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Modele Tailors Cosmeceuticals for U.S.

Modele, a Canadian skin care line, is making inroads in the U.S. market by appealing to retailers' growing fondness for niche brands.

NEW YORK — Beauty behemoths, such as L’Oréal and Procter & Gamble, may occupy much of the real estate in mass market skin care aisles, but their dominance has not stopped gutsy newcomers from eyeing their turf. Modèle, a Canadian skin care line, is making inroads in the U.S. market by appealing to retailers’ growing fondness for niche brands.

This year, Modèle gained footing in Albertsons’ Osco Drug and Sav-on stores, entered 300 Rite Aid doors and expanded its assortment in CVS. Its broadened U.S. distribution, now at 7,000 doors, has eclipsed its Canadian door count of 2,000.

The antiaging skin care line is distributed by Naturale Science Pharma, a pharmaceutical company based in Ontario, Canada, that markets cosmeceutical products in North America. The company was started five years ago by Italian-born Sergio Martines, who left Italy for Canada in 1999. Martines, who occupies the post of president and chief executive officer, had been deeply entrenched in the pharmaceutical industry in Europe, and formed NSP to bring European cosmeceutical technologies to the North American market.

“We are a young company and new to the North American market,” said Martines. “The only reason we have a chance is because we bring innovation.” The firm’s product pipeline relies on three European research and development consortiums.

NSP introduced Modèle, its first retail brand, to Canadian drugstores in 2001, and then to CVS stores two years later. “We felt Canada was a good market to test the line,” said Martines, adding that the goal was always to enter the U.S. market. The company expects the U.S. to account for 70 percent of its sales by the middle of next year. Last year, the company’s revenues totaled $4.2 million. The year-end revenues were matched by 2005’s first-quarter revenues of $4.2 million. Figures have been converted from Canadian dollars at the current exchange rate.

As NSP expands its presence south of the Canadian border, the company expects robust growth rates to continue. Henry Evans, NSP’s executive vice president, noted that year-over-year sales have increased 100 percent since 2002.

Two years ago, NSP recruited Milan-born Francesco Saverio Dioguardi, a doctor who specializes in amino acids, as Modèle’s chief medical consultant. The company is the exclusive licensee of Dioguardi’s patented amino acid-based skin care technology. Dioguardi stumbled upon the concept of using amino acids to repair skin in the Seventies. At the time, he was researching liver fibrosis, and discovered that, by feeding human livers with a specific combination of amino acids, he and his colleagues could help prevent fibrosis. Applying that same rationale to skin care, Dioguardi created a patented skin care formula based on amino acids. In 1992, he traveled to the U.S. to run his findings past beauty firms such as Revlon and Johnson & Johnson. Dioguardi recounted that, in the early Nineties, companies were more interested in retinols than amino acids, and thus passed on his formulas.

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Martines, hearing of his compatriot’s work in the pharmaceuticals industry, recruited Dioguardi to create Modèle products based on his patented formula of the amino acids proline, glycine, leucine and lysine. These four amino acids, explained Dioguardi, maintain and form collagen, the most abundant protein in the body. Dioguardi acknowledged that the financial spoils of the cosmetics industry outweigh the monetary rewards of the medical world. But he quickly added, “I’m not an expert in beauty. I am an expert in collagen.”

Using this principle as a guide, Dioguardi created three Modèle products, namely Daily Anti-Wrinkle Face Treatment Cream, Daily Anti-Wrinkle Eye Treatment Gel and Intensive Anti-Wrinkle Spot Facial. As of June 2005, a total of five items have been available in the U.S. market, ranging in price from $29.99 for the lip-plumping Collagen Lip Treatment to $49.99 for the Intensive Anti-Wrinkle Spot Facial, a treatment designed to diminish wrinkle size within three hours. The Canadian collection consists of 17 items, which are sold in outlets such as Shoppers Drug Mart, Jean Coutu and London Drugs.

In May, the company launched a print ad campaign in U.S. beauty books and will step up its advertising efforts this fall, noted Martines. The company also has a loyalty program called Club Modèle, in which consumers can earn redeemable points toward free beauty products.

NSP is currently developing a second brand targeting the mass market next year, but Martines was mum on the details.

Evans said, “NSP is evolving into a multibranded company.”