These days, it seems every celebrity is eager to become a a brand founder.
The success of companies like Fenty Beauty and Rare Beauty have made celebrity brands seem inevitably lucrative. However not all celebrity brands are an automatic success, as the past few years have shown. Some of these brands have gone bankrupt, while others have gotten pulled from retail shelves after poor sales. One of the latest examples is influencer Jaclyn Hill’s cosmetics brand, which was owned by the now-bankrupt Forma Brands and was shut down on January 1.
Even retailers noticed customers’ lack of interest, with Sephora dropping influencers Hyram Yarbro and Addison Rae’s lines last year – both of which coincidentally also saw a steep drop in social media followers. Indeed, public fatigue had already set in a couple of years ago, when seemingly every actress, popstar or social media star was putting out a makeup or skincare line.
With the tumultuous nature of the space, new players are trying to do things differently, like focusing on being a product-first brand as opposed to relying on the celebrity’s clout to scale the brand. Others are thinking outside of the most crowded categories, like beauty or alcohol, and are instead going into more niche areas that are authentic to their interests. Meanwhile, some of the brands that went bankrupt last year are trying to rebuild under new ownership – all of which points to how it takes more than social media popularity to stand out as a celebrity founder.
‘Celebrity is a perishable commodity’
According to industry watchers, the odds of successfully scaling a company with a famous face are slim. Still, celebrity and influencer ventures don’t show a sign of stopping – with Business Insider estimating as many as 25 brands just in beauty alone were launched between 2020 and 2023, and more are expected to debut this year. Even Beyoncé reportedly teased a haircare line last summer, which fans and the media predict will drop any minute. But it’s unclear how many of these companies will be catapulted to the success of Skims or Casamigos.
Greg Portell, a partner and global markets lead at strategy and management consulting firm Kearney, said many of these companies still build on the strength of the famous faces behind them. “Celebrity is a perishable commodity, and that lifecycle is shortening,” Portell said. “I wouldn’t expect a slowdown of interest from celebrities to monetize their brands. However, the financial backers of these companies would be expected to be more cautious.”
Currently, there are a handful of incubators dominating the development and launch of these types of brands. For instance, Beach House Group operates actress Millie Bobby Brown’s skincare brand Florence by Mills, Shay Mitchell’s luggage brand Béis, Kendall Jenner’s oral care line Moon, and Tracee Ellis Ross’s Pattern hair care. Similarly, brand incubator Maesa owns a number of beauty brands created in partnership with Hollywood stars, such as Drew Barrymore’s Flower Beauty, Taraji P. Henson’s TPH by Taraji hair care, and Jada Pinkett Smith’s personal care brand Hey Humans.
But outside of the biggest success stories, celebrity-led brands are showing some cracks.
The most recent example was baby products company Hello Bello, which was founded in 2019 by actress Kristen Bell and actor Dax Shepard, and filed for bankruptcy last year. In December, healthcare-focused private equity Hildred Capital Management acquired the brand for an undisclosed amount, with plans to turn the business around under new leadership.
Forma Brands has been restructuring since its bankruptcy filing a year ago, and was bought out by Jefferies Finance in a $670 million deal last month. Amyris is another parent company struggling to grow its brands in light of a bankruptcy, which forced it to auction off most of its portfolio. In December, actress Naomi Watts bought back her menopause-focused brand Stripes from Amyris, after having helped launch Stripes in 2022. Other Amyris sales include Rosie Huntington-Whiteley’s makeup brand Rose Inc. and Jonathan van Ness’ haircare line JVN, which sold for $2.5 million and $1.25 million, respectively.
Portell explained that the failure of celeb-geared brand incubators can be traced back to two sources. The first is the rush of going into a venture without a clear roadmap.“It might seem somewhat pedestrian, but many [celebrity brands] don’t start with viable business plans,” he said. “Many enthusiastic celebrity backers lack the basic business fundamentals to launch a successful startup.” The second, and probably more fatal source, is an over valuation of the brand. “For every Ryan Reynolds, Kim Kardashian and Kathy Ireland there is a Kathy Griffin and others who typically don’t rank on the ‘A List’,” Portell noted.
An evolving category
Jocelyn Florence, partner at Parallel, a celebrity talent partnership studio & strategic investor, whose portfolio includes brands like Venus Williams’ Happy Viking, said that a celebrity’s venture has to have the right perspective to appeal to both fans and other consumers. “It’s not just about the famous person and their millions of followers anymore,” Florence explained. That these days, social media followers and the general public can see through the transactional nature of creating and selling said brand.
However, betting on celebrity or creator-led brands continues despite the high profile failure of several companies. But it’s not just beauty that’s still getting infiltrated by famous figures. Food and beverage is another category that celebrities are starting to tap into.
Finding niche segments could be key to standing out from the sea of beauty and wellness brands. Some celebrities trying to go about launching products they’re genuinely interested in, ideally in partnership with an established parent company as a backer.
In the fall rapper Wiz Khalifa launched his own brand of mushroom growing kits, called Mistercap’s, that is sold direct-to-consumer. Misitercap’s general manager, Philippe Chetrit, told Modern Retail the launch was a result of a year-plus development by Khalifa. The brand was inspired by his love for mushrooms that he incorporated into his diet while trying to get healthier. Mistercap’s was created in partnership with Netherlands-based Red Light Holland, which produces and distributes functional mushrooms and mushroom home growing kits.
Celebrity-founded brands are now a dime a dozen, and it comes as no surprise whenever a famous face announces a skincare line. But the team behind Mistercap’s argues that Khalifa’s genuine interest, in this case in wild mushrooms, will help message the products in an authentic way. “This is his baby,” Chetrit said. “It was his idea and he was really active on the brand development, the packaging, and how we’re going to talk about customers and community.” The goal is to bring cooking mushrooms to communities who don’t normally forage, he said. The reason for launching direct-to-consumer, said Chetrit, is due to the need to package and ship the mushrooms quickly “because they’re coming straight from the farm.”
The success stories that are far and few between, like Kim Kardashian’s Skims and Gal Gadot’s Goodles continue to attract institutional investors and show that the model can be executed correctly. But from a venture capital perspective, Florence said that with firms being more choosy with who to back, the current wave of celebrity and influencer brands will inevitably slow down.
“These high profile celebrities can help close rounds or bring on key hires,” Florence said. “So there is still excitement, but it’s not just from a public-facing perspective but also on the backend of the business.”