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WWD Honors: E.l.f. Beauty, Best-Performing Beauty Brand, Large Cap

"Even in 2014, our vision was building a world-class team that actually reflected the consumers we serve," said chief executive officer Tarang P. Amin of the brand's employees — more than 40 percent diverse, 75 percent women and more than 60 percent Gen Z and Millennial.

It’s safe to say, E.l.f. Cosmetics broke the internet last March when the brand unveiled its unexpected collaboration with Chipotle, the fast-casual Mexican restaurant chain.

Disrupting industry norms is in the brand DNA, said Tarang P. Amin, chief executive officer of E.l.f. Beauty — with a portfolio comprising of E.l.f. Cosmetics, “clean” brand W3ll People and Alicia Key’s Keys Soulcare.

“The very founding of E.l.f., of selling cosmetics over the internet when people didn’t think you could sell cosmetics over the internet, and certainly not for $1, was inherently a disruptive idea,” he went on. “I think where the DNA has evolved is finding different dimensions of what that disruption looks like.”

E.l.f. Cosmetics — which stands for eye, lip and face — was founded by father-son entrepreneurs Alan and Joseph Shamah (with help from Scott Vincent Borba) in California in 2004, before being acquired by private equity firm TPG in 2014 and bringing on Amin, a coinvestor, as CEO.

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From inception, the creators filled the gap they saw in the market: selling quality beauty product that consumers would afford. “They had just crossed $100 million in sales,” explained Amin. “They had been around for almost 10 years. We knew there was something real here.”

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Already set with an online presence and community of beauty enthusiasts (who could rely on the products, yet not break the bank), the company was ready for the next stage of growth at the time, Amin continued, and went public in 2016.

“That way we’d have a long-term platform and try to really change the face of beauty,” Amin said of the move.

The brand, which is vegan and cruelty free, expanded — into more categories, online and new retailers — growing its team in the process. Then the coronavirus pandemic hit, and while it was a notably challenging year for cosmetics as consumer shopping habits shifted, remarkably, E.l.f. Cosmetics saw an uptick in sales.

In fact, the mass-market brand has had 10 consecutive quarters of net sales growth, with a 50 percent increase to $97 million, driven by e-commerce and both domestic and international retail partners (including Walmart, Target and Ulta Beauty), according to E.l.f. Beauty. The company also announced that it’s the only U.S.-based top five color cosmetic brand to post growth in the quarter and gain share, per Nielsen Holdings.

The growth is the reason E.l.f. is this year’s recipient of the WWD Honor for Best-Performing Beauty Brand, Large Cap.

Amin attributes the growth to the brand’s initial mission (“accessible beauty definitely resonated”) and to “listening to the community.”

“None of us knew what was going to happen or where we were going,” he said of the impact of COVID-19. “But we went to our community, and we asked them, ‘What do you want us to do?’ For example, a number of people pulled back their new product launches. With our community, it was a resounding no. ‘Please, we get joy out of seeing new products from E.l.f. and what you’re able to do.’ We accelerated our efforts.”

Engaging with consumers, the brand looked to focus on the “fun” side of makeup (even entering into the Crypto world with the launch of Ne.l.f.Ts).

“More than ever, consumers needed to be reminded of why they love this category,” the executive said. “Even at times when you couldn’t use self-expression as much as you want it, I think the joy that comes from having fun with makeup, from interacting with others in the community and really embracing that, are some of the factors that really led to us continue to be able to grow, even in a difficult environment.”

The team examined where their shopper was spending the most significant time online, which turned out to be TikTok (predominantly reaching Gen Z) and Twitch — the live video streaming service and hub for gaming that largely attracts 16- to 34-year-olds.

“Around 66 percent of our consumers actively play video games,” Amin said. “And I think over 60 percent of people watch people play video games.”

While embracing the popular platforms, the collaboration with Chipotle came from seeing the company’s popularity on TikTok, its appeal to Gen Z and shared values with E.l.f. Beauty.

“The biggest evolution of our DNA is branching even beyond beauty,” Amin added.

For that, experimentation is key, he said, to “test and learn and try new things.” There’s a “disruptive spirit” within the company, and it’s been important to “give people the freedom to think outside the box and to actually celebrate that. Not everything we do works, and that’s OK. But I think it allows us to not overanalyze or overthink things. If it serves our consumers, let’s lean in and do it….And it ends up creating this virtuous circle, because you get success in a few things that makes you even more emboldened to try others. It attracts other partners to you, other people that want to collaborate and work with you. It’s an incredible, fun place to be and help nurture that culture.”

Amin made note of the diversity of the team, which he also attributes to the brand’s success.

“Even in 2014, our vision was building a world class team that actually reflected the consumers we serve,” he said. “So, I’m proud of the fact that we have over 75 percent women, over 40 percent diverse (as defined as those who identify as non-white or two or more races), over 60 percent Gen Z and Millennial. And that goes all the way to, in many respects, our board. We’re one of only five public companies that have 55 percent women, over 20 percent Black representation on our board of directors — and that’s out of almost 5,000 public companies in the U.S. And we do that not just to talk about the diversity but because we fundamentally believe that the quality of that team gives us the ability to continue to scale our businesses.”

Moving forward, E.l.f. Beauty is focused on continuing to build its core three brands — pushing marketing boundaries and expanding what it means to be affordable with E.l.f. Cosmetics, “clean” with W3ll People (which was acquired) and providing wellness with Keys Soulcare (co-created from the ground up) — while looking to add to the portfolio.

The aim is to “take a look at other core brands that are either in adjacent categories or have adjacent capabilities…and that can leverage the chassis that we’ve built, this core chassis of digital engagement, that strong innovation engine we have, our ability — both digitally and with key retailers — to drive even greater engagement, traffic and productivity,” Amin said. “Certainly, strong growth and strong cultural fit are paramount.”