8 months ago • 2 mins
Cosmetics colossus L’Oréal announced this week that it’s buying Aesop, the luxury skincare brand.
What does this mean?
L'Oréal used its tried-and-tested acquisition strategy when it snapped up CeraVe, a budget skincare company, back in 2017: nab a smaller brand, give it a makeover and an international rollout, and – ahem – rinse and repeat. But Aesop's cult global following and $500 million plus in annual sales seems to have prompted a strategy reconditioning by L'Oréal. After all, the firm really dug deep for this one: it took months of negotiations before L'Oréal outshone competitors with a deal valuing Aesop at $2.5 billion. That cash injection could save the skin of the high-end brand’s former owner, Natura, too – helping the company trim its debt and focus on the other businesses it owns.
Why should I care?
The bigger picture: Aesop’s fabled riches.
It’s no wonder that L'Oréal had Aesop in its crosshairs. After Natura bought it in 2013, the brand shot past its other ventures – like Avon and Body Shop – at hair-raising speed to become the firm’s most profitable business. And just last year Aesop scored another touchdown, with a debut in China that overshot everyone’s expectations. That bodes pretty well for growth markets like India, Japan, and South Korea – and if anyone's got the smarts and the global distribution prowess needed to drive further expansion, it could be L'Oréal.
Zooming out: Slip me some skin.
Skincare’s a pretty glossy sector right now, with estimates valuing the industry at $150 billion back in 2021 and tipping it to almost double come 2031. And those towering figures make sense: after all, consumers are increasingly health-conscious these days, especially post-pandemic – and the aging West is likely to buy more anti-aging products as folks fight off wrinkles, eyebags, and crow’s feet en masse. Plus, with environmental consciousness on the rise too, Aesop’s eco-friendly elixirs of youth could be a very clever bet indeed.
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