By and  on December 1, 2017
Nest Fragrances Black Tulip

It's not just holiday shoppers that are looking to spend — the beauty M&A markets are busier than ever this holiday season.Recent deals, including Eurazeo Brands' $70 million majority investment in Nest Fragrances and Beauty Partners' purchase of Coastal Salt & Soul, which were both revealed Thursday, underscore investors' continued appetite for beauty companies. The demand has lasted several years.The Nest transaction was the first deal from Eurazeo Brands, the New York-based consumer and retail fund of the Paris private-equity firm. The deal is also Eurazeo's first investment in a beauty brand. Eurazeo Brands is headed by chief executive officer Jill Granoff, a beauty and fashion veteran.

Founded in 2008 by Laura Slatkin, who is reinvesting in the business as part of the Eurazeo deal, Nest makes home scents and fine fragrances. The company is best-known for its candles, but also makes reed diffusers and launched a Liquidless Diffuser, which has scented sticks instead of reeds dipped in liquid, earlier in 2017. Industry sources said the brand will do between $70 million and $80 million in retail sales for 2017, up from between $60 million and $70 million for 2016. WWD previously reported Nest hired Moelis & Co. to conduct a sales process.

At a minimum, Granoff said she thinks Nest could double or triple the size it is today. “[There is] a lot of runway for growth, both by increasing penetration with existing partners and existing categories, as well as layering on new distribution options and new geographies,” Granoff said. Right now, Nest is primarily focused on the U.S. market, but plans to use its new relationship with Eurazeo to guide which international markets might make sense down the line, according to Nest chief executive officer Nancy McKay. The company will also test stand-alone doors at some point, likely with pop-ups, Granoff said.

McKay, who joined Nest after a 28-year stint at the Estée Lauder Cos., also sees room to deepen and expand Nest’s product categories, she said. “We have quite a bit of opportunity within product offering and product categories to continue to be innovative within the home fragrance space, as well as disruptive…within the fine fragrance space,” McKay said. Nest’s fine fragrances portfolio includes 10 fragrances in eau de parfum, rollerballs and body creams.

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