Building a brand takes a strong foundation, belief in what it stands for and, yes — money.
Earlier this week, Korres Natural Products, the Greece-based beauty care company that makes 300 skin, hair and sun care products, made its initial public offering on the Greek stock exchange to raise capital for what it sees as its largest growth opportunity: building company-owned stores around the world. With offers in the range of 6 euros to 7.2 euros per share (or $8 to $9.60 at current exchange rates), the 11-year-old beauty firm expects to reap 11.5 million euros, or $15.3 million, to help build stores, add to its executive team and expand outside of beauty.
“We have had different offers to sell and we didn’t,” said Lena Philippou Korres, the company’s co-founder and also its international marketing and new product development director. “We wanted the management to stay in place and to have no other interests. We think it is best for the brand,” she added.
For now, the company is privately owned, and will remain mostly that way with approximately 1.5 million shares out of 7.7 million shares on the market. In 2006, Korres generated 25 million euros, or $33.3 million, worldwide.
Korres, which manufactures its beauty items at a plant just outside of Athens, is sold in 5,000 pharmacies in Greece, the company’s key market. Worldwide, Korres is sold in 30 markets, including the United Kingdom, the U.S. and Germany. Two other emerging markets of importance for Korres are Japan and China.
The idea for a natural beauty company grew out of Korres and her husband’s ownership of a pharmacy in Athens, where they were also making natural personal care products for loyal customers. The opportunity to export those items arose in 1999; goods first were available to U.S. consumers through a partnership with beautyjungle.com — at the time a leading beauty Web site — as well as Henri Bendel.
Soon Korres was sold in Harvey Nichols and Selfridges. In France, Galeries Lafayette became a vendor.
Today, Korres remains selective in its distribution. In the U.K., Korres is sold mainly in department stores. In the U.S., Sephora is a major vendor, as is Nordstrom, Fred Segal Beauty, Henri Bendel, Ulta, Whole Foods and the Home Shopping Network. And, recently, Korres partnered with The Morgans Hotel Group as an in-room amenities brand, a deal that will allow Korres to develop and launch new products specifically at Morgans hotels, according to Robert DeBaker, chief operating officer, Korres Natural Products USA.
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But owning stores is where the company sees its best opportunity. In 2001, the first Korres store opened in the U.K. This June, two are planned for New York, one in SoHo, the other in Brooklyn. Two more are slated for the New York area by 2008.
Currently, Korres operates eight freestanding stores, with locations in Barcelona; Athens; Helsinki, Finland, and Bucharest, Romania. By the end of 2010, Korres plans to operate between eight and 10 stores in North America. Globally, 30 Korres stores should be up and running in the next three years.
To help steer future growth, Korres hired three key senior executives this week.
Liz Folce, formerly of London-based Pout Cosmetics, joined Korres as vice president, sales and account management. Prior to Pout, Folce worked at the Estée Lauder Cos. for 15 years.
Nancy Tarantola, formerly of Bourjois Cosmetics, joined Korres as executive director of marketing. Prior to Bourjois, Tarantola spent more than 12 years with Gap Inc.
And Toni Oliveri, most recently with MAC Cosmetics, joined Korres as executive director of retail operations. At MAC Cosmetics, Oliveri led the brand’s expansion of stand-alone retail stores.
Korres’ roots lie in its natural approach to beauty, a positioning that is now subjective and largely defined from one manufacturer to another — not the industry. Korres, therefore, aims to make all of its active ingredients natural, so there are no mineral oils or pH regulators or silicones in its formulas.
Ingredients in Korres products are sourced from four major groups: Greek flowers, herbs, foods and high-tech natural ingredients. For example, in 2008 the company is planning to launch an antiaging line based on an ingredient found on Greece’s mountainsides. “We isolated the active ingredient and worked with the University of Athens” in the making of the products, Korres said.
Face care makes up 50 percent of Korres’ business, followed by body care, hair care, hair color and sun care. Their most recent venture is color cosmetics, which launched in Greece last year into 3,000 pharmacies. Makeup items such as foundation, compact powder, concealer, eye shadow, lipstick and eye and lip pencils will launch internationally in Korres’ stores. Food items are also a part of the expansion, including jam with figs, honey and prunes.
Korres said she approached formulating the new cosmetics as they do skin care items. “Ninety percent of formulas are paraben-free and we have limited amounts of silicones. They are skin-friendly formulas. Particles are covered with a vegetable coating, which has contact with the skin,” Korres said.
In keeping with Korres’ natural positioning, the line’s palette of bold colors, she said, reflects what’s seen in nature, not a trend forecast.
Distribution of cosmetics and food items will be limited to Korres stores at first, “to help differentiate the offering” from other retailers, said DeBaker. But, the company is looking to expand its scope at some point in the near future.