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Jessica Alba's Honest to expand to China

Actress Jessica Alba speaks at 'Inc. Presents: The Honest Company' during the 2015 SXSW Music, Film + Interactive Festival at the Austin Convention Center on March 15, 2015 in Austin, Texas.
Heather Kennedy | Getty Images
Actress Jessica Alba speaks at 'Inc. Presents: The Honest Company' during the 2015 SXSW Music, Film + Interactive Festival at the Austin Convention Center on March 15, 2015 in Austin, Texas.

Jessica Alba's nontoxic consumer products brand Honest is exploding.

As the keynote speakers at South by Southwest on Sunday, chief creative officer Alba and CEO Brian Lee announced the company generated $150 million in revenue last year, triple the company's revenue in 2013. In an exclusive interview, Lee revealed plans to expand into China as early as the end of this year. Alba, announcing the company's launch of baby feeding products is going "really well," said it is just the beginning.

"Our customers are demanding that we go even further and offer solids and snacks and later stage foods as well," said Alba. "And our customers have also asked us to do more personal care, so feminine care is a vertical we're launching in the summer, and in the fall—beauty. Both of those verticals we've been working on for years, it's just now that we're at the point we can finally launch them."

"It's been very exciting developing and I'm very anxious to see how our customers respond," said Alba. "It's my third baby and I've put my heart and soul into it."

And now they'll see how customers will respond in Asia. "We're looking at China in particular. We believe our brand will really resonate with the Chinese family looking for nontoxic lifestyle choices," Lee said. "We believe it's a very large market for us."

It has been a very busy six months for Honest. It has grown its employee base from 250 to 320, expanded its total number of stock keeping units from 450 to 625, and widened its retail presence from 2,800 to 3,500 stores, including Target, Whole Foods, Nordstrom, Costco, BuyBuy Baby and independent boutiques. But three-quarters of Honest's revenue is online, and 80 percent of that is via subscriptions to one of four monthly bundle options.

One place you will not find Honest products is on Amazon. Alba said she wants to maintain the one-on-one relationship with the customer and does not want to give up control of the customer experience to Amazon.

The company is also selling a growing variety of products. In addition to the newly added baby feeding category, which includes formula and a range of products for nursing moms, it is ramping up the number and range of collaborations with other brands in its "gear & more" category. There's everything from Honest-branded products like diaper bags and swim shirts, as well as partnerships like craft kits from Seedling, swaddle blankets from Aden + Anais, strollers and cribs.

It is a billion-dollar idea—that is how its most recent round of fundraising in August valued the company. It has raised a total of $127 million, and is expected to file to go public this year. What's behind that billion-dollar valuation? Beyond the $150 million in revenue and fast growth rate, its e-commerce-first business model has a couple of key advantages.

By selling direct to the consumer, Alba and Lee are cutting out the middle man, which means higher margins, and it allows them to charge lower prices. And the fact that so much of its revenue comes from monthly subscribers allows the company to better predict demand and manage inventory.

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Lee said there are no plans at the moment to file for an initial public offering. He noted that the company has a strong balance sheet so is not in any rush.

Nevertheless, Lee and Alba stressed that Honest is more than a nontoxic version of Unilever or Procter & Gamble headed for an IPO. "We're not just a CPG (consumer products) company. It really is a lifestyle and a way of life. And we're also an education platform," Alba said. "In so many ways it's a different idea."

Alba added she sees demand for these nontoxic products rising, led by millennials and parents in particular. "The core of the business truly is to create a nontoxic world," Lee said.

Harriet Taylor contributed to this report.