written by
Christian Köhler
Christian Köhler
Market Insights
2020-02-25

Honesty is the Best Policy

Honesty is the Best Policy

The Honest Company, provider of natural baby, beauty and personal care products and founded by actress Jessica Alba, has enjoyed a meteoric rise since its start in 2012. Reportedly valued at just short of $1 billion, the company’s success offers learnings for German companies operating in the same ethical consumerism space.

Problem identified and Zeitgeist hit

The Honest Company was borne from US actress and founder Jessica Alba’s search for safe, eco-friendly, and affordable childcare products when she was pregnant in 2012.  The only products that were available on the market at that time contained chemicals and additives; she reportedly even had an allergic reaction after washing baby clothes in one detergent. To solve this problem, she set about creating a range of chemical-free, all natural baby products. The year was 2012 when the benefits of a sustainable lifestyle were coming to light. It was the right time for this product line.


Direct-to-consumer, online model, and social media reach

Rather than aiming to sell through brick-and-mortar retailers, The Honest Company tapped into the eCommerce market first and focused on building a subscription service for diapers, something new parents often find they run out of at inopportune times. A non-toxic diaper delivery service would give The Honest Company an entry point to the homes of their target customers, and provide a predictable revenue stream. Alba and her team also concentrated on building a community of social media followers that appreciated the company’s mission. This not only solidified The Honest Company’s image, it also gave them a way to invest more of their capital into the products.


Diversified product line, covering all areas of the parental experience

The Honest Company started with baby products – nappies, wipes, creams - but the team soon realised the sustainable mission of the company could be extended to other product areas too which were important for parents  such as cleaning products, beauty products and female care. This enabled the company to cover the whole parental, and in the case of feminine care, female journey.


Promoting a lifestyle over products

Undeniably a famous founder brings press attention to any company, but Jessica Alba represents a new wave of prominent entrepreneurs (most notably Gwyneth Paltrow with Goop) who are not just promoting products but also a lifestyle and values system. Jessica Alba is very prominent in all Honest Company marketing campaigns and the compelling company story is her story – and rightly so; she is a longstanding sustainability campaigner.

 
Does similar potential exist in Germany?

All signs indicate that the time is right for companies in Germany with a similar mission to The Honest Company to enjoy success. There are many examples of startups following a similar path: offering sustainable care products and direct-to-consumer subscription models. The Female Company, producer of organic period products with modern design packaging, received a single-digit million investment in April last year and founders have expressly stated that much of this fresh capital will go towards expanding the product range. Mylily from Hamburg which has a similar product portfolio just raised a mid-six-figure sum from investors. And it is not just sustainable period products which are making waves in this segment. Sustainable diaper maker Lillydoo has raised total investment in the double digit million range and has forecast sales of €100 million for 2020. Founders have stated plans to become a multi-brand platform, with new products to include a moist toilet paper and wet wipes for children, a premium diaper collection and skin care products for babies. Lillydoo is thus developing from a pure diaper company into a supplier of body care products for babies and toddlers.

With the topic of sustainability rising up the political agenda daily, the consumer is rightly demanding more from the care products they buy. This, along with rise of companies like The Honest Company, means that exciting times are ahead for German sustainability brands.

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