While many in the beauty industry panicked this year as beauty sales growth slowed, investors, bankers, executives, founders and other industry insiders at Beauty Independent’s Dealmaker Summit expressed selective optimism about the state of business.
There were over 120 attendees from retailers, venture capital firms, investment banks, brands and more such as Unilever Ventures, Fable Investments, Space NK, JamJar Investments, Felix Capital, Raymond James and Rothschild & Co at the event, which ran from Nov. 11 to 12 in London. If you weren’t able to attend, we dug into the discussions at Dealmaker Summit to highlight insightful comments from the stage.
The Merging Of Beauty And Aesthetics
Andrew Stanleick, president of skin health and beauty, North America at Kenvue and former CEO of Hydrafacial, said, “Consumers no longer see beauty and health as separate…It’s one, and it’s driven this growth of beauty. Consumers are just so much more educated, more conscious of what goes in and on our body, and that’s what’s fueling the growth of this aesthetic sector and health and wellness in general. It’s a $24 billion market, growing at 8%. It’s very attractive.”
Agreeing, Olivier Garel, managing partner at Unilever Ventures, the VC arm of Unilever, said, “L’Oreal just invested in Galderma. You have the IPO of Galderma. That whole category is becoming very much a part of people’s daily or regular beauty regimen. So, I think there will be innovation and ways to play that category.”
Barriers to the march of aesthetics include provider shortages, regulatory complexities and the high cost of clinical trials. Expansion into the sector by non-core providers such as dentists and aestheticians raises concerns about standardization and consumer trust. Fragmentation across technologies, economic pressures and bifurcated markets present hurdles, too.
Hanadi Al Hamoui, managing director in consumer and retail investment banking at Bank of America Merrill Lynch, said, “We are also seeing the rise of new Asian alternatives, so cheaper products for the cost-conscious consumer. For instance, Hugel, which is one of the largest aesthetics companies in Asia, sold a stake to CBC Group, that’s an interesting transaction. Are consumers really going to buy the cheaper fillers or not? I mean, we see a market for that. I don’t think the educated consumer will, but there is a market for that.”
Fragrance Premiumization
Margaret Mitchell, chief merchandising officer at Space NK, is bullish on the fragrance category over the next year to two years. At Space NK, she shared it was up 90% in October, with luxury brands such as Byredo, Creed and Parfums de Marly performing well. She said, “They have extreme longevity as brands. They also demonstrated the ability to be relevant in social media and to continue acquiring their customer. So, it gives them future runway…What we’re seeing is that the young customer on social media is setting trends and is driving traffic and is bringing a conversation to fragrance that is completely new at all price points.”
Panelists at the Dealmaker Summit explained consumers’ preference for premium and personalized experiences heightens expectations for lower priced brands, making them riskier investments. Acquisitions in fragrance are lagging behind other categories as strategic buyers and private equity firms wade through the niche fragrance crowds in an effort to identify winners.
Sandra Nait-Amer, managing director of luxury, fashion and beauty at Rothschild, asserted that fragrance dupe brands are becoming legitimate acquisition targets, though one hasn’t traded yet. Acquirers are hesitant about picking up brands that rely solely on dupes, but, as dupe brands hone their craft, some have started to introduce original fragrances at accessible prices that consumers already familiar with their names are scooping up.
Nait-Amer said, “One of them has $100 million in revenue. Suddenly, it becomes interesting…They’re becoming brands in their own right.”
Longevity Movement
Longevity brands are experiencing an investment surge, with deal activity in the space tripling between 2023 and 2024. Susan Lin, an investor at Felix Capital, which has Goop, Peloton and Allplants in its portfolio, said, “There has been a huge uptick in consumer interest and also awareness and knowledge in this space…What we’re also seeing is translating to consumers willingness to spend much more. From the venture perspective, it is a very broad market, and there are a lot of very credible, very thoughtful players.”
Executives and entrepreneurs helming longevity brands advise that they demand patience and long-term commitments that might be tricky for traditional VC investment horizons. Timeline, the supplement and skincare brand backed by L’Oréal VC fund BOLD, dedicated 12 years to research before launching its first product. Federico Luna, CMO at the brand, said, “It would be very difficult to do quite honestly with a traditional VC model.”
Color Cosmetics Challenges
In 2024, early-stage deal flow in color cosmetics dried up, with zero pre-seed or series A funding deals as of November. Market saturation and the dominance of celebrity-backed brands like Rare Beauty and Fenty have intensified competition. Investors are cautious, prioritizing proven, value-driven assets over untested newcomers. In the cautious environment, Rare Beauty, which had been circling a $2 billion valuation, paused its sale process, according to reporting by the publication Axios.
Josie Buck, principal at Venrex, an early-stage investment firm backing brands like Charlotte Tilbury, Lisa Eldridge and Vieve, said, “We’re in this place now where we do have a number of larger brands who are waiting to exit and that is a little bit of a backlog.” She added, “While growth investors might hesitate, we remain confident in the demand for new brands…A distinctive, disruptive brand, they have the ability to consistently cut through the noise and get noticed and recognized by their consumers. Some of them do it by being fronted by celebrity, others do it through disruptive marketing tactics.”
Tickets for Dealmaker Summit New York are available here.
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