Constantly altering approaches and a fast speed to market have allowed the beauty industry to continuously adapt to meet the ever evolving needs of the consumer. As consumers continue to shift focus onto skincare over beauty, big beauty is increasingly divulging in M&A deals and smaller-brand investments. The concept of invest-first, acquire-later saturates the industry, as big beauty works to enhance their brand portfolios. As seen with dozens of companies, M&As, minority and majority investments, and brand partnerships help big beauty brands target these changing consumer needs.  

Important M&A of 2021 

CVC and Shiseido 

In early February, private equity firm CVC Capital Partners acquired a 65% stake in personal care brand Shiseido for $1.5 billion. Shiseido, an Asia-focused brand, currently sells hair and skincare products but looks to enter the premium beauty market. Its brand portfolio includes Tsubaki, uno, Super Mild, and more. CVC’s involvement will spark further growth outside of Asia with enhanced product development and expansion resources.  

L’Oréal and Takami 

L’Oréal announced its plans to acquire the Japanese skincare company Takami in early February of last year. Founded by esteemed dermatologist Dr. Hiroshi Takami, the omnichannel skincare brand saturates the Asian market. The skincare expertise of Takami paired with the global powerhouse that is L’Oréal will help the brand move Westward into the increasingly skincare-focused European and American markets. 

Estée Lauder and DECIEM 

Beauty giant Estée Lauder announced its $1 billion increased investment in skincare brand DECIEM in late February of 2021. DECIEM, parent company of The Ordinary, has made waves in the beauty industry with its authentic and transparent approach to skincare. After going viral on social media during the pandemic period, DECIEM is valued at $2.2 billion and is expected to see further growth. Estée Lauder’s investment will further expand the brands skincare portfolio, going from a 29% stake to 76%. Estée Lauder will hold a majority investment in the brand with hopes to fully acquire the brand in the next three years.  

Recent News 

KKW Beauty and Coty Inc. 

Beauty company Coty Inc. maintains a 20% stake in Kim Kardashian West’s KKW Beauty brand. In August of last year, KKW Beauty announced its rebrand, which will focus on modern, innovative, and sustainable skincare. As consumers continue to focus on skincare over makeup, there is an increasing push for sustainability and transparency from beauty brands. Coty Inc. has also recently shifted focus onto skincare, with the launch of CoverGirl skincare, the investment in Orveda, and the hiring of a Chief Scientific Officer. The two brands are working in tandem to launch a skincare line in the spring of 2022, which has been in the works since 2020. This partnership falls in line with the overarching growth of the skincare industry, working to meet consumer needs.  

L’Oréal and Verily 

Makeup giant L’Oréal has partnered with precision health tech company Verily to introduce inclusive, personalized, and precise skincare options. This partnership focuses on two main goals: enhance understanding and characterization of skin and hair aging, and amplify beauty tech strategy along with research and development. The two brands will collaborate to research the biological, clinical, and environmental views of skin health while developing new technology solutions like AI to meet these goals. Introducing technological solutions to skincare and beauty will provide convenience and accessibility for consumers, as they shift focus onto their skin health. 

Estee Lauder and Haeckels 

Estée Lauder recently invested in beauty brand Haeckels, which creates products made from unconventional, natural ingredients like coffee and mushrooms. This financial backing will spark growth for the small UK-based brand, assisting in expansion, R&D, and sustainability efforts. The small beauty brand’s emphasis on sustainable and all-natural ingredients parallels the continued trend seen within consumers’ desires. Estée Lauder’s investment corresponds with the brand’s larger M&A strategy, focused on minority investments before acquisition, as seen with the acquisition of brands DECIEM and Have & Be Co.  

Looking Ahead 

As we move into 2022, the beauty industry will continue to see M&As and brand partnerships paving the way. Big beauty brands continue to take opportunities to expand and/or narrow down their portfolios to meet consumer needs. The increasing focus on skincare and skin health pushes brands toward sustainability and transparency, exploring consumer-driven desires like all-natural ingredients and technological solutions. With this, the growing focus on skincare and clean beauty will persevere, along with investment in R&D and digital alternatives. In meeting consumers changing needs, brands must remain agile and strategic with their brand and product portfolios.  

Contributions by Rachel Ruth