The Business of Beauty in 2024: A Year of Mergers, Struggles, and Innovation
A look into the trends and challenges shaping the beauty and wellness industries in 2024
The year 2024 is set to be a transformative one for the beauty and wellness industries. With the announcement of a daily newsletter by The Business of Beauty, industry insiders and consumers alike can expect a more comprehensive coverage of the global beauty landscape. As we delve into the dynamics of this ever-evolving industry, several key themes emerge, including a surge in beauty mergers and acquisitions, the struggles faced by celebrity and influencer lines, and the challenges for independent labels. Additionally, we anticipate a clearer definition of wellness and the potential for innovative advancements. Let’s explore these trends and their implications for the year ahead.
Beauty M&A: A Blockbuster Year
The beauty industry has wasted no time in making headlines with a flurry of mergers and acquisitions. Skincare label Dr. Barbara Sturm found a new home with Puig, while feminine wellness line The Honey Pot joined Compass Diversified. Notably, conglomerates like Unilever and Shiseido also made strategic acquisitions in the form of K18 and Dr. Dennis Gross. This trend is set to continue, with premier assets like Summer Fridays, Kosas, and Rare Beauty entertaining potential sales. Smaller brands such as Kiko Milano, Tree Hut, Pixi, and Erno Laszlo are also expected to hit the market. The success of recent acquisitions has sparked hope among brands of all sizes, as they seek to secure their place in the industry.
The Changing Landscape of Buyers
While the beauty industry is witnessing a surge in M&A activity, the landscape of buyers is undergoing a transformation. Conglomerates like L’Oréal and Unilever, once the go-to buyers, are now divesting from certain brands to align with stricter company mandates. As a result, financial sponsors and unexpected buyers are expected to play a significant role in 2024’s deals. Moreover, not all brands will find the desired buyer, as conglomerates focus on forever brands rather than trends like “clean” or “natural.” This shift in buyer preferences is reshaping the industry and forcing brands to adapt their strategies.
Struggles of Celebrity and Influencer Lines
While celebrity and influencer beauty lines have seen success in the past, the market is becoming increasingly challenging for these ventures. After the triumph of Rihanna’s Fenty Beauty and Selena Gomez’s Rare Beauty, many A-, B-, C-, and D-list celebrities and influencers have tried their hand at launching their own beauty and wellness labels. However, the market has not been kind to these lines, as demonstrated by the struggles of Morphe and Amyris in the previous year. Retailers are now relying less on these labels, and talent is moving on to other projects. This shift highlights the need for authenticity and a unique value proposition in an oversaturated market.
The Challenges for Independent Labels
The rise of independent beauty labels in recent years has led to a crowded market. However, the availability of capital has become more limited, and fast growth without profitability is no longer enough to attract investors or retailers. As a result, independent brands will face increasing challenges in establishing themselves and gaining traction. A rightsizing is on the horizon, where only the most innovative and financially sustainable brands will thrive in the competitive landscape.
A Clearer Definition of Wellness
The concept of wellness is evolving beyond supplements and CBD products. Themes like longevity and holistic treatments are shaping the beauty and wellness industries. Brands and retailers have an opportunity to tap into these emerging trends, whether through innovative skincare solutions, advancements in sleep products, or the creation of wellness-centric stores. The year 2024 holds the promise of more meaningful innovation and a redefined understanding of wellness.
Conclusion:
As we embark on a new year, the beauty and wellness industries are poised for significant transformations. The surge in mergers and acquisitions, the challenges faced by celebrity and influencer lines, and the struggles of independent labels all shape the landscape of the industry. Additionally, a clearer definition of wellness and the potential for innovation offer exciting possibilities. The Business of Beauty will continue to follow these stories and more, providing comprehensive coverage of the trends and developments that define the year ahead.