Obagi, Alchemy 43 and Face Foundrie are at the forefront of the $40 billion-plus medical aesthetics market in the United States. Projected by insights firm Nova One Advisor to accelerate at a compound annual growth rate of almost 14% through 2033, when it’s expected to hit $137 billion, they realized the opportunity years ago.
To get an understanding of their view of where that opportunity is heading, Beauty Independent gathered three executives from the companies—Nicci Levy, founder and CEO of Alchemy 43, Michele Henry, founder and CEO of Face Foundrie, and Justin Giouzepis, CMO of Obagi—for a recent episode of the In Conversation webinar series sponsored by Merit Manufacturing. During the episode, they discussed aesthetics innovations to watch, areas primed for expansion and professional skincare distribution.
Alchemy 43
Concept: A med-spa chain with 10 brick-and-mortar locations across California, New York and Texas. It offers a full menu of injectables, filler, laser therapies, microneedling and weight loss treatments and has an average order value that clocks in at around $700.
Innovations to watch: Injectables that are a hybrid between hyaluronic acid and bio-stimulators.
A former Allergan representative, Levy witnessed the early rise of the med-spa industry in the 2000s, with locations popping up outside of dermatologists and plastic surgeons’ offices. Today, she pointed out about half of aesthetics services occur in med-spas. She said, “We’ve seen this incredible forward movement of medical spas and how they have become not only acceptable, but a place where most people are actually going to now consume these treatments.”
Capitalizing on the growing med-spa segment, Levy founded Alchemy 43 nine years ago to provide an experience rooted in artistry and customer loyalty over what she refers to as the “transactional” nature of medical aesthetics. “I really wanted to bring an entirely new flavor to how people consume these services,” she said. “I wanted to apply beauty best practices, create connection with our clients and build those long-term relationships, whether it was through visiting us for different services or through a membership or loyalty program.”
Alchemy 43’s core customers are young professionals between the ages of 27 and 35 years old. Men account for about 20% of its clientele and represent a promising development for Alchemy 43 and the larger med-spa industry. Levy said, “There’s a real interest, and there’s a lot of data around why men would be interested in taking care of their skin in this way.”
Face Foundrie
Concept: A facial bar chain with brick-and-mortar locations in 32 cities around the country and an average order value around $150.
Innovations to watch: Artificial intelligence-driven technological advances to enhance customization for individual clients. Additionally, the rise of next-generation microneedling treatments like microchanneling from Procell Therapies.
Launched in 2019 with a single location in the Galleria shopping center in Edina, Minn., Face Foundrie set out to disrupt the spa industry with what Henry describes as an “open-air model” where customers could receive quick facial treatments without having to undress or go behind closed doors. She said, “It is all about being focused just on treating your face, and you can get in and out.”
Price accessibility is a key aspect of Face Foundrie’s positioning. During the preliminary stages of building the business, Henry visited a many med-spas to test Hydrafacial treatments and was dissuaded by its $350 per session price. “That wasn’t a price point that I think people would be comfortable with, especially here in the Midwest,” she said. “So, I set out to change that as we launched Face Foundrie.”
Face Foundrie is looking to capture a wide swath of customers as it rapidly extends its footprint. It’s adopted a franchise model to fuel growth and is on track to reach over 100 locations by 2026. In vetting potential franchisees, Henry said, “The franchisees’ vision and values have to align with ours. That’s really important because we’ve had plenty of larger groups try to step in and offer to buy a ton of units, but ultimately it would probably change our trajectory and also our culture.”
Obagi
Concept: A 35-year-old professional skincare brand with over 200 products in eight product categories, including cleansers, toners, serums, moisturizers and exfoliants. In 2021, it was acquired with Milk Makeup by special purpose acquisition company Waldencast Acquisition Corp. to create a multi-brand beauty and wellness platform valued at $1.2 billion.
Innovations to watch: The advancement of anti-aging technologies that play into the longevity trend.
With a professional distribution network of 5,000 dermatologists’ offices, med-spas and spas, Obagi products have to validate their results with clinical studies. “Our main customer is really demanding,” emphasized Giouzepis. “They demand results and proof, and they demand that you use gold standard ingredients.”
Obagi has a field team of 50 employees that service different territories, craft sell-through plans and match products with services. Giouzepis underscored that professional distribution is distinct from traditional retail. “We are working with mostly small business owners who operate differently and need different help than you would give if you were working with Target,” she said. “It is a very personal business. In beauty, in general, relationships matter and certainly when you’re talking about people’s faces.”
Obagi sells a product line for professionals with higher concentrations of active ingredients and a separate line for consumers, the latter of which it started selling on its website in 2021. Despite the brand’s late entrance into the direct-to-consumer channel, Giouzepis stated that Obagi’s website is pivotal in fueling its revenue and awareness.
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