NEW YORK — Maesa Group, the company behind Flower by Drew Barrymore at Wal-Mart and Circa at Walgreens, is sprouting again with the purchase of P2, a European beauty brand.
This story first appeared in the June 10, 2015 issue of WWD. Subscribe Today.
The 350-stockkeeping unit color line, is sold exclusively in 1,800 DM stores, Germany’s largest drugstore retailer. According to Maesa, it is number one or two in market share in most color categories. Maesa hopes to duplicate that success in North America with plans to launch with retailers as early as summer 2016.
Terms of the deal were not disclosed. Industry sources estimate P2’s annual sales exceed $100 million at retail.
The addition of P2 provides Maesa, which designs and produces private labels and exclusives, another vehicle to help retailers offer their own beauty items. The timing is fortuitous, retailers said, since they are on the hunt for cosmetics that differentiate their assortments from competitors while also bolstering gross margins and nurturing store loyalty.
Fueled by growth in exclusives, Maesa is on a growth projectile. Total revenues are expected to hit $185 million in 2015, post-acquisition, with a goal to reach $350 million by 2020, the company said. In addition to its exclusives, Maesa’s other businesses are private label manufacturing and outsourcing.
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P2, in particular, which includes a sister cosmetics line called Just Cosmetics (sold in another German chain called Budnikowsky), adds an established line with value pricing.
Gregory Mager, founder and chief executive officer of Maesa Group, believes P2 can fill the “white space” for quality products at reasonable prices. “Everything [in P2’s lineup] is made in either Germany or France,” he said of the line, which will carry average retail prices between $3 and $4 in the U.S. Many of the other lower-priced ranges sold by mass merchants are produced in China, he said. The products are also paraben- and fragrance-free, a growing interest in the U.S., retailers said.
P2 was founded in 2004 as a division of Palmers Textil, a lingerie retailer, and expanded to DM where it even “outsells L’Oreal,” Mager said.
“We don’t plan to sell it everywhere. We are looking at strategic retailers to partner with – we could do one in Canada and say two or so in the U.S.,” he said. “We see it as a canvas. One drug chain might like it as it is, or we can customize or tweak the assortment,” he added.
Retailers familiar with P2 said that in addition to the reasonable pricing, the brand removes some risks of creating lines since the formulas already have a proven track record.
Exclusives, such as Circa, Flower and ELLE at Monoprix, represent about 47 percent of Maesa’s business. Industry sources expect more launches are in the pipeline from Maesa.
Circa, Mager said, is off to a good start in Walgreens including strong sales in face a category that develops loyalty. Flower is expanding into Wal-Mart’s Sam’s Club (with specific club packaging). A fourth fragrance is set to debut along with body spray versions of all the Flower scents and a cosmetic bag collection.
In addition to exclusives, Maesa also has a stronghold in private labels, such as those it produces for Zara, The Body Shop and Rue 21 along with outsourcing for companies such as Elizabeth Arden and Parlux.
“This is a strategic acquisition of one of the most exclusive cosmetics brands in the world,” said Mager, adding the goal is to be the global leader in exclusive beauty brands.