Cosmetics Case Study - Anastasia Beverly Hills: The Business
Anastasia Beverly Hills Cosmetics was created in 1998 by a mother and daughter duo, Anastasia and Claudia Soare. This duo created the company after Anastasia saw massive success in California as an aesthetician and eyebrow artist. Through their success with celebrities and an extremely large Instagram following, Anastasia has maintained success since 1998 as a leader in the beauty industry. Their utilization of high-quality photos and makeup artists on social media has been a large contributor to their success. The company faced a trademark infringement lawsuit in 2016, but the case was ruled in their favor and they were found not guilty of trademark infringement in January 2018. Below is an overview of the history and business strategy of the company, followed by their marketing strategy and success drivers, as the two are heavily linked. Further, an overview of the lawsuit is included.
Anastasia Beverly Hills was created in 1998 by Anastasia and Claudia Soare, a mother-daughter team that began the business in a rented room in Los Angeles, California. Claudia and her mother have retained ownership of the company in its entirety; Anastasia is the CEO and Claudia, her daughter, is the President. The company started and remains a privately held company.
HISTORY AND BUSINESS STRATEGY
Prior to beginning her own salon, Anastasia worked as an aesthetician at Giovanna-Jutta salon on Melrose Place in California. In the early 1990s, she began to offer eyebrow services in a room at Juan Juan Salon in Beverley Hills, quickly gaining celebrity clients, including Cindy Crawford, Stephanie Seymour, and Naomi Campbell. An article was written in Vogue in 1994 about Anastasia’s eyebrow services, and the same issue of Vogue also included an article about a new book from Kevyn Aucoin called “Making Faces”. Kevin discussed the importance of eyebrows in his interview, stating that they can really change the expression your face is making, and from there, Anastasia’s business grew exponentially.
Anastasia Beverley Hills was formed with Anastasia's daughter, Claudia, in 1997, and soon they found themselves doing eyebrows for models in photo shoots, on top of previous and new celebrity clients, e.g. Kim Kardashian.
Anastasia Beverly Hills estimates $340 million in net sales, with an estimated revenue after taxes, depreciation, and amortization of $5.8 million. Please note, Anastasia Beverly Hill’s is a privately held company, so all mentions in the media of their net sales, earnings prior to taxes, revenue, etc. are estimates.
MARKETING STRATEGY + success drivers
In 2012, Claudia encouraged her mother to begin utilizing social media for their advertising. Rather than focusing on influencers with large followings, Anastasia Beverly Hills focuses on Instagram users who utilize high-quality photos and makeup techniques, to show off their products in the best light. In Q2 2015, Anastasia Beverly Hills earned an estimated media value of $46.5 million via social media. For comparison, MAC cosmetics earned $26.4 million during that same time, with Too Faced estimating $17.2 million.
Rather than utilizing social media to sell, Claudia (President of Anastasia Beverly Hills) states that they instead focus on “promoting [on social media] to inspire and to establish what we are all about.” By utilizing over 600 influencers on social media, with followers of each ranging from 50,000 to a few million, Anastasia Beverly Hills ranked as the 14th brand in “prestige color cosmetics…and 6th brand in the eye category” of the NDP Group.
In 2014, their success on social media expanded further, when Kim Kardashian began promoting Anastasia’s products and services, as she and the entire Kardashian family have been long-time customers. With such a large following, especially as it relates to makeup, Kim helped further the reach and recognition of the Anastasia Beverly Hills brand.
Anastasia Beverly Hills is now the second most followed Instagram beauty account, with over 16.4 million followers, right behind MAC Cosmetics (17.1 million). Please note, in December of 2015 Anastasia Beverly Hills held the title of most followed Instagram beauty account, but has since been surpassed by MAC. In December 2015, they reported 7.5 million followers, and in just over two years, their Instagram followers have grown by 8.9 million followers, which is a 119% increase.
As they began as a brow company, their eyebrow products, both brushes and makeup enhancers for eyebrows, are among their best-sellers. Further, they tend to be thought of as the company who “put eyebrows on the beauty map”, and utilize it as their claim to fame, so to speak.
In 2016, Anastasia Beverly Hills was sued by Hard Candy, a cosmetic company based in Hollywood, Florida, that claims Anastasia Beverly Hills unlawfully used Hard Candy’s trademark “display, marketing, advertising, and sale of its product”, without authorization from Hard Candy. Hard Candy stated that Anastasia Beverly Hills unlawfully took the name Hard Candy as their own, as Anastasia Beverly Hills named one of their eyeshadow colors “hard candy” (other names in the kit were mimosa, crushed pearl, and starburst). In the petition papers, Hard Candy noted that Anastasia Beverly Hills is liable to them for trademark infringement “under 15 U.S.C. 1114(1), and that Hard Candy is entitled to receive any and all profits the Defendant [Anastasia Beverly Hills] has made because of its wrongful conduct.”
The lawsuit concluded in January 2018, with Anastasia Beverly Hills successfully receiving a defense verdict, through a non-jury trial. The court ruled in favor of Anastasia Beverly Hills, “finding no evidence of trademark infringement”, and it was noted that while the words “hard candy” were used, there is no evidence that a consumer would be confused as to if there was a connection between the company Hard Candy and Anastasia Beverly Hills.
Anastasia and her daughter Claudia founded Anastasia Beverly Hills in 1998, and have continued to own and run the company together for twenty years. Celebrity use is the main driver of success for Anastasia Beverly Hills. From models (e.g. Cindy Crawford) to large personalities (e.g. Kim Kardashian), products are driven by social media due to the Instagram users who promote and use their products. They remain the second most followed beauty account on Instagram with over 16 million followers and have an estimated yearly revenue of over $5 million USD. While Hard Candy attempted to sue them for trademark infringement in 2016, they ultimately won the lawsuit, and have seen no negative effects on their business as a result.