In 2000, Justin and David Letschert were running a boutique mergers-and-acquisitions firm that specialized in the pharmaceutical and personal care product industries. One client they were working on was Union-Swiss, which was up for sale and had ten brands with 120 products in its portfolio. The problem was that a lot of the brands were defunct labels that were not drawing revenue or building business value. “The owner wanted to sell lock, stock and barrel. But no one in this industry buys anything lock, stock and barrel, they only buy labels that add value to the basket of brands in their business,” says Justin Letschert, CEO of Union-Swiss.
There were loads of offers on the business but each one was turned down because of the owner’s stubborn refusal to break the company up or sell it off piecemeal. The brothers had invested a significant amount of time and effort in the business without accruing any revenue for their time and were looking for a creative solution to the problem. “At that point we had done so much work on the business we decided to buy it. We bought a business we knew nothing about and my brother literally climbed in his car and drove across South Africa to take ownership. It was three years before he returned,” says Letschert.
The merger and acquisition specialists took a knife to the business and stripped away all the dead wood, but when it came to Bio-Oil, they instinctively knew they had an underperforming bestseller on their hands.
“The history of the creation of the product is fascinating. Bio-Oil was a tissue oil that operated in a category where 95 percent of its competitors were creams," says Letschert. "All creams are a mixture of water and oil (in some cases up to 90 percent water), and as we all know, water contains oxygen. The oxidizing effect inhibits the efficacy of additives like vitamins, extracts, botanicals in creams quite significantly. To ensure that essential ingredients in creams do their job, further additives must be included to restore efficacy. Oil has no oxygen, and enhances the effect of beneficial additives.”
The inventor of Bio-Oil, Dieter Beier, was searching for a solution that would have all the benefits of oil but would be consumer friendly, when he stumbled on a scientific breakthrough based on the reduced viscosity of the oil on ducks’ feathers when they preen themselves. This led to the creation of PurCellin Oil, a product with reduced viscosity that delivers all the benefits of oil without being greasy.
Although the Letschert brothers weren’t branding, pharmaceutical or personal care product experts, they had intuitive marketing smarts. They quickly realized that the skin care and pharmaceutical industries where poles apart but were beginning to grow toward each other. Skin care products were becoming more scientifically formulated, while the pharmaceutical industry wanted to reach target buyers outside the medical market.
This saw the skin care sector moving into the pharmaceutical and dermatological arena with strong collaboration between the two industries, as witnessed recently by healthcare company Allergan (the producers of Botox) collaborating with Elizabeth Arden to produce the anti-aging brand Prevage.
Letschert explains how this happened: “The skin care market moved from being strictly glamorous and aspirational to becoming cosmeceutical with brands that treat specific skin care problem areas. We realized that no one was playing in the scar market because commercial products to treat scars didn’t exist ten years ago. The skin care industry was saying ‘scars are a medical problem’ and not doing anything about it, while the pharmaceutical industry didn’t think scars were a big enough medical problem or market to focus on.”
Nobody appreciated the extent of the market before Bio-Oil revolutionized this sector of the industry. Research shows that there are up to three scars on every body. Not everyone wants to do something about them. Males mostly see scars as war wounds, but women largely want to lighten or eradicate scars. When you start doing the math, you realize that the market is enormous.
“What we did was simple. We repositioned Bio-Oil from being a tissue oil that was used for special occasions to a scar and stretch mark product. Clinical trials had yielded incredible results, so we knew people would take to the product,” Letschert says. “All we did was to give people a reason to use our product. What happened then is that people started buying Bio-Oil as a scar or stretch mark product and then started using it for moisturizing, anti aging, bath oil and numerous other uses. We didn’t change a thing; all we did was to provide the reason for use.”
When you hear how the brothers positioned their brand, you’ll appreciate their instinctive marketing talent. The skin care industry sells much more than products—they sell a lifestyle with complex, larger-than-life brands. If you use Chanel lipstick, the brand story should make you feel more sensual, sexy and luxurious. Bio-Oil’s approach is markedly different: the brand’s only story is the truth. There’s no glamorous packaging or invented fairy tale. Bio-Oil’s the girl next door. No smoke and mirrors, simply a brand that does what it says it will.
In an industry that has pushed the smoke and mirrors to the edge, this is a refreshingly appealing sales pitch. Bio-Oil’s marketing is done through endorsements by ordinary people who use the product and relay their experience of the brand—a radical departure from the cosmetic industry with its celebrity endorsements, which can be summed up by the statement that Charles Revson, legendary founder of Revlon made: “We sell hope in a jar.”
“In today’s environment consumers want honesty. With the advent of the internet and the growth of blogging, truth is becoming pervasive. People don’t want to be hoodwinked. Our insights show that women don’t want to be Nicole Kidman or Naomi Campbell. They want to be a better version of themselves.”
Sassy marketing, trusting the truth and the invention of a new brand category led to rich rewards for the Letschert brothers. When they acquired the Bio-Oil brand it was moving 2,000 units a month. Today the product sells one million units to markets like Japan, the USA, Canada, Malaysia and 17 other countries. In the United Kingdom the brand is so popular that three years after launch, industry statistics showed that Bio-Oil was the number-one-selling body care product in that market.
The old adage proves true: you only sell a bad product once. But an honestly awesome product backed by smart marketing? Well that just keeps on selling, and selling and selling.