and personnel-intensive. What really changed is that this was a direct-to-consumer relationship through digital marketing acquisition costs. It turns out that social media is also like a wholesale channel — the only difference is that Google is the wholesaler as opposed to Neiman [Marcus].
It’s also what caused a lot of hiccups for the direct-to-consumer brands [because] that specific wholesaler increased their price overnight, three nights in a row. Sometimes when I speak internally about some of the complexities I see there [I say] it is the equivalent of your landlord coming on Monday and raising the rent and then coming back on Wednesday and raising it again. So to build or hinge your business on one of these channels as they continue to evolve is dangerous.
BoF: Byredo leveraged scarcity and its reputation as a niche player to maintain allure among consumers and build desire. But that’s notoriously difficult to scale. How do you strike the balance between niche and mass appeal, especially when you’re growing fast or you’re part of a bigger group?
BG: It’s the eternal dilemma: how to control supply and demand, and to your point, at scale how do you still maintain the desirability of a brand? Defining what that scale is — I don’t necessarily think it’s about numbers. I think it’s about perception.
For us, it’s been focussing on authenticity and quality. Scarcity was one of the pillars of luxury culture. But I think with the “marketisation” of luxury and fashion, authenticity and quality are the things that are going to take you beyond that.
If I approach it as a consumer myself, the brands and the products that continue to be in my life are the ones that qualify under those two criteria: being authentic and being [high quality]. I can find scarcity in other parts of my life if that’s important.
BoF: How do you see this evolving?
BG: Scarcity is a very interesting tool. We’re still living in an era of rapid growth and a lot of brands are still very interested in growing things very fast. We took a very long-term approach, which in retrospect was painful for many years because it obviously requires patience. You’re probably saying no more than you’re saying yes to things, you appear to be leaving a lot of things on the table. But I think brands have an opportunity today to pace themselves a little bit. I am a huge advocate for seeing the journey as more of a marathon.
Scarcity is a very interesting tool. We’re still living in an era of rapid growth and a lot of brands are still very interested in growing things very fast.
BoF: Byredo’s roots are in fragrance, but you recently expanded into makeup and there’s a skin care launch in the works. What role does category diversification play when you’re thinking about scale?
BG: We entered into fragrance without any background in the category, with no expertise. We kind of employed this idea that it could be done differently in a unique way. Part of that philosophy was to be executed in makeup from a purely creative place. I think what’s different today than 18 years ago when we started is that we have a large group of clients and customers. Part of what we do today is to embrace that as our community. I think being a three-axis beauty brand is partly what people expect, but it also caters to the beauty needs of our community.
The reality is that if you want to compete with the truly big groups or big brands, you need to play in all three of these axes. You can use them so that they benefit each other. Today we speak to a much younger clientele — primarily women — when it comes to makeup. A lot of these makeup customers have in the last year transitioned into becoming fragrance customers. In parts of Asia, skin care drives the beauty market. Skin care becomes the way to reach the larger group of people, so it can have different strategic purposes.
But for the sake of Byredo, it’s just a natural evolution and something I kind of considered from day one that we would be more than one thing.
BoF: How do you maintain desirability, especially when you’re a brand that’s been around for a while and is competing with even bigger players and newer buzzy start-ups?
BG: It’s maybe the most important question, it’s one that we discuss daily. I funnel it down into creating relevance in an authentic way. The evolution of a brand is its ability to stay alive and stay relevant.
Relevance is work. It’s speaking to people in a way that they understand, with how they’re living and where they’re living and what is going on in the rest of the world. So even though we were timeless in our approach, and our products are borderline iconic at this point, the narrative has to evolve as the customer evolves. We have to continue to tell stories that are relevant to the way people live.
A few years ago, you started seeing the world come around to this idea of diversity and that was people trying to create relevance to something that was important to the world. We also saw that the people that were doing it in a less authentic way didn’t succeed in creating relevance. So, it’s an open-ended answer because it’s going to be different for everybody, but I believe the combination of timelessness and current relevance, how you do that is how you stay alive.
This interview has been edited and condensed.
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