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Aveda Founder Teams With Regis on Organic Venture

Rechelbacher seems determined to help create a sustainable ecosystem.

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NEW YORK — Horst M. Rechelbacher, a self-described “ecological activist,” shook up the salon industry in the late Seventies with Aveda, his natural, eco-friendly brand. Now he’s preparing to break ground with another line, one that reflects his sharply evolved homegrown philosophy.

By teaming up with salon company Regis Corp., Rechelbacher has created “a head-to-toe” organic personal care and cosmetics line under the “Intelligent Nutrients by Horst” banner. The joint venture, Intelligent Nutrients LLC, plans to distribute the products to salons exclusively. Glenn Elliott, former global vice president of sales for the Dermalogica skin care company, has been tapped as the new president of the joint venture. A management team has already been put in place.

Paul Finkelstein, chairman and chief executive officer of Regis Corp., said, “This not a Regis venture. We have an equity interest. This is a 50-50 joint venture, and Horst is the person who sets the table. This is his vision, training and product line.” Finkelstein, however, is chief executive officer of the new joint venture.

In separate interviews, the partners gave their personal opinions of the joint effort.

Finkelstein explained that he had handpicked 800 Regis Corp. doors that will merchandise the line, including Vidal Sassoon and Carlton Hair International salons, a California chain. The brand will be wholesaled to other non-Regis Corp.-owned salons; it is now being shipped to Aveda concept salons. Both partners stressed that profits from wholesaling to non-Regis salons would be turned over to charities. Finkelstein said Rechelbacher’s share of the profits would go to environmental charities — such as farmers and communities practicing sustainable agricultural techniques — and Regis has earmarked its profits for beauty school scholarships.

Finkelstein echoed Rechelbacher in declaring that the line would be merchandised in “high-profile locations with unique displays so that the line stands out” and eventually would develop into store-within-store concepts.

“I am interested in putting stores within stores,” said Rechelbacher, who is the deal’s founder, designer and educational director. “The most important thing is location,” he noted, adding that he was looking at Regis salons around the world. He is focusing on Europe, but also mentioned Hong Kong and Bangkok, among other locales. In New York, he has already settled on a Jean Louis David salon on 42nd Street and Sixth Avenue that could serve as a flagship.

This story first appeared in the November 17, 2006 issue of WWD.  Subscribe Today.

For Rechelbacher, a critical factor is the ability to educate salon personnel to be in tune with his natural, organic vision. “It’s all about reinvention and training hairdressers.” Before selling Aveda to the Estée Lauder Cos. in November 1997 for approximately $300 million, Rechelbacher had perfected the art of selling products in salons. While many salons in the industry at that time could only generate 3 percent to 5 percent of their total revenues in retail business, he was claiming percentages as high as 65 percent and 70 percent. One method was to establish and work through schools. “When I started schools, I used to promote the products,” he said, noting that Regis runs 100 schools.

But the heart of his current proposition is product assortment, which includes foods, such as teas and chocolates, and a whole range of personal care and cosmetics — hair care, color cosmetics, skin care, body care, maternity and baby care, and even edible “sensuous love products.”

His vision is to market a brand of “rare edible organics made of highly nutritious food substances.” Rechelbacher has been working with “some edible aromatic food-grade essential oils.”

Both Finkelstein and Rechelbacher underscored what they perceive as the need for the organic products.

“We are sick and tired of manufacturers abusing the trust of the hairstylist and no one else is big enough to stand up to them,” Finkelstein said. “We have a 15 percent share of what is sold in North America. If we don’t make a stand, no one else can.”

Finkelstein said Regis Corp. would make “plenty of money” on the sale of Intelligent Nutrients in his company’s salons. He added that the joint venture has a contractual life of five years, at which point it will be evaluated. He estimated first-year sales of products could be anywhere between $3 million and $20 million, depending on supply, since organic ingredients can’t be artificially manufactured. However, he estimated that in three years the joint venture could generate as much as $100 million in sales.

Rechelbacher seems determined to help create a sustainable ecosystem.

“The Earth doesn’t belong to us, we belong to it,” he declared. “I want to die with a good conscious.”

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