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An Honest Effort Amid flagging sales and rising competition, Honest Company CEO Carla Vernon is preparing to reinvent the brand.

- AINSLEY HARRIS

HONEST COMPANY CEO CARLA VERNÓN saw her first diaper "cake" at a friend's baby shower in 2017. The Instagram-worthy centerpiece featured tiered stacks of Honest's flagship eco-friendly diapers and infant-care products, such as wipes and baby wash, all wrapped up with a bow.

At the time, Vernón was managing brands like Annie's, Cheerios, and Larabar for General Mills. "I think of myself as a very nerdy consumer products brand builder," says Vernón, who looks the part, wearing lime-green glasses, when we speak via Zoom in late September. The pride of place given to Honest's diaper cake made it clear to her that something about the brand was resonating. She made a mental note: "This generation is picking a different diaper than my parenting generation picked."

In the years since, interest in brands like Honest - which makes eco-friendly, hypoallergenic baby, household, and beauty products including diapers, wipes, lotion, and mascara-has only grown, with smaller brands and consumer packaged goods (CPG) giants alike rolling out similarly "clean" and "natural" products. Spending on wellness products and services hit an estimated $450 billion in the U.S. last year, according to McKinsey & Company. But Honest, a trailblazing company launched by actor Jessica Alba more than a decade ago and once valued at $1.7 billion, has struggled to maintain its early momentum. Dozens of clean startups now compete with Honest for space on retail shelves and in social media feeds. The company, which hit a market cap of $1.44 billion after going public in 2021, is now worth just over $120 million. Revenue dipped in 2022 to $314 million. Management needs to "rebuild credibility," Morgan Stanley analysts wrote last November.