When Big Brands Sell Out – Unilever Buy Dermalogica

It is commonplace within the beauty industry for brands to be bought over/acquired by big multinational companies. Independent beauty brands are always joining the family of well known beauty industry powerhouses such as Estee Lauder and L’Oreal.  Its no biggy and for many it means you will see greater distribution of niche brands that were once hard to find. Take the cult NYX cosmetics brand – a drugstore favourite in America, that was somewhat hard to find outside of specialist retailers in Ireland and the UK.  L’Oreal made a very smart and strategic move when acquiring this range – it is a powerful cult brand among YouTubers who drive sales for the ranges many affordable ‘dupe’ products that rival many bigger brands such as MAC and Urban Decay.  We know YouTube and the beauty industry equals BIG business and through this take over, L’Oreal have in effect just bought a major share in the lucrative YouTube market by taking on NYX – an inspired move that will see them dominate the YouTube/Blogger market.

Dermalogica and Unilever

So yes it happens all the time and from a consumer point of view it can be a very positive move.  But what happens when a brand which has built its business on being a professional only range, serving the business needs of a salon with an array of results driven products and treatments, sells out to a huge company such as Unilever?  I am of course talking about the recent agreed take-over of Dermalogica by Unilever which was announced yesterday via this press release.

Dermalogica has always been an intriguing brand for me, more so from a marketing point of view than their actual product/treatment offerings. No, it is the business of Dermalogica has always captured my attention. They are a marketing powerhouse who have cornered a major part of the professional skincare market and for better or worse dominate it and for this I admire them. Their branding, incentives, training provided free of charge (or so it seems) are brilliant and I can see why salons levitate towards them and aspire to stock them. Dermalogica have built a brand that the consumer wants and recognises on a global scale.  However, I just don’t understand why salons accept the fact the brand will sell their product in ANYWHERE – whether it is the salon next door to you that just opened up, the high street store/beauty hall or even worse cut price online. In my mind these practices really show zero respect to the salons who invest in them and build their business around them.

So considering the fact that Dermalogica are already on a slippery slope whereby many therapists feel that they have already ‘sold out’ the professionals who helped build their empire – where now for the brand who are part of the Unilever family? For those of you not too familiar with Unilevers business or the brands they own, here is a brief intro from their website:

Unilever is one of the world’s leading suppliers of Food, Home and Personal Care products with sales in over 190 countries and reaching 2 billion consumers a day. It has 172,000 employees and generated sales of €48.4 billion in 2014. Over half (57%) of the company’s footprint is in developing and emerging markets. Unilever has more than 400 brands found in homes around the world, including Persil, Dove, Knorr, Domestos, Hellmann’s, Lipton, Wall’s, PG Tips, Ben & Jerry’s, Marmite, Magnum and Lynx.

Doesn’t exactly scream professional beauty industry does it? But I wouldn’t let that fact worry me as such, they do have a prestige  division “which is exclusively dedicated to select distribution and premium personal care brands”.  Dermalogica are far from exiting a professional market, but I do expect to see the brand finally start popping up en masse in chemists, large chain retailers etc over the next 5 years – they are there in many ways already present in that market in the likes of Harvey Nichols etc. But would I be surprised if I found Dermalogica on the shelves of Boots and similar at some stage in the not too distant future? Not. At. All.

While this post may focus on Dermalogica and their recent news, the point I am trying to make is this when the big boys buy out your favourite brand that was once touted as a salon/professional only brand – it will lead to a dilution in your market and increased competition for you . The new owners want to grow and expand the brand and see a return on their investment (which is likely to be in the billions of dollars) sooner rather than later, it is business after all and these guys are the big league. Other niche/salon brands which sold out in recent years include nail brand OPI to Coty Inc and Glamglow to Estee Lauder (which reportedly sold for approx. $125 million) . Dermalogica has been going for over 30 years, they have built a worldwide bestselling brand, they have set trends and in many ways defined a market. They were never going to continue to do it for ever and maybe it was time for the founder and driving force behind the brand Jane Wurwand, to get out and take a back seat – from a business point of view I don’t blame them, it is a very smart move. I do feel for the hundreds of thousands of salons and therapists they built their brand on – Dermalogica can be considered many things – but now more than ever, exclusive/professional only is not one of them!

If you are a Dermalogica salon or therapist and love and believe in the brand, keep going. If it works for you and your business, your clients love it and retail sales are good – fantastic, don’t let this news shake you, just be aware of what is going on with the brands you’re invested in and keep abreast of any changes which may effect your business in the future. As with any brand as long as you believe in what you work with and sell – your customers will too !

    1. Hi Louisa – great article, we share some of the same thoughts around the takeover. I don’t wish to see Dermalogica become a retail specific brand but fear that is the way it had been going long before the buy out. It will be interesting to see what the next few years will bring. They have released some strong products over the last few months and their stockists still seem fiercely loyal so that is a good sign.

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