Whatâs Going On Here?Cosmetics colossus LâOrĂ©al announced this week that itâs buying Aesop, the luxury skincare brand. What Does This Mean?L'OrĂ©al 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 â ahem â 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'OrĂ©al. After all, the firm really dug deep for this one: it took months of negotiations before L'OrĂ©al outshone competitors with a deal valuing Aesop at $2.5 billion. That cash injection could save the skin of the high-end brandâs former owner, Natura, too â helping the company trim its debt and focus on the other businesses it owns. Why Should I Care?The bigger picture: Aesopâs fabled riches.
Itâs no wonder that L'OrĂ©al had Aesop in its crosshairs. After Natura bought it in 2013, the brand shot past its other ventures â like Avon and Body Shop â at hair-raising speed to become the firmâs most profitable business. And just last year Aesop scored another touchdown, with a debut in China that overshot everyoneâs expectations. That bodes pretty well for growth markets like India, Japan, and South Korea â and if anyone's got the smarts and the global distribution prowess needed to drive further expansion, it could be L'OrĂ©al.
Zooming out: Slip me some skin.
Skincareâs 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 â and the aging West is likely to buy more anti-aging products as folks fight off wrinkles, eyebags, and crowâs feet en masse. Plus, with environmental consciousness on the rise too, Aesopâs eco-friendly elixirs of youth could be a very clever bet indeed. | 