Stylin' in the city

Northeast Ohio-based Aquage, Mantra take on big hair-care firms

Wednesday, August 29, 2007

Kim Crow

Style Editor

Northeast Ohio is no stranger to the big business of hair-care products. (So would that be Big Hair?) After all, Matrix Essentials Inc. was founded in Solon nearly 30 years ago by the husband-and-wife team of Arnold and Sydell Miller.

But a quiet revolution against the behemoth beauty industry is taking place in our land of highlighted bobs. Aquage and Mantra, two locally based hair-care companies, have launched lines to go head-to-head with the Paul Mitchells, the Redkens and, yes, the Matrixes by concentrating on selling only to independent salons and licensed beauty professionals.

They're combating a process known in the beauty industry as "diversion." In 2005, Business Week estimated that nearly $800 million worth of the beauty industry's $29 billion annual product sales may have been diverted or counterfeit.

Diversion takes many forms but essentially washes down to products that are sold outside their authorized chain of distribution. One common scenario is that a Big Hair Company sells its products to independent salons, promising exclusivity. Later on, Big Hair Company's line becomes available at Wal-Mart, CVS and Giant Eagle, either through a corporately planned expansion or through somewhat shady, yet still legal, practices of diversion through distributors who sell off bulk shipments of old or discontinued products to mass-merchandise stores.

Whatever the case, a salon's clients can then pick up their favorite products during their weekly shopping trips, forgoing the retail sales at their independent salon, which may well rely on those sales for its bottom line.

"Diversion is not a bad word, it's just a business practice -- some manufacturers do it and some don't," says Mike Nave, editor of the Beauty Industry Report, a behind-the-scenes industry newsletter.

"Stylists don't want to spend a lot of time retailing. They're in the instant-gratification business, and they'd rather spend their time making someone feel great."

Another side effect from picking up that fancy molding mud at CVS? It can harm a line's reputation.

"The No. 1 complaint we hear from people is that a product doesn't work like it says it would," says Luis Alvarez, vice president/creative at SalonQuest LLC, which produces Aquage.

"Of course it doesn't -- because no one has shown you how to use that product. We spend $1 million a year on education, teaching stylists how to teach you to use our products. You can't get that by picking up something at Target."

"We want to protect a salon's interests and give them something their customers can't go get at the grocery store," says Jeff Klominek, president of Mantra. "Our industry loves new things, but I think salons have had enough."

Aquage and Mantra are at the forefront of a trend in the industry -- small companies that promise exclusive products and continuing education to independent salons, along with a firm commitment to stemming diversion.

Aquage

SalonQuest, the parent company of Aquage (pronounced ah-kwahge), is neatly tucked away inside a nondescript strip of office buildings in Chagrin Falls.

Inside, the stylish conference rooms and a strict adherence to a shades-of-blue color scheme -- from the walls to the carpet, even to the employees' clothes -- remind visitors that these are people in the appearance business.

President and Chief Executive Officer Dennis Lubin, whose sister is Matrix co-founder Miller, was creative director of Matrix for years until it was sold for an undisclosed sum to Bristol-Myers Squibb in 1994. Matrix is now part of L'Oreal USA.

While Lubin was financially secure after the Matrix sale, he continued to discuss the hair business with his good friend and former Matrix colleague Alvarez at marathon discussion sessions in Lubin's Moreland Hills home.

"Finally, my wife threw us out of the kitchen and told us to find some office space," Lubin says with smile. "You develop a passion for this industry. We joke that if you cut our veins, shampoo will flow out."

Aquage was launched in 1999 with two philosophies: teaching and exclusivity.

"Hairdressers more than anything need great education," says Alvarez, a stylist. "Hair care today is so confusing -- so many styling products, and not much instruction on how to use them. We want to help stylists help clients to maximize their beauty."

Aquage sends a battalion of Alvarez-trained stylists to salons and trade shows across the country, not only to inform clients about the product, but about the company's business practices as well.

"We're kind of a champion for the independent salon," says Lubin.

The 30 products in the sea botanicals-based Aquage line are designed for specific hair types and are intended to be "layered" over one another to achieve the desired effects. Alvarez and his team of educators and stylists are becoming well-known for their skills with up-dos, or, as they more stylishly term them, "dresswork."

"We worked with salon owners to identify the problems that their clientele has, and we work sort of backward on that to figure out the answers," says Alvarez.

"For instance, we know that bridal is a big challenge for a lot of salons, so we developed specific bridal techniques, product and tools, even CDs with step-by-step instruction, to help them."

Although SalonQuest is privately held and does not report profit numbers, Lubin says Aquage sales have increased an average of 40 percent a year.

SalonQuest has 25 full-time employees who are accustomed to wearing many hats on their well-coiffed heads. Alvarez, who has a haircutting chair and portable sink in his office, not only grooms the staff to test new products and techniques, he also is the photographer behind all the advertising and promotional materials.

"We're pretty bonded here and passionate about our mission to help salons grow and prosper," says Lubin. "Without good retail and education, they're not going to survive."

Mantra

Jeff Klominek got into "wet lines" to give his family's hair-care distribution business a steady customer -- himself.

"There's no security when you're selling other people's brands," says Klominek, whose grandparents started North Coast Salon Systems more than 70 years ago.

"We'd spend years building a line, only to see it taken away from us by another distributor. Once I started having kids, I saw the need for stability."

As the beauty industry consolidates, giants such as L'Oreal have taken to buying out distributorships -- thus not only controlling the market through brand domination, but controlling the means to the market as well, according to Nave of the Beauty Industry Report.

Three years ago, Klominek joined forces with Jim Vlasik, a chemist who has worked with Aveda, American Crew and Tigi, to create a botanical line of products that Mantra would manufacture, market and distribute on its own.

"There's not a lot of bad product in our business -- there's a lot of good stuff out there -- it's the business practices we have a problem with," says Klominek, 38. "The only way to stop diversion is to not support it. We're protecting a salon's interests."

The 24 products in the Mantra line are displayed all over the company's Broadview Heights offices, most prominently in a conference room, where Mantra holds training sessions for stylists and "beauty ambassadors" who attend trade shows across the country to raise brand awareness. Shipping and receiving is done in Broadview Heights as well, while the products are manufactured in Minnesota.

"We never intended to be a national brand," he says. "We're just a speck on the national beauty radar, but we're building."

Mantra, with 13 employees, is sold in 5,000 salons in 15 states, with the Mexican and Canadian markets in the firm's sights.

Mantra's biggest seller is called Transcend, an anti-frizz serum, followed closely by Om Foam, a volume-adding mousse that protects color, and Karma Klay, a texturizer.

Like Aquage, Mantra stresses the importance of providing education to salons.

"We want everyone to know how to use Mantra," Klominek says. "You can have the best product in the world, but it won't work if you don't use it correctly."

To reach this Plain Dealer columnist:

kcrow@plaind.com, 216-999-4046



Stylin' in the city Northeast Ohio-based Aquage, Mantra take on big hair-care firms Wednesday, August 29, 2007 Kim Crow Style Editor Northeast Ohio is no stranger to the big business of hair-care products. (So would that be Big Hair?) After all, Matrix Essentials Inc. was founded in Solon nearly 30 years ago by the husband-and-wife team of Arnold and Sydell Miller. But a quiet revolution against the behemoth beauty industry is taking place in our land of highlighted bobs. Aquage and Mantra, two locally based hair-care companies, have launched lines to go head-to-head with the Paul Mitchells, the Redkens and, yes, the Matrixes by concentrating on selling only to independent salons and licensed beauty professionals. They're combating a process known in the beauty industry as "diversion." In 2005, Business Week estimated that nearly $800 million worth of the beauty industry's $29 billion annual product sales may have been diverted or counterfeit. Diversion takes many forms but essentially washes down to products that are sold outside their authorized chain of distribution. One common scenario is that a Big Hair Company sells its products to independent salons, promising exclusivity. Later on, Big Hair Company's line becomes available at Wal-Mart, CVS and Giant Eagle, either through a corporately planned expansion or through somewhat shady, yet still legal, practices of diversion through distributors who sell off bulk shipments of old or discontinued products to mass-merchandise stores. Whatever the case, a salon's clients can then pick up their favorite products during their weekly shopping trips, forgoing the retail sales at their independent salon, which may well rely on those sales for its bottom line. "Diversion is not a bad word, it's just a business practice -- some manufacturers do it and some don't," says Mike Nave, editor of the Beauty Industry Report, a behind-the-scenes industry newsletter. "Stylists don't want to spend a lot of time retailing. They're in the instant-gratification business, and they'd rather spend their time making someone feel great." Another side effect from picking up that fancy molding mud at CVS? It can harm a line's reputation. "The No. 1 complaint we hear from people is that a product doesn't work like it says it would," says Luis Alvarez, vice president/creative at SalonQuest LLC, which produces Aquage. "Of course it doesn't -- because no one has shown you how to use that product. We spend $1 million a year on education, teaching stylists how to teach you to use our products. You can't get that by picking up something at Target." "We want to protect a salon's interests and give them something their customers can't go get at the grocery store," says Jeff Klominek, president of Mantra. "Our industry loves new things, but I think salons have had enough." Aquage and Mantra are at the forefront of a trend in the industry -- small companies that promise exclusive products and continuing education to independent salons, along with a firm commitment to stemming diversion. Aquage SalonQuest, the parent company of Aquage (pronounced ah-kwahge), is neatly tucked away inside a nondescript strip of office buildings in Chagrin Falls. Inside, the stylish conference rooms and a strict adherence to a shades-of-blue color scheme -- from the walls to the carpet, even to the employees' clothes -- remind visitors that these are people in the appearance business. President and Chief Executive Officer Dennis Lubin, whose sister is Matrix co-founder Miller, was creative director of Matrix for years until it was sold for an undisclosed sum to Bristol-Myers Squibb in 1994. Matrix is now part of L'Oreal USA. While Lubin was financially secure after the Matrix sale, he continued to discuss the hair business with his good friend and former Matrix colleague Alvarez at marathon discussion sessions in Lubin's Moreland Hills home. "Finally, my wife threw us out of the kitchen and told us to find some office space," Lubin says with smile. "You develop a passion for this industry. We joke that if you cut our veins, shampoo will flow out." Aquage was launched in 1999 with two philosophies: teaching and exclusivity. "Hairdressers more than anything need great education," says Alvarez, a stylist. "Hair care today is so confusing -- so many styling products, and not much instruction on how to use them. We want to help stylists help clients to maximize their beauty." Aquage sends a battalion of Alvarez-trained stylists to salons and trade shows across the country, not only to inform clients about the product, but about the company's business practices as well. "We're kind of a champion for the independent salon," says Lubin. The 30 products in the sea botanicals-based Aquage line are designed for specific hair types and are intended to be "layered" over one another to achieve the desired effects. Alvarez and his team of educators and stylists are becoming well-known for their skills with up-dos, or, as they more stylishly term them, "dresswork." "We worked with salon owners to identify the problems that their clientele has, and we work sort of backward on that to figure out the answers," says Alvarez. "For instance, we know that bridal is a big challenge for a lot of salons, so we developed specific bridal techniques, product and tools, even CDs with step-by-step instruction, to help them." Although SalonQuest is privately held and does not report profit numbers, Lubin says Aquage sales have increased an average of 40 percent a year. SalonQuest has 25 full-time employees who are accustomed to wearing many hats on their well-coiffed heads. Alvarez, who has a haircutting chair and portable sink in his office, not only grooms the staff to test new products and techniques, he also is the photographer behind all the advertising and promotional materials. "We're pretty bonded here and passionate about our mission to help salons grow and prosper," says Lubin. "Without good retail and education, they're not going to survive." Mantra Jeff Klominek got into "wet lines" to give his family's hair-care distribution business a steady customer -- himself. "There's no security when you're selling other people's brands," says Klominek, whose grandparents started North Coast Salon Systems more than 70 years ago. "We'd spend years building a line, only to see it taken away from us by another distributor. Once I started having kids, I saw the need for stability." As the beauty industry consolidates, giants such as L'Oreal have taken to buying out distributorships -- thus not only controlling the market through brand domination, but controlling the means to the market as well, according to Nave of the Beauty Industry Report. Three years ago, Klominek joined forces with Jim Vlasik, a chemist who has worked with Aveda, American Crew and Tigi, to create a botanical line of products that Mantra would manufacture, market and distribute on its own. "There's not a lot of bad product in our business -- there's a lot of good stuff out there -- it's the business practices we have a problem with," says Klominek, 38. "The only way to stop diversion is to not support it. We're protecting a salon's interests." The 24 products in the Mantra line are displayed all over the company's Broadview Heights offices, most prominently in a conference room, where Mantra holds training sessions for stylists and "beauty ambassadors" who attend trade shows across the country to raise brand awareness. Shipping and receiving is done in Broadview Heights as well, while the products are manufactured in Minnesota. "We never intended to be a national brand," he says. "We're just a speck on the national beauty radar, but we're building." Mantra, with 13 employees, is sold in 5,000 salons in 15 states, with the Mexican and Canadian markets in the firm's sights. Mantra's biggest seller is called Transcend, an anti-frizz serum, followed closely by Om Foam, a volume-adding mousse that protects color, and Karma Klay, a texturizer. Like Aquage, Mantra stresses the importance of providing education to salons. "We want everyone to know how to use Mantra," Klominek says. "You can have the best product in the world, but it won't work if you don't use it correctly." To reach this Plain Dealer columnist: kcrow@plaind.com, 216-999-4046 © 2007 The Plain Dealer © 2007 cleveland.com All Rights Reserved.