The overlap between the beauty and aesthetics industries is increasing. L’Oréal recently took a 10% stake in Galderma, the pure-play dermatology company that markets Botox alternative Dysport, and Crown Laboratories announced it’s acquiring Revance Therapeutics, the company behind Daxxify, another Botox alternative.
To make sense of these moves, for the latest edition of our ongoing series posing questions relevant to indie beauty, we asked 14 beauty investors, investment bankers and consultants the following: What can they tell us about the growing relationship between the beauty and aesthetics industries? Do you believe there will be more moves marrying these industries? If so, what could they look like?
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Rich Gersten Co-Founder and Managing Partner, True Beauty Ventures L’Oréal’s acquisition of a 10% stake in Galderma and Crown Laboratories’ acquisition of Revance highlight a growing trend of convergence between the beauty and aesthetics industries. Noninvasive aesthetic treatments may represent a key growth area for traditional beauty companies.
The Growing Synergy Between Beauty And Aesthetics
- Expanding consumer demand for aesthetic treatments: The beauty industry is increasingly recognizing that consumers are not just looking for topical solutions, but are also interested in more long-lasting, minimally invasive procedures. Products like Daxxify, which are alternatives to Botox, are in high demand as they offer consumers ways to achieve aesthetic goals with relatively low commitment and downtime. By investing in or acquiring companies that specialize in these treatments, beauty companies can tap into this burgeoning market and offer a more comprehensive range of beauty solutions to consumers.
- Diversification and innovation: Large beauty companies continue to diversify their portfolios, allowing them to stay competitive in a market that increasingly values holistic approaches to beauty.
- Strategic positioning for future growth: These acquisitions position beauty companies to capitalize on the expected growth in the aesthetics market. As consumers continue to seek out both preventive and corrective aesthetic procedures, companies with a presence in this space would be well-positioned to benefit from the increasing acceptance and adoption of these aesthetic procedures.
Future Moves And Industry Trends
I anticipate more moves that will lead to an increased convergence in these industries.
- More strategic acquisitions and partnerships: Larger beauty companies are likely to continue acquiring or partnering with aesthetics-focused firms, particularly those specializing in noninvasive or minimally invasive treatments. This could include companies that develop injectable treatments, laser therapies, biotechnology or advanced skincare technologies that blur the line between beauty and medical aesthetics.
- Innovation in hybrid products: The blending of beauty and aesthetics could lead to the creation of new hybrid products that combine the benefits of skincare with the results of aesthetic treatments. For example, topical products that enhance the effects of injectables or skincare products designed specifically for post-treatment care could become more prevalent. New brands such as Viktor Michael would be an example of this.
The lines between beauty and aesthetics are becoming increasingly blurred, with both industries potentially benefiting from the synergies created through these strategic initiatives.
- Sonya Brown General Partner, Norwest Venture Partners
The connection is certainly tightening between clinical aesthetics and the broader beauty industry. We believe one key driver of this tightening is the rising use of weight-loss drugs. These drugs will increase demand for aesthetics as people loose fullness in their face and seek fillers, lasers and plastic surgery to solve skin elasticity after weight loss. This issue is relevant at any age and will continue to bring consumers entering aesthetics earlier.
Additionally, beauty dollars are being allocated to services, and with the rise of traffic through med-spas, more purchasing is happening through beauty services channels as well. It makes sense that a science-based leader like L’Oréal, who participates in the aesthetics clinical channel through Skinbetter and Skinceuticals, would strive to gain more wallet share from these customers.
- Andrew Stanleick Beauty Industry Veteran
These moves reflect a growing consumer movement that has accelerated since the pandemic: the growing convergence of beauty, health and wellness. It is the notion that consumers no longer view beauty and healthcare as separate. I call this the “medicalization of beauty.”
Gone are the days when consumers were willing to spend hundreds of dollars for that metaphoric hope in a jar. In 2024, consumers are smarter, better educated and demanding more from their beauty products. As aesthetic treatments have become more mainstream, more accessibly priced and more widely available, the traditional beauty industry now has to compete with the immediate and transformative results of toxins, fillers, lasers, micro-needling, Ozempic, etc.
In the competition for share of the wallet, aesthetics has rapidly become traditional beauty's most significant competitor as consumers demand science-backed, efficacious and personalized beauty experiences that deliver immediate results in a way that traditional lotions and potions never could.
This represents a turning point for our traditional notion of the beauty industry. Dare I say, in this age of Instagram, it’s a Kodak moment with the potential to radically reshape the industry. Companies will either need to adapt or get left behind.
With this example, L’Oréal has once again demonstrated that it is willing to take risks to lead the industry and seize the opportunity in the next frontier of the beauty economy: the untapped, fast-growing aesthetics market. Aside from the strategic advantages of this partnership in terms of R&D and access to each other's distribution channels, the data supports the investment thesis. American Med Spa Association and Boston Consulting Group valued the global aesthetics market at $21 billion in 2023, with a forecast to exceed a staggering $30 billion by 2028.
Penetration rates for injectables, medical devices and professional skincare remain below 10%, and innovation will fuel consumer adoption, especially amongst younger consumers and men. The market has already demonstrated through the Great Recession and the recent period of high inflation that it is resilient and is sticky as consumers, once exposed to aesthetic treatments, prioritize spending in this area to retain the habit of self-care.
With this attractive investment landscape, more companies will undoubtedly follow, so I believe this is just the tip of the iceberg. I expect to see more of the same as companies and investors flock to these under-penetrated, high-growth, high-margin, resilient performance beauty categories. Exciting times ahead!
- Sarah Woelfel Co-Founder and Partner, Cult Capital
L’Oréal and Crown Laboratories have a well-established history of investing in derm-focused brands that combine skincare with scientific innovation. L’Oréal’s acquisition of brands like SkinCeuticals and CeraVe reflects their commitment to dermatologically driven skincare solutions that deliver clinical results. These brands have become cornerstones of L’Oréal's portfolio, catering to consumers who prioritize efficacy and science-backed products.
Similarly, Crown Laboratories has strategically expanded its derm-focused offerings with the acquisition of StriVectin and Eclipse MedCorp, both of which are recognized for their scientifically advanced skincare products. These acquisitions have allowed Crown to build a robust portfolio that spans both consumer skincare and professional-grade aesthetic solutions.
The recent investments in aesthetic-focused companies like Galderma by L’Oréal and Revance by Crown Laboratories represent the next generation of this strategy. By integrating products like Dysport and Daxxify—Botox alternatives—these companies are blurring the lines between traditional skincare and medical aesthetics. This evolution aligns with the growing consumer demand for products that offer the effectiveness of dermatological treatments within the beauty regimen.
These moves suggest that L’Oréal and Crown Laboratories are not only expanding their influence in the skincare market but are also positioning themselves at the forefront of the rapidly converging beauty and aesthetics industries. The future of skincare will likely continue to blend therapeutic efficacy with aesthetic innovation, driven by these forward-looking investments.
- Jeremy Triefenbach Founder, DFN Ventures
Due to the regulatory nature of aesthetics products, it never made sense for large beauty companies to dive deep into the aesthetics industry. Product development, sales processes, distribution infrastructure, price model, supply chain, you name it, the industry is very different.
However, the key break in the ice is that consumers now identify aesthetics as beauty services. Retail private equity investors in the past five years have gone all in on rolling up providers across the county. This tipping point in consumer adoption is the real game changer for big beauty to start investing.
I think a small ownership percentage is very thoughtful for getting started. My gut is that these investments will be a platform for executives at L'Oréal and others to start to understand how to evolve their infrastructure to make aesthetics a core area of growth over the next 10 to 20 years.
- Anna Whiteman Partner, Coefficient Capital
I do see the continued convergence of the beauty and aesthetics industries, especially as beauty brands lean much harder into clinical and professional validation to drive differentiation.
Consider first the explosive growth of the medical aesthetics industry at roughly 14% annually, attributable to both growth in units and variety of services offered within those units, according to McKinsey. Beauty brands would be missing out on a significant growth and distribution channel if they fail to crack the professional opportunity at hand.
Further, in a crowded brand landscape where consumers are more exacting and educated than ever, McKinsey found that nearly half of gen Z consumers will conduct extensive research before making a beauty purchase, the endorsement of and use in the professional channel can drive truly valuable brand moat.
For professionals, brand loyalty can also be translated into professional loyalty. In 2023, Boston Consulting Group found that, five years prior, “Only about 20% of consumers asked for a specific brand when deciding to undergo a filler procedure; today that number has grown to 30%.” Both brands and professionals can benefit from the consumers' increased intentionality in this space to drive retention.
Lastly, while overall beauty spending remains resilient through economic cycles, we do see consumers trading up or down within categories to map to their realities. Medical aesthetics tend to be a luxury that consumers may be more inclined to trade down in tougher times, which can often guide them to professionally vetted, clinically validated brands that function as their accessible luxury.
As such, I expect we’ll continue to see brands that can claim clinical levels of functionality (plumping,
filling, firming) at home, but the level of support from the professional channel will be imperative in providing credibility. - Qasim Mohammad Director, Wittington Ventures
We will continue to see stronger ties between beauty and aesthetics. I suspect that much of the M&A activity is largely being driven by the fact that certain types of cosmetic procedures are generating high growth, particularly neuromodulator injections (Botox, Dysport, etc.).
The American Society of Plastic Surgeons reported that 9.5 million of these injection procedures were done in 2023, up 9% from the year prior. The growth and high margin profile of these medical-grade procedures makes aesthetics an attractive market for beauty incumbents to extend into.
I also think the science-driven performance theme that is currently hot in beauty categories such as skincare is extending into medical grade procedures, with a growing number of customers opting for the latter. Several retailers are also doing a great job of blending beauty with aesthetics such as Formula Fig and the soon-to-be-launched Rennai beauty destination in Montreal.
I believe these sorts of experiences are training customers to not just think of beauty and aesthetics as being in separate buckets, but as a blended experience where one can feed the other.
- Emily Bullman Investor, JamJar Investments
There’s absolutely been a blurring of lines between these industries post-pandemic. In their search for the most efficacious treatments, more and more consumers are exploring a combination of beauty and aesthetics to meet their anti-aging needs.
This convergence has been further accelerated by the growing accessibility and improved experience of aesthetic treatments. As these services become more refined and widely available, they are increasingly being perceived as an extension of beauty rather than medical procedures. This shift presents a significant opportunity for brands as aesthetics begins to be seen as a legitimate component of the beauty industry.
Ultimately, efficacy is the top priority for consumers. The popularity of Ozempic, for instance, is a great parallel, highlighting how people are increasingly open to using injectables to achieve their best appearance. The lowering of barriers from both the demand and supply side has brought aesthetics into the mainstream. It’s evident that aesthetics is moving into the mainstream, either as a complement to traditional beauty treatments or as a new contender for market share.
Recent strategic moves by L’Oréal and Crown Laboratories illustrate this shift. By integrating aesthetics into their offerings, these brands are smartly positioning themselves to capitalize on the expanding overlap between beauty and aesthetic services. Expect to see more industry players follow suit as major beauty brands strive to stay ahead of evolving consumer preferences and trends.
- Andrew Shore Founder and Former Managing Director, Shore Companies and Moelis
The moves by L’Oréal and Crown Laboratories to enter the aesthetics markets with Galderma and Revance, respectively, could portend a growing relationship between the beauty and aesthetics industries given the rising demand for non-surgical and minimally invasive products.
However, this relationship will likely be two steps forward and one step back. The aesthetics market is advantaged—$10 billion in size with 12% growth, low penetration of 5%—and expected to double in the next decade, according to L’Oréal. Beauty companies need to be in the right place at the right time to assure long-term growth, and aesthetics is one of the markets it may have to be in.
The knock is the market is highly regulated by the Food and Drug Administration in the United States, and the United Kingdom is introducing new regulation to categorize procedures by risk.
The other is sheer size. The global beauty industry is still expected to be 20 times the size of the global aesthetics business by the end of the decade, with 4% to 5% annual growth. There still seems to be a lot of “wood to chop” in the beauty industry.
- Tina Bou-Saba Investor
These moves by L’Oréal and Crown Labs are fascinating and highly strategic, in my opinion. I’ve been surprised by how relatively quickly noninvasive aesthetics treatments have become mainstream. It makes perfect sense that a global beauty powerhouse like L’Oréal would want to plug into the aesthetics industry through this minority investment.
Presumably, they want to better understand how the industry will impact their own business and ensure that their portfolio is well-positioned to capitalize on consumers’ interest in aesthetic procedures and adjacent products. In the case of Crown Labs, this is an intriguing expansion into a new line of business that has strong tailwinds.
I fully expect to see more moves that marry these industries. The consumer has been highly vocal that she (and he!) are open to aesthetic procedures. The reality is that even the most scientifically advanced skincare is limited in its efficacy.
Don’t get me wrong, great skincare does work! But it can’t address concerns like deep wrinkles or laxity the way that injectables or lasers can (just a couple of examples). For consumers who elect to undergo aesthetic procedures, high-quality skincare is an important complement.
Fundamentally, successful companies need to follow the money, and it is clearly going toward aesthetic procedures! I don’t have data on average annual skincare spend versus aesthetic procedure spend for different consumer groups, but I have to imagine that the latter is significantly higher. Smart beauty companies understandably want a piece of that rapidly growing pie.
As for specific predictions, brands and products that specifically address pre-procedure, post-procedure and maintenance are clear opportunities. Expansion of med-spa and derm chains (sometimes funded by private equity) will surely continue. Practitioner education and employment opportunities are an important driver of industry growth, for everything from microblading to nurse injections.
I wonder when beauty retailers will dedicate sections to aesthetics-adjacent products. At the same time, brands and products specifically for the practitioner channel are a major opportunity. (For example, L’Oréal’s acquisition of Skinbetter Science in 2022.)
As a side note, I think that the most explosive growth of GLP-1 meds has some relevance here. I appreciate that for millions of people, these are crucial medical interventions, but, in my mind, there is a loose connection between people’s comfort self-injecting these drugs and some of what’s going on in the aesthetics space, less fear of needles and “medicine.”
- Odile Roujol Founder, Fab Co-Creation Studio Ventures
The definition of beauty should now include wellness and supplements and also noninvasive procedures and new spa services. The future belongs to brands and corporations understanding a broader approach to well-being in which people strive to appear younger for longer using noninvasive procedures instead of invasive surgery.
For corporations, the broader approach means participating or acquiring companies in the aesthetics space with science-based products and a rigorous way to develop them, checking carefully that they are safe and performing.
Also, in an era when people spend a lot of time watching video content and live events every day, the approach means understanding how to leverage the power of a community of experts such as dermatologists, academics, doctors, aestheticians, scientists and a new generation of aesthetic surgeons. It has to be agile, open-minded, and technology and data driven.
- Michele Miyakawa Co-Founder and Managing Director, Moelis
The L’Oréal/Galderma transaction may be a harbinger of things to come and definitely sends a message of how the landscape is changing. While the nature of the partnership was not disclosed, it’s interesting to note three things that came out of announcement of the transaction.
First, that L’Oréal is interested in the injectables space, which represents a beauty player looking beyond just a skin-deep interest. Second, that the investment is essentially in R&D and represents one of L’Oréal’s largest investments, which speaks volumes on the value of “optionality” in the area of discovery.
Third, the overlap of beauty and science is not just beauty companies seeking science-based solutions, but also pharmaceutical companies seeking to expand their reach with the consumer in the area of aesthetics and potentially topicals. All three things bode well for both the beauty industry and the consumer.
- Rose Fernandez Beauty Industry Expert and Advisor
I look forward to seeing how the relationship between L’Oréal and Galderma evolves. This partnership creates a lot of opportunities for both parties. The clinical or dermatological skincare landscape has demonstrated through its growth that the consumer wants products that are backed by science, work and have a medical relationship.
The reality is though that these products are still classified as cosmetics. While there are brands that can absolutely deliver results, their performance claims, ingredients used and formats are limited. Some brands have IP that could be expanded upon if there was category disruption.
The innovation in products, services and distribution that could come from this partnership are exciting prospects for beauty. We have seen companies like Musely bring prescriptions and dermatology through telehealth, and the consumer is definitely interested.
I predict that we will see elevated drug/skincare solutions being marketed and distributed differently and that there will finally be a broader destination to receive more mainstream injectables and procedures along with a drug-type product assortment to support these services.
- Nadia Lau Founder and Strategic Business Advisor, Aria Business Advisory
In recent years, we have seen exponential growth in dermatologist-driven and science-backed skincare brands as well as growth in the med-spa sector and consumers demanding transparency and efficacy in the products they purchase. There has also been an increased demand for noninvasive procedures due to advanced technology, shifts in consumer preferences and the growing demand to age gracefully.
L’Oréal and Crown Laboratories’ recent acquisitions underscores there will be continual growth and a deeper convergence between the aesthetics industries and the beauty industry beyond products and brands. The anti-aging customer base continues to grow, yet there is also a growing segment of customers who embrace gracefully aging, which requires new technology and new formulations to satisfy this customer segment.
For L’Oréal and Crown Laboratories, the acquisitions are strategic and complementary. They diversify segments and channels, allowing for improved and increased market penetration and access to a greater network and customer base. The ability to integrate complementary strengths and consolidate marketing strategies could lift customer acquisition dramatically.
The access to combined data will attract a broader customer base and strengthen consumer awareness across all channels. Recent industry reports show a dramatic shift in consumer behavior, and the convergence between the beauty, dermatology and aesthetics industries make these acquisitions a natural progression for expansion.
The blurring of the aesthetics industry and dermatology with traditional beauty will propel a shift in the natural and clean beauty sector with a bigger gap between the definition of natural beauty and clean beauty. This will manifest in the following ways:
Innovation and R&D collaboration: Combining the strengths of each company crossing over to a complementary market allows for more advanced research and development and technological innovation on new ingredients and formulations that satisfy customers' demand for effective solutions without harming the skin and environment.
Redefining clean beauty: Clean beauty may evolve beyond excluding harmful ingredients and include science-based and high-performance ingredients that are not harmful and mimic natural ingredients. Although this will not be an overnight shift, it will require new education for customers to embrace and feel safe and comfortable in this evolved space where clean beauty and science merge.
Widening the gap with natural beauty: Natural beauty will also undergo a shift such that where and how ingredients are sourced and processed and how they are formulated will be even more important. Their value proposition will be spotlighted as will be a brand's unique selling propositions.
With these acquisitions, both L’Oréal and Crown Laboratories will tap deeper into the professional practitioner segment, ultimately increasing their customer base and market share through greater collaboration on research and development on new advanced technologies and formulations, dermatological products, consumer devices and channels.
Beyond advanced scientific researched brands and products coming onto the market for consumers and professional practitioners, I believe there will be a greater cross-pollination between dermatologist, brands, holistic practitioners and med-spas offering both holistic treatments and traditional aesthetic treatments, especially with the exponential growth in the global med-spa market. Grand View Research indicates the med-spa market was valued at approximately $18.6 billion in 2023 and is expected to grow at a compound annual growth rate of 15.13% from 2024 onwards.
With the merging of the dermatology and med-spa sector, both will be able to access cutting-edge treatments and products and enhance their service offerings, creating an integrated and holistic approach to skincare and wellbeing. This integration could foster improved skin health from the inside out, while addressing issues like aging with scientifically backed solutions.
Overall, the acquisitions are strategically positioned to accelerate innovation and growth in the dermatology and beauty sectors, benefiting both end consumers and professional practitioners, with more opportunities for other companies to forge similar partnerships and perhaps to further merge the traditional and or holistic med-spa industry.
If you have a question you’d like Beauty Independent to ask investors, investment bankers and consultants, please send it to editor@beautyindependent.com.
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