Professional beauty remains a popular hunting ground for acquisition targets, with small and mid-sized brands offering growth potential to their future owners. Both Unilever and Colgate have pursued professional skin care with this strategy in mind, with Unilever’s Dermalogica gaining ground through retail expansion and Colgate-owned EltaMD making progress in the Chinese market. Brand stewards have pursued opportunities in this space including attracting new (younger) consumers and new, advanced products. The recently published 2019 edition of our Professional Skin Care Global Series report indicates that this is still a market filled with vitality, as sales reached $8 billion at the manufacturers level globally in 2019, showing a healthy gain of 5% over the prior year.
What’s in store for 2020? A group of fast-growing brands that were once known as “newcomers” may be ripe for purchase near-term, including mid-tier brands Alastin and Skinbetter Science. Boasting its TriHex technology, Alastin promotes its products that are right for aesthetic pairing while maintaining a strong social media presence and network of doctor influencers. Also on the M&A radar is the popular HydraFacial spa service, which offers a 30-minute service that can be customized and thus appeals to a broad consumer base.
Heading up the pack is ZO Skin Health, which has enjoyed tremendous growth in the United States as well as abroad, namely Europe. The brand received high marks from its doctor partners, as cited in our Physician-Dispensed Skin Care: Perception and Satisfaction Survey published in June. Doctors favor this brand due to its dedication to training and education as well as its product portfolio and innovation. The brand continues to exhibit steady growth both in the United States and in Europe under the stewardship of a strong executive team which has stayed stable for several years. ZO is clearly a top industry performer and an attractive candidate should its owners seek to take advantage of the healthy premiums in this still-strong M&A market.
Looking forward, opportunities will also arise in the fast-growing Chinese market, with local brands such as Collgene & Comfy driving growth in the expanding medical providers channel. In Europe, brands to watch in the medical channel include QMS Medicosmetics and Medik8. We will keep an eye on the key market movers for 2020 and their success in the next edition of our Professional Skin Care Global Series.