Sunday, April 8, 2018

R.I.P. OCC? Thoughts on failed makeup brands, how brands make a comeback, & predicting who's next

photo from makeup artist Kevin James Bennett
OCC, maker of the OG liquid lipstick Lip Tars and cult classic John Doe creme color concentrate, appears to be out of business. They recently shut down their website and social media after deeply discounting their online merchandise. The company has not confirmed the news, but it isn't a surprise to anyone in the makeup news sphere that OCC has been in trouble.

For more information and background info, I highly recommend checking out an article in the Revelist here, reading makeup artist Kevin James Bennett's statements on instagram here, and reading the OCC and Sephora 2016 lawsuit information on Justia here.

Why did OCC go out of business?

The short answer - businesses don't close because of strategy, marketing, product formulations, or design of store displays - they go out of business because they ran out of cash. I know that sounds glib, but it's true that the #1 job of a CEO is to not run out of cash.

The longer answer - the product that put OCC on the map wasn't relevant or user friendly to the market they targeted. Lip tars were one of the first liquid lipsticks (2009), one of the first lines to offer colors perfect for makeup artists to mix custom colors (tarred, feathered, traffic, nsfw, and rx), had packaging perfect for makeup artists concerned about hygiene, and were vegan. At the time, the product and value proposition was unique, compelling, and a great fit for their target market of pro artists. As OCC reached beyond their pro artist indie base into mass retail (like Sephora) and into more product lines (cream colors, nail polish, pencils, base products), they had growing pains.

I remember buying a lip tar in the most beautiful red shade, Stalker. I loved the color, the concept, the artistic DIY indie type marketing, the cruelty free vegan message, everything except actually using the product. Stalker was hard to apply, bled outside my liplines (I was only 23!), had no wear time, and I literally never even once wore it outside of the house because I knew there was a good chance I would end up with red all over my face.

Lip Tars were launched at Sephora, seemed to sell well, but were also frequently returned for being a pain to work with. Years later, OCC made a packaging change to the RTW version in a lip gloss style tube with a doe foot applicator, but by that time there were tons of other liquid lipstick formulas on the market with unusual colors in more user friendly formulas.

I think their bigger picture issue was: (1) selling formulas and products designed for pro makeup artists to mass consumers and (2) growing pains with cash and distribution. Reading their Sephora lawsuit makes it clear that they had some operations and cash management problems and also that they depended on Sephora for a substantial part of their retail distribution plan. Unfortunately, there are plenty of examples of small companies going out of business (or growing big time!) after landing a big retail partner that makes up the lion's share of their retail business. I've read about this many times with WalMart, Costco, and many other large retailers, it is certainly not unique to OCC and Sephora.

Can OCC come back?

Let's be clear, I do not know anything about the internal workings of OCC and do not have any data on this question one way or another. We can, however, look at brands that have been dropped by large stores like Sephora, had product failures, or reopened under new ownership.

Other brands that used to be sold at large US beauty retailers:

  • Illamasqua - dropped by Sephora, now has no US distribution and is mostly only available in the UK, with select distribution elsewhere in Europe, Israel, and UAE
  • Ardency Inn - dropped by Sephora, available on their website, Beautylish, in subscription boxes, and other places online, but I haven't seen it in a physical store for over a year
  • Cargo - dropped by Sephora years ago, picked up by Ulta, dropped by Ulta in store and now only online at Ulta
  • CkOne - Calvin Klein has gone through a few failed makeup lines, most recently CKOne, which used to be at Ulta. Still exists in fragrance but the makeup is gone.
  • Fiona Stiles - new-ish brand that came into Ulta and was dropped a short time later, both in store and online. It appears to still be available on QVC and the brand's website. When the brand was discounted and moved out, online rumors said the brand would be repackaged and brought back, but that was almost a year ago so we'll see.
  • Jane  - Jane was available years and years ago as a drugstore brand, was brought back to Ulta a few years ago, dropped, was unavailable for a while again, and now is back at Rite Aid with a limited selection. 
  • New York Color NYC - NYC was a drugstore staple brand alongside Wet N Wild for many years but was dropped by Target, CVS, and others. Now the brand is only available in store at WalMart, KMart, and Family Dollar.
  • Kiko USA - Kiko is an Italian brand that tried to make a move into the US. They declared bankruptcy in 2018 and will be closing US stores, but it looks like they will still be online for US customers. 
  • Sonia Kashuk - Sonia Kashuk's makeup line was recently phased out by Target but still is in stores with makeup bags and brushes. As far as I can see, the makeup is gone for good.

How can brands come back?

Clearly, even if a brand like OCC comes back, it will have changes on the business end. Likely the brand assets will be sold to new owners who have a new business plan and cash, the original backers may or may not be involved. Remember that brands themselves have value - bringing a new name to consumers is hard and expensive, so rehabbing an old brand can be a better pitch than starting from scratch. Let's assume that behind the scenes at OCC they figure out the finances, business plan, and retail plan - how can they re-enter the market?

Comeback strategy #1: rebranding at a new price point 
There have been a few successful examples of this strategy, for example:
High to low price point: 
  • Hard Candy
  • Bliss
  • TheBalm (arguably high to medium, but not a prestige brand anymore)
Low to high:
  • Eyeko (I'm really skeptical of this working for them, but you never know!)
  • If you think of another good example, leave a comment! I'm sure there are some that aren't coming to mind right now. 
Comeback strategy #2: new products that people love
  •  Stila - Stila was pretty close to being dropped from Sephora, only their eyeliner pens and limited liquid lipsticks were available in store for a while. Stila's new glitter and glow liquid glitter eyeshadow formulas were unique on the market, very popular with makeup buyers, and have earned back some store distribution for Stila. 
  • Clinique - This isn't as severe of an example, but a few years ago Clinique was seen mostly as a boring skincare brand and didn't have a large branded presence in the cosmetics side of the store at Sephora. Their release of the cheek pops blush helped revitalize the brand in the eyes of the makeup community, even with people who weren't users of their skincare.

What are other brands in danger? 

This is my own personal list of guesses, but based on my experience as a shopper and blogger, I don't think these brands are knocking it out of the park:
  • Almay
  • Mally Beauty
  • Jessie's Girl
  • JCat Beauty
  • Butter London
  • Bronx Colors 
  • Japonesque 
  • Stellar Beauty
  • Amazing Cosmetics
Well, this turned out to be a long post! Thanks for sticking with it, if you have any thoughts about brands or questions, please leave a comment! xoxo


  1. I agree that the Lip Tars and pencils were really only for pro's and that was confusing to a consumer like me who is bad at wearing makeup - at the same time so many people are "prosumers" now basically putting on looks for instagram that I think they did do well with more than just licensed pros. But their amazing tinted moisturizer and their nail polishes and concealer were great for everyone. OCC actually had my favorite packaging of any brand ever.

    I think the going out of business probably has more to do with the Sephora lawsuit than anything else. Giant companies are always screwing over younger less experienced smaller companies. I once had something similar happen on a MUCH smaller scale. An organization asked me to make a jewelry collection inspired by their organization, to be sold at their annual holiday fair which lasts weeks and to get your own booth costs like $20,000. I took out a loan to make the collection, and then they decided not to have a booth for the designers they had approached. BY CHANCE a friend of mine with a much bigger company did have a booth at the fair and let me sell my collection there in exchange for working the booth a few hours. If I hadn't had this luck I would have been out 10K because the collection was literally designed FOR this place. If OCC took out loans to make fixtures specifically for Sephora as mentioned in the lawsuit and produce product for them only to have no one to buy it, that's devastating. Sephora is a giant compared to OCC. When you're the smaller party and you rely on oral agreements because you think people are decent and then they re-neg, there's seriously nothing you can do - except be more careful in the future.

    1. thanks for sharing your experience and I'm glad that it worked out okay in your case - how scary that must be! I also loved their packaging but I never personally tried their tinted moisturizer. I wonder if they would have been more successful coming to Sephora later? It seems like the "prosumers" have really taken off over the last few years and OCC was trying to be in that space before it was as well defined... something to mull over :)


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