Unilever is at it again — acquiring, that is.
The personal-care giant is buying Sundial, which owns SheaMoisture, Madam C.J. Walker and Nubian Heritage. The brand adds a multicultural offering to Unilever’s portfolio and builds up the company’s presence in clean beauty. Terms of the deal were not disclosed, but industry sources estimated Unilever likely paid around $1.2 billion given Sundial’s $240 million sales projection for 2017. Sundial and Unilever declined to comment on sales price estimates.
“We’re definitely bringing them an incremental consumer when you think about the multicultural consumer but also the Millennial consumer — SheaMoisture has a very strong Millennial consumer base,” said Sundial founder and chief executive officer Richelieu Dennis. “We’re also bringing a natural business to them, which is also incremental…a premium naturals business in [the mass market]. This is additive.”
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Plus, Dennis noted, Sundial brings a different business model into the Unilever fold — something he calls community commerce. That process entails selling “community commerce” stockkeeping units, with 10 percent of the revenues from those products going back to the cooperatives that make them. Those cooperatives are run by women in developing geographies, and the cycle generates up to a seven times increase in their income, according to Dennis.
“Our belief is that underserved communities can only become developed and sustainable if we have commerce in those communities and if we can have economic activity coming from within the community to support itself,” he said.
Unilever and Sundial have also committed $50 million to the New Voices Fund, which will supply women-of-color entrepreneurs with business funding, as part of the deal. The duo is looking to raise up to $100 million for the fund.
“Particularly in minority communities and underserved communities as a whole, businesses tend to take out and not put back in in a meaningful way,” Dennis said. “This isn’t about charity, this isn’t about handouts. This is about giving people in the communities that we serve an opportunity to have the same opportunities and the same access that anybody else has. It’s a big investment, [and] it’s going to fuel even bigger businesses and investments that can hopefully be much bigger than ours, and create tremendous value in those communities and for women of color….I tear up every time I think about it, to be honest with you.”
For Anglo-Dutch Unilever, the transaction follows allegations of racism after a Dove body wash advertisement — which the brand pulled — showed a black woman taking off a brown top to reveal a white woman in a white top. It also comes at a busy time for the business, acquisition-wise. Other recent deals include Hourglass Cosmetics, Carver Korea and Living Proof — but in the past few years, Unilever has also added Murad, Ren, Dermalogica and Kate Somerville — and invested in smaller beauty brands through Unilever Ventures. The deal marks an exit for Bain Capital, which invested in Sundial in 2015.
Sundial’s brands are known for being inclusive and ingredient focused, and are being added to a hair portfolio that contains TRESemmé and Suave.
SheaMoisture in particular has fared well lately in a slowing U.S. mass-market landscape. The brand makes hair, bath, skin care and cosmetics products that are paraben, phthalate, petroleum, paraffin, mineral oil, DEA, formaldehyde and propylene-free, as well a cruelty free. The brand is sold in Target, Ulta Beauty, Walgreens and other retailers. SheaMoisture generated $6.8 million in Earned Media Value for the first half of 2017, according to Tribe Dynamics.
SheaMoisture’s conditioner did $17.2 million in sales, a 28 percent year-over-year increase, for the 12-week period ended Aug. 13, according to IRI data. At Suave, the Professionals Hair Conditioner did $9.5 million in sales, a 25 percent increase, Essential Hair Conditioner was down 4.5 percent, at $6.6 million in sales, Keratin Infusion conditioner was down 2.7 percent, with $4 million in sales, and Sleek conditioner was up 2.8 percent to almost $2.4 million in sales for that period. TRESemmé’s Moisture Rich conditioner sales remained flat, at $9 million, and the Expert Selection Bontanique conditioner was down 5.7 percent, to $5.2 million.
Nubian Heritage, created in 1992, makes a line of deodorants, bath products, shampoo and conditioners, lotion, shea butters and other products. Madam C.J. Walker, a prestige hair-care line, has products that are sold online through Sephora, as well as QVC. The brand’s lineup includes Coconut & Moringa Oils Humidity Block Curl Gel, $26, Scent & Shine Coconut Oil, $26 and Brassica Seed & Shea Oils Silkening Blow Out Crème.
As part of Unilever, Sundial will operate as a stand-alone company and focus on growing its brand globally, according to Dennis, who will remain at the helm. Separately from the Sundial deal, Unilever announced that former P&G consumer beauty executive Esi Eggleston Bracey will become executive vice president and chief operating officer of Unilever North America Personal Care effective Jan. 1.
“We aligned and wrote out a manifesto as to how we would run the business so everybody is clear from the beginning,” Dennis said, speaking about Sundial as part of Unilever. “In the global marketplace, we have very little penetration — they have penetration across the globe. We now have access to those teams and infrastructures and resources and know-how to move into a market like Brazil.”