Part 2: Lights, Camera, Business: Bridging showbiz and business

The gush in celebrity-driven brands is striking a direct challenge to long-established industry giants. As consumers increasingly seek authenticity and resonance, traditional metrics of brand loyalty and leadership will be challenged, creating a competitive marketplace where the old and new must constantly evolve to stay in sync with ever-changing consumer expectations.

There’s a puzzle to be solved: Should established brands compete directly with such fresh, dynamic and burgeoning entities or strategically align with them through investment or acquisition?

Both will likely coexist, but the balance of power will shift. Established brands will need to innovate and adapt, incorporating elements of personal branding and authenticity into their strategies. Meanwhile, celebrity brands will continue to leverage their unique position, offering consumers a mix of personal connection and product quality.

Investing in or acquiring celebrity brands can offer several benefits for established companies. Firstly, it allows them to tap into new customer bases and demographics that might have been elusive. Celebrity brands come with built-in fan bases that can be leveraged to expand market reach and boost sales. We talk about Rihanna’s Fenty Beauty again. LVMH’s investments in the trendsetter brands enabled the luxury conglomerate to diversify its product offerings and capitalize on the singers’ massive appeal and brand equity.

Now established brands could either compete directly to stay relevant or focus on cobranding a partnership. To appeal to the tech-savvy and trend-conscious consumers swayed by Kanye West’s Yeezy Line, Nike invested heavily in R&D to create groundbreaking products like its Nike Air technology and self-lacing sneakers.  On the other hand, Adidas partnered with Kanye West and leveraged his influence while integrating Adidas’ expertise in sportswear. Its prime focus was on forming strategic partnerships to co-create products, commingling the appeal of the celeb with the established giant’s quality and distribution network.

Secondly, these acquisitions can infuse a sense of modernity and relevance into traditional brands. By aligning with trendy, up-and-coming labels, established giants can refresh their image and stay in tune with contemporary consumer preferences. This strategy can be particularly effective in industries like beauty and fashion, where trends evolve rapidly, and consumer tastes are ever-changing.

Acknowledging the potential impact of Alia Bhatt's Ed-a-Mamma, which grew ten times in less than a year of its launch and clocked a valuation of Rs 150 crore, RRVL acquired a 51% stake in the brand. This is classic proof of how Reliance's strength from supply chain to retail to marketing when blended with Alia Bhatt's fame, authenticity & ideation, led to a successful brand.

A prime example of this strategy in action is Coty's acquisition of a majority stake in Kylie Cosmetics. By investing in Kylie Jenner's brand, Coty not only gained access to a younger, more engaged audience but also benefited from the social media prowess and personal branding that Jenner brings to the table. This move allowed Coty to rejuvenate its portfolio and compete more effectively in the fast-paced beauty market.

In 2017, George Clooney and Rande Gerber made headlines in the alcobev domain, when they sold their tequila brand, Casamigos, to the spirits giant Diageo for a staggering $1 billion. This high-profile deal highlighted the massive value and potential of celebrity-backed brands in attracting lucrative investments and acquisitions in the alcoholic beverage industry. This success also inspired a wave of celebrity-backed tequilas to enter the market over the past few years, such as LeBron James with Lobos 1707, and Kevin Hart with Gran Coramino.

Engaging followers is essential for influencer marketing. A strong connection is more important than sheer follower numbers. Celebrity brand owners achieve this by sharing content that is emotionally resonant and entertaining. For instance, Chef Gordon Ramsay, known for his engaging cooking tutorials, frequently uses his product line in demonstrations, reinforcing authenticity and trust.

Kim Kardashian's approach with Skims is another prime example. By sharing images of herself and her circle wearing Skims and involving her followers in product development, Kardashian fosters a sense of community and inclusivity. This not only provides valuable consumer insights but also ensures that customers feel integral to the brand, enhancing loyalty and trust.