Outlook for the beauty industry in 2022
The beauty sector has become particularly attractive to investors in recent years, due to its high gross margins and enduring consumer popularity. Beauty has also become more accessible, with influencers and vloggers making over the masses through social media tutorials.
In 2021, the sector saw a rise in maverick disruptor brands which have attracted growing investor interest. These smaller, ‘indie’ brands, such as Glossier, have shaken up the sector with innovative new product lines targeted at specific demographics, such as the creation of more ethical and sustainable goods. In line with this disruption, in 2021 Arrowpoint Advisory played an integral role in key transactions in the beauty and personal care sector. Firstly, we advised founder and majority shareholder Shaun Pulfrey and management on the sale of his business, Tangle Teezer, to Mayfair Equity Partners. Shaun has been hugely successful in creating the leading global brand in his market and under new ownership Tangle Teezer will continue this journey through expanding its innovative product range and developing its global distribution.
Secondly, we delivered a successful exit for Palamon Capital Partners and the other shareholders of Feelunique, the fast-growing eComm beauty platform, in a landmark transaction, selling to the world's leading luxury product group LVMH Moët Hennessy Louis Vuitton providing them with a platform beauty acquisition in the UK for its subsidiary Sephora.
Looking forwards to 2022, the next generation of beauty disruptors will most likely be digitally focused. From using customer data to enable virtual try-ons, smart beauty devices and more, companies have seen the value in using tech and AI to improve their product and service offering. As a result, large beauty brands have been racing to snap up these innovative firms and integrate this tech into their offering. A prime example of this is when, in August last year Catterton-backed Il Makiage acquired artificial intelligence (AI) start-up Voyage81 for $40 million. Inevitably, there will be ongoing success for leading global brands with differentiated propositions. Digital-led businesses will continue to thrive, with consumer activity online across industries up anywhere from 15-30%, and with further headroom for growth, this year is expected to be a big year for the beauty sector.