Boys, take notes from Michael Cera-Ve
Psychics are in, Whoop's insane athlete roster, CeraVe's agility is helping them win.
Hi everyone, happy belated MDW. Sorry for the day-late letter but I’ve been enjoying my post-finals downtime. I just arrived in Sedona for a family trip and while waiting for our table at El Rincon for dinner, we popped into a psychic on the other side of the road. Apparently, Sedona is a vortex of spiritual energy. With only 15-minutes to spare before dinner, my brother took the one slot. The reading was mostly vague EXCEPT for 2 pretty spot-on comments about his recent life changes. I’m usually not into the voodoo stuff but… I did go to a psychic last summer in NYC with my high school friends, and not to sound crazy, but they high-key predicted a past relationship of mine. That was actually one my favorite nights last summer - we went to the speakeasy on top of Five Guys in the West Village, and then to a nearby psychic, and debriefed our readings over sangrias at a wine bar. Let’s just say… these psychics know something. I have been itching to go back all year - so for my friends in NYC this summer, hit me up if u want to go together. I promise it won’t disappoint.
Today’s main kiki is about CeraVe’s quick rise in the skincare industry.
SNIPPETS
Whoop is killing it with athlete representation. Nike invented the model of bundling a product with an elite athlete - their Jordan brand was the most lucrative shoe deal in history. But Nike has been falling off recently - earlier this year, they ended their 27-year partnership with Tiger Woods. Whoop is now collecting athletes like Pokemon, including partnerships with Patrick Mahomes, Sha’Carri Richardson, and most recently Cristiano Ronaldo… What I notice is every frat guy at Yale wears a Whoop now (especially my non-athletic kings). Up to you guys if that means their marketing is working.
A throwback to high school calculus. One of my favorite newsletters did an analysis on Sweetgreen last week. I loved the way Gad intertwined calculus into company analysis, incorporating graphs of the second derivatives of revenue and cost trajectory which show the rate of change of revenue/cost growth. The main takeaway: Sweetgreen’s revenues are growing faster than its costs.
THE MAIN KIKI - In: Cerave, Out: Neutrogena
When I was in 10, I went to Stagedoor Manor Performing Arts Camp in upstate New York. Stagedoor’s famous alumni include Natalie Portman, Robert Downey Jr, Lea Michele, amongst others. I was not one of the notable performing arts alums. For those who know the story, this is the camp where I auditioned for Annie on Broadway and sang the censored version of F*ck you by Ceelo Green. Not a shocker … I did not get the part. More memorable and fun however was the big pre-camp Target shopping with my mom. I loved buying new bed sheets, bug spray, and an insulated water bottle to survive the 100-degree Catskills summer. I remember perusing the cosmetics section to select my moisturizer, face wash, and sunscreen, for which the then obvious choice was Neutrogena. Back then, and for the next decade, everyone I knew was a loyal user of Neutrogena’s pink grapefruit face wash (a staple in my routine for 8 years), or the morning burst face wash, and many products in their sunscreen line.
Developed with and endorsed by dermatologists with medical credibility, Neutrogena’s wide array of skin care products secured shelf space in shopper’s bathrooms. At least through covid years, the brand dominated Target, CVS, and other drugstore skincare sales, and was a staple in consumer baskets. Yet by 2024, the loyalty and “shine” for Neutrogena are off as competitor Cerave has taken the skincare market lead. Neutrogena, owned by Kenvue, has fallen from 23% share in 2019 to a slim 14% in 2023, significantly trailing CeraVe’s (L’Oreal) 29% market share.
An essential in my skincare routine - I work through a bottle of CeraVe PM moisturizer every month, and I love their turquoise foaming facial cleanser. Their product line is developed with dermatologists and focuses on creating a strong natural skin barrier with their face wash, moisturizers, sunscreens, and medical treatments for acne and eczema amongst others. So… a few things I love about this company + a few explanations for their rise in popularity:
Skincare as a category is hot and always will remain hot... because having good skin is priceless! Global spend on skincare in 2023 was $106B. Just to put that into perspective, that is 1/2 the 2023 global spend on iPhones, and ~3.5x the 2023 global spend on Macs. Especially amongst Gen Z’ers, who strive for the ‘clean girl’ look, we allocate share of wallet to pampering ourselves and prioritizing self-care. Skincare companies know this, and therefore exercise more pricing power, which equates to high margins. For example, this list highlights the most expensive skincare products that have price tags reaching $2,000+ for 50mL… with consumers willing to pay up.
Accessible price point that doesn’t sacrifice medical-grade quality. What makes Cerave interesting is it allows consumers to participate in good skincare practices without paying that $2k for a serum. There’s a consumer perception (especially with products related to health/aesthetics) that the higher the price point, the more ‘legit’ or high quality the product. Cerave’s products (reasonably priced between $10 - $35), make it a frictionless bargain purchase. While they could hike prices to increase their margin, CeraVe is likely trying to win with volume/greater market share.
Simple and professional packaging gives CeraVe credibility. Idk about you but if it’s about skincare, CeraVe’s packaging has more credibility than others simply because it looks like it’s backed by dermatologists (makeup is a different case, where more stylish packaging could be advantageous).
CeraVe builds customer loyalty by making their products habit. Their products are the steps of a healthy skincare routine or a habit base layer. In fact, their easily bundle-able products (e.g. their AM and PM moisturizer) go hand in hand, increasing AOV while ingraining habits.
Adapting to young audiences through marketing with ‘derm-fluencers’. Looking at CeraVe’s increasing growth line in the market share graph from above, their intersection with falling Neutrogena share was during Covid, which can be partly attributed to CeraVe’s proactive marketing strategy on TikTok. Neutrogena faced Covid-induced supply chain problems, requiring them to cut back on marketing to preserve their bottom line, laying up CeraVe for success. CeraVe worked with dermatologist influencers, including Hyram (5.9M followers) and Dr. Shah (@dermdoctor 18.1M followers). Skincare requires one level deeper of trust than makeup since it is about healing your natural beauty before embellishing with makeup. Hence, partnering with dermatologist influencers was an effective way to build trust with consumers.
Capturing male demographic through their superbowl ad with Michael Cera. CeraVe’s ingenious superbowl ad was a play on rumors of Michael Cera’s association with the brand (there wasn’t and isn’t). I don’t know what he’s up to these days, but all I could think when watching the commercial was “I love that guy…” and the positive association made me pay more attention to that commercial. More importantly, the ad strategically captures a male audience! While women are influenced by dermfluencers, Michael Cera draws in male consumers.
Kudos to CeraVe which has managed to create a strong brand in an oversaturated skincare market, even in the face of celebrity branded products who can fast track into the skincare space. And if you’re still on Neutrogena, I hope I’ve convinced you to convert.😘
THINGS I’M LOVING RIGHT NOW
Painting my nails ballet slipper pink - I usually do more fun colors, but it makes me feel so adult going with a simple color. Perfect timing for work starting soon.
The concept of a capsule wardrobe, which essentially means having a handful of classic basic pieces that can be recycled into many outfits. It’s all about the investment pieces and efficiency.
Tatte Bakery and Cafe in Boston - I’ve been to Boston twice in the past month and I camped out in the Tatte on Clarendon Street. Their chicken pita is GAS.
Tagging along on my mom’s work meetings. Since I have a few weeks between end-of-finals and summer internship, I have been hanging out with my mom. She included me in a few of her work events, one of them being a group cooking class. All I’ll say is if I have colleagues who are even half as cool, smart, and dynamic as hers, that would be a huge win.
In one of the meetings, presenters shared a scan of Mitt Romney’s notes from a few years after founding Bain Capital. Pretty cool.
That’s a wrap on Jackiki 7. As always, thank you for reading and let me know your thoughts. I will be in NYC as of June 3, so to old and new friends, text me if you are in town!
Finally, special shoutout to Xander and Grace for being loyal Jackiki readers.
Ciaoooo see you in the next letter!!
Shoutout Gad and Wharton for the data on $SG
Obviously not the most intellectual point to garner from this post but re: Tatte … the oatmeal cookie changed my life and you must try!!