Procter & Gamble is betting big on prestige beauty.
The consumer goods giant is acquiring Tula Skincare — its third deal in two months and seemingly the largest, as well. Terms of the deal were not disclosed but Tula — a probiotic, superfoods-based skin care line founded by gastroenterologist Roshini Raj, Bobbi Brown cofounder Ken Landis and tech entrepreneur Dan Reich and backed by L Catterton — was reportedly on track to reach about $150 million in net sales for 2021. That makes it almost twice the size of Farmacy Beauty, which P&G bought in November, and three times that of Ouai, the hair care brand it snapped up in December.
Taken together as a group, along with P&G’s existing portfolio comprised of SK-II and First Aid Beauty, the company is significantly increasing its presence in specialty and premium channels, going head-to-head with rivals including L’Oréal, Unilever and the Estée Lauder Cos.
“When we look at our beauty strategy, we want to win in beauty in the categories we choose to play in — skin, hair and personal care, categories where the clinical performance of the products makes a difference,” said Markus Strobel, president of global skin and personal care. “We want to win in the industry — in different channels and segments. Wherever we feel that there is a gap in our portfolio, then we want to close it.
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“The prestige beauty channel is growing double digits so it is a channel where we want to have a stronger presence with a tight portfolio,” he continued, “a portfolio that covers the key benefit spaces that we feel will be growing in the future.”
Founded in 2014, Tula has posted explosive growth since its inception, an early entrant in the conversation around probiotics in beauty that connected the dots between beauty and wellness. It is both the fastest-growing prestige brand at Ulta Beauty and also a direct-to-consumer powerhouse, with about half of its sales coming from that channel. Millennials are its core consumer base, with about 75 percent of customers below the age of 35.
“We are really at an inflection point as a brand,” said Tula chief executive officer Savannah Sachs, who has led the growth and will stay on board as the company’s leader under its new ownership. “We have an incredibly talented team whom I’m humbled to work alongside. Yet we feel we are just getting started and scratching the surface of long-term opportunity. We have stayed very focused to date. As we look ahead to driving continued growth, there is so much white space.”
International is one such area. In August, Tula launched in Sephora Canada, its first foray abroad. While Sachs declined to specify which markets are next, she did say that the company will have news in that area “soon.”
Product-wise, Tula launched body care in December and has dabbled in hybrids that combine makeup and treatment properties, as well as ingestibles. Moving forward, skin care will continue to be the primary priority. “Our focus is on bringing powerful, clinically proven skin solutions to each step of our consumer’s routine,” Sachs said. “It’s energizing to be able to continue to run toward our vision and drive growth, since we will operate independently, but at the same time be able to tap into P&G’s capabilities.”
The brand has also been a vocal proponent of beauty positivity, committing to no retouching in its advertising and to changing the language around skin care, an ethos that fits in with P&G’s Responsible Beauty platform.
“The brand story of holistic wellness and the health of your skin starting from the inside out is a powerful idea and the way that Tula has brought this to life with skin care is amazing. It’s a super interesting space for us,” said Strobel, adding that after he read an advance copy of Raj’s upcoming book, “Gut Renovation,” he’s become a convert to kombucha.
The transaction represents another successful exit for L Catterton, whose current beauty portfolio includes investments in Il Makiage, Function of Beauty and Kopari.
“Tula represents some of the major trends that we are seeing in skin care today — efficacious products with an ingredient story that taps into health and wellness and a culture of inclusivity and skin positivity,” said Jon Owsley, managing partner of L Catterton’s Growth Fund. “From the beginning of the company’s discussions with P&G, it was clear that P&G understood the essence of the brand and shared in the vision and mission.”
As for P&G, Strobel isn’t ruling out more deals in the near future. “In this industry you’re never done because beauty is so dynamic. We have a certain strategy and certain criteria for what we’re looking for,” he said.
“Under [P&G Beauty CEO] Alex Keith’s leadership, we have got our mojo back as a beauty company,” Strobel continued. “Beauty is growing — and we want to be not only participating in that growth but a driver.”
Financo Raymond James was the exclusive financial adviser for Tula.