Unilever extends its skin care brands with Dermalogica acquisition

Unilever has announced the acquisition of Dermalogica, the world’s number one professional skincare brand, as it continues to add to its long list of healthy and beauty brands.

Described as a “superior skin health brand” by Unilver’ CEO Paul Polman, the acquisition follows the FMCG giant’s move to acquire British skincare brand Ren Skincare back in March.

Dermalogica – which generated total sales of $240m in 2014 and is currently sold in over 80 markets including the UK; although it isn’t nearly as established here as in the markets such as the US – will be incorporated within Unilever’s prestige brand division.

Designed to address skin problems such as acne and sensitive skin, the brand’s products are a mix of professional and in-home. However its focus is more on skin health than beauty and pampering.

“Dermalogica enjoys an outstanding reputation and incredible awareness among skin care professionals and consumers alike that complements our Prestige offering,” said Polman. “It is a company with great distribution and presence globally and shares our belief in the role of business as a force for good in society.”

The move comes as Unilever, which already owns healthy and beauty brands such as Dove, looks to drive growth into its portfolio by upping sales of personal care goods to two thirds of total sales – it currently represents 37%.

Rival P&G, meanwhile, is currently divesting, discontinuing or merging 100 brands globally representing 14% of its sales. Many analysts believe that as part of the process P&G will exit all or most of its salon haircare and prestige fragrance and beauty businesses to focus on more manageable mass channels.

Niche brand strategy

Dermalogica founder Jane Wurwand said that the Unilever tie-up will allow the brand to expand globally.

She added: “This partnership will provide Dermalogica with the resources to take the brand to even greater heights and help us continue our legacy in supporting the next generation of professional skin therapists and women entrepreneurs worldwide.”

However Ildiko Szalai, senior analyst of beauty and rersonal Care at Euromonitor International told Marketing Week that the acquisition is part of an ongoing investment strategy for Unilever.

She explained: “Unilever’s strategy to build a portfolio of premium-positioned, niche skin care brands is clearly reflected in this current acquisition of Dermalogica, following the two purchases since the beginning of 2015: REN and Kate Somerville.

“Dermalogica had well established presence through salons, department stores and growing sales through beauty retail channels. In Western European premium beauty it has registered an 8% CAGR between 2009-2014.

The lucrative growth opportunities offered by well-performing niche brands and categories have been captured is being multinationals through intense acquisition activity in 2014 and on into 2015. Niche brands have the advantage of a more personalised offering , unique features and benefits and are highly specialised in their focus categories.”

Terms of the Dermalogica deal were not disclosed while the transaction is subject to customary regulatory approvals according to Unilever.

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