Unilever expects prestige skin care acquisitions to kick on and strengthen in 2016

22-Jan-2016 - Last updated on 22-Jan-2016 at 10:47 GMT

Anglo-Dutch consumer goods giant Unilever is expecting to strengthen its position in the prestige skin care market as its 2015 acquisitions are now all fully integrated and provide a strong base in this field.

Last year was very much one for prestige purchases for Unilever, buying REN in March, Kate Somerville Skincare in May, Dermalogica in June, and then adding Murad in July.

The acquisitions gave the company immediate exposure to the market, and now with them fully integrated, CEO Paul Polman believes that they can drive on from a strong base.

“2015 also marked our entry into prestige skincare with four acquisitions and a turnover approaching €400 million,” he says.

“This gives us critical mass and a good base of strong brands from which to expand and, again, integration going well and certainly within expectations.”

Unilever has just released its full year figures for 2015, revealing that turnover and sales both saw good growth, with Personal Care representing 38% of sales and 48% operating profit. The fourth quarter was particularly important as it saw the completion of the prestige integration, and this should bode well for future developments.

“On the prestige businesses, we've really continued to focus on integrating these businesses. And we've really just done that in the last quarter, so the businesses are now really part of the Unilever and we're looking at the synergies,” says Graeme Pitkethly, CFO.

“And the growth rates that we're seeing there are in line with our acquisition economics, actually slightly ahead, if I may be honest. But we're very pleased with that, but we don't publish them.”

Time to shine

CEO Polman believes that with the continuous improvement that the company has been seeing in its personal care business, it now has the critical mass to be a player in the prestige segment with these acquisitions.

With Unilever becoming the second biggest personal care business in the world after L'Oreal with these buys, much is expected from these buys, and analysts have already commented on how they will help the Dove skin care maker make a dent in a number of markets, of which prestige is the main one.

According to Kline, these acquisitions will allow Unilever to make gains in channels which until now were not the firm’s forte.

“In 2015, the trend towards acquiring successful up-and-coming, innovative brands continues. Some of the most notable headlines in the beauty industry in recent months are about who is being acquired by whom,” said Carrie Mellage, Vice President Consumer Products at Kline, after the Murad acquisition last year.

“More importantly, these acquisitions feature a new generation of competition for the leading companies—indie brands.”

For Unilever, these brands have given the company a great opportunity to expand into the prestige skin care sector with well-established brands, meaning it doesn’t have to start from scratch.