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Unilever Adds Murad to Growing Prestige Portfolio

Unilever’s ceo Paul Polman said the clinical skin-care brand has “excellent potential for expansion.” 

LONDON — Over the past year, Unilever has made no secret of the fact that it wants to develop its premium cosmetics offering, and in the past months the personal care giant has ramped up that strategy, acquiring four niche skin-care brands since March.

The latest acquisition is Murad, the American clinical skin-care brand, with Unilever announcing the purchase last week. The terms of the deal were not disclosed, and the deal is expected to close during the third quarter of 2015. That followed the acquisition of Dermalogica – which Unilever bought in June, in a deal that is also expected to close during the third quarter – Kate Somerville and Ren, all of which Unilever acquired this year and make up its new Prestige division.

The Prestige division also encompasses Unilever’s premium toothpaste line, Regenerate and the Nexxus hair-care brand, and the London-based division is overseen by Vasiliki Petrou, Unilever’s senior vice president of prestige brands.

According to Ildiko Szalai, senior analyst, beauty and personal care at research firm Euromonitor International, the Murad acquisition will allow Unilever “to reach out to another niche consumer segment in premium skin care.” “Murad stands out in Unilever’s new premium portfolio with claims of practical clinical experience built into its product range and its offering of dietary supplements and lifestyle programs for skin health,” said Szalai.

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Murad, which had a turnover of $115 million in 2014, was founded in 1989 in Los Angeles by Howard Murad M.D., a dermatologist, pharmacist and UCLA professor. Murad established the line by developing antioxidants, antiinflammatories, and hydrators to address a variety of skin-care concerns, from acne to antiaging.

Paul Polman, Unilever’s chief executive officer, said in a statement last week that Murad “offers products in a differentiated clinical and holistic well-being segment. It has a loyal following that gives it excellent potential for expansion, and wonderfully complements the brands recently acquired.”

Howard Murad added: “With Unilever, we can broaden our reach and significantly grow our brand while remaining faithful to the founding principles of Murad. There is a very bright path ahead.”

Murad has a significant presence in the U.S. through professional salons and spas such as Massage Envy, and specialist retailers such as Sephora, Ulta and Nordstrom. It also has a regional hub for Europe located in the U.K., and the brand can be found in more than 42 countries, in department stores, pharmacies, spas and salons.

And according to Euromonitor’s figures, Murad achieved a compound annual growth rate of 11 percent in the U.S. between 2009 and 2014. In 2014 Murad’s parent company purchased its U.K. distributor with the aim of accelerating expansion in Europe, and Szalai noted that Unilever’s “large-scale go-to market infrastructure” will help with that aim. However, Szalai cautioned that as Unilever’s portfolio of stockists is largely mass-market, “it will need to develop its premium channels for its growing portfolio.”

Szalai also pointed out that Murad has operations in Hong Kong to aid its Asian expansion. The analyst described the Chinese premium skin-care market as Murad’s “most attractive target,” given that the country is forecast to generate 60 percent of the global premium skin-care value growth between 2014 and 2019.