By  on July 22, 2005

NEW YORK — Costco has found a supplier for its new private label bar soap category. Truescents LLC, the maker of SaVon de-luxe beauty bars, has signed a long-term contract to handle the estimated $25 million a year Kirkland Signature business.

Spencer Krenke, founder and chief executive of Truescents, said the deal with Costco was not easy  to win. His family-owned company, based in Seattle, was up against at least four other national soap manufacturers, including  Dial Corp. and Bradford Soap Works Inc.

Boxes of the Kirkland Signature beauty bars — they’re not called soap — are now retailing for $9 per 14-bar pack at Costco’s 457 stores in the U.S., Canada, the UK, Mexico and Asia. For its most recent fiscal year ended Aug. 24, Costco generated sales of $47.15 billion.

Krenke wouldn’t comment on estimated sales of the beauty bars, but industry sources said his deal with Costco is likely the second-largest private label bar business, behind Wal-Mart. He has invested $5 million into the launch, in raw materials, packaging and product.

Costco’s Kirkland Signature brand offers products ranging from dog food to grills to acetaminophen. This is the retailer’s third health and beauty care product, after shampoo and conditioner. The retailer exited the body wash category six months ago.

To kick off products in stores, Truescents held sampling and demo events over the July 4 weekend. 

Formulas for the beauty bars include coconut and palm oil, as well as the highest percentage of glycerine of any soap on the market, Krenke said. The bars have a blue citrus note scent that is crisp and clean, not floral.

Probably to its advantage, Truescents has its roots in the prestige market, where it launched de-luxe, a triple-milled beauty bar line in 1999, in retailers such as Portico and Nordstrom. Lotions and balms followed. But after 9/11, retailers’ interest in the line began to fade. “At the time, luxury was not doing well,” Krenke recalls. That’s when he started knocking on mass doors. The volume available in mass allowed him to lower price points to accommodate the distribution channel without changing the product’s high quality, he added.Krenke tapped his contacts at Costco; prior to Truescents, he owned Aromatherapy of Rome, a high-end candle brand that Costco stocked in 1995. Months later, de-luxe entered Costco and soon became a huge hit, likely because the retailer had not previously sold a high-end bar soap. “They sold out immediately. The initial launch was 250,000 units of packs of 12 beauty bars for $10,” Krenke said. “Costco knew there were enough consumers looking for Aveda- and L’Occitane-type products in their store.” 

SaVon de-luxe became a rotating, or “spice” item, in Costco lingo, to keep the bar soap category fresh. The brand became more familiar to the beauty world when it landed distribution in Target in November 2003. It became the retailer’s best-selling bar soap and quickly was awarded 12 feet of selling space in the specialty bath department.

What sets Truescents beauty bars apart from the rest, said Krenke, is the company’s commitment to bringing genuine specialty-brand quality to mass.

“Costco is trend-forward, and what a lot of people don’t know is that the Costco member is value- and quality-driven, not just budget. Total Costco store sku’s [stockkeeping units] is about 4,000. The average number of items in a grocery or drugstore is just over 100,000 items. Space is incredibly intense,” Krenke said.

What surprised Krenke most about doing business with the club retailer was its commitment to quality for its Kirkland Signature private label brand. “The last thing they want to discuss is price. At retail, buyers usually start a conversation wanting to know the price, the margin and the promotional budget you have. But the Costco buyer doesn’t want to discuss price until they know about the quality.”

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