The Growing Influence of Private Equity in Beauty and Personal Care
The investments Private Equity (PE) is making today are likely to shape the future of beauty and personal care for years to come.
PE’s growing influence is redefining the beauty and personal care industry, spurring innovation, and opening doors for brands to scale globally. As consumer preferences move from large consumer goods conglomerates to niche, sustainable, and digitally native brands, PE is positioned as a key player in the industry’s ongoing evolution.
High-Growth Market Opportunity
Beauty and personal care have experienced rapid growth, driven by the agility and innovation of newer players. For PE firms, this creates an enticing opportunity to invest in high-growth brands capable of scaling quickly and capturing significant local and global market share.
The rapid rise of direct-to-consumer models is another reason PE is drawn to the beauty and personal care space. Brands that bypass traditional retail channels and directly engage with consumers enjoy greater control over their margins, customer data, and overall brand experience. This operational efficiency aligns with PE firms' focus on profitability and value creation, making the sector even more attractive.
Moreover, sustainability and inclusivity have become central themes in beauty and personal care, resonating strongly with younger consumers.
Many companies increasingly prioritize clean beauty products, ethically sourced materials, and inclusivity in product lines, driving demand for brands that embrace these values. PE firms, recognizing the profitability of these shifts, are keen to inject capital into brands that can grow and appeal to a broader, socially conscious audience.
Investment Trends
Several high-profile PE investments reflect this trend. For instance, The Carlyle Group's acquisition of a majority stake in Beautycounter for around $1 billion in 2021 underscores the growing demand for transparency in beauty products. With Carlyle's backing, Beautycounter has been able to accelerate its expansion and bolster its digital presence, capitalizing on the clean beauty movement.
Similarly, Advent International's 2021 acquisition of bareMinerals, BUXOM, and Laura Mercier from Shiseido Americas Corporation marks another significant investment. By acquiring these well-known brands, Advent International is positioned to revitalize and expand market presence by leveraging their strong customer base and focusing on both digital growth and global markets.
In the haircare sector, Advent’s 2019 acquisition of Olaplex for a reported $1 billion demonstrated the potential of high-growth, premium beauty brands.
Olaplex’s rise was fueled by its strong social media presence and salon partnerships, and with Advent’s backing, the brand expanded internationally and went public in 2021, further enhancing its market position.
Digital Transformation Drives Growth
Looking ahead, digital transformation will remain a major focus for PE-backed beauty and personal care brands. E-commerce platforms and digital marketing strategies will continue to be key areas of investment, with advancements in technology such as artificial intelligence for personalized shopping experiences, and augmented reality for virtual try-ons offering a competitive edge. Brands that can harness these digital channels and analytics will gain deeper insights into customer behavior and improve engagement.
ESG Positioning Increases Long-Term Value
Environmental, social, and governance (ESG) initiatives are also becoming increasingly central to PE investments. As consumers demand more transparency and ethical practices from the brands they support, PE firms are recognizing the long-term value of prioritizing sustainability.
Whether through eco-friendly packaging, carbon-neutral operations, or ethical sourcing, these considerations will likely form part of PE firms’ value creation strategies, impacting both brand equity and profitability.
In addition to these trends, the industry may see increased consolidation as PE firms continue to acquire complementary beauty and personal care brands.
With the financial resources at their disposal, PE-backed companies are well-positioned to build multi-brand portfolios that dominate specific niches or geographic markets, further shaping the competitive landscape.
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To learn more about the role of PE in beauty and personal care, contact your Moss Adams professional.