Key Takeaways From Boston Consulting Group and Jefferies Annual Beauty and Wellness Consumer Conference
At the annual beauty and wellness consumer conference held by Boston Consulting Group and Jefferies, global industry executives and leading private equity investors gathered to discuss important themes transforming the beauty and wellness space and what will drive the most compelling recent deal market within the consumer sector.
Among the key talking points was data from BCG’s recent consumer behavior survey (taken in August 2023), which found consumers’ intention to spend more within the beauty and wellness categories, compared to fashion, entertainment and even alcohol. Facial care and sun care are leading growth in overall beauty with growth also seen being driven by “ultra prestige” products. The aging U.S. population, those 55 and older, is driving growth in highest-penetrated customer demographic while a growing interest is being seen among Millennials in health and preventative care.
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BCG and Jefferies presented six areas of opportunities to consider, which included highly efficacious skin care at mass price points, products providing sensorial experience/escape, “skinification” and premiumization of body and hair, science-led functionality claims, condition-specific supplements for nuanced consumer needs, and natural sourcing and better-for-you ingredients.
Jefferies raised key themes in today’s M&A market including omnichannel strategies being rewarded, minority investments being increasingly en vogue and investor focus on consumable, recurring, recession-resilient offerings. It was further noted by Jefferies that while the volume of M&A activity in 2023 has decreased compared to the highs of 2020 to 2022, valuations have not seen any compression as strategic and private equity buyers continue to place significant premiums on growth-oriented beauty and wellness brands.
During a conversation on strategic acquirors with executives from Orveon, Nestle Health Science U.S., Kind, Nature’s Bakery and Mars, the speakers shared that companies are able to be discerning. Often, they said, buyers today want founder brands to be specific rather than broad also noting that the human side of a brand can be very important for an acquisition.
In a session that looked at the modern take on wellness, executives from Ritual, HumanN and Lemme shared their insights on the current state of supplements including a notable change since COVID-19 and an evolution in clean. The executives agreed that there has been a cultural shift since the pandemic with interest in nutrition earning a younger audience that they believe will continue to grow. Companies that enter the space, they said, should consider that “investing in the hard stuff,” like clinical studies and research on women’s health are paramount to finding success.
“With increased competition and claims for clean ingredients and clinical efficacy, consumers are looking for clearly defined standards to cut through the noise.” During the panel, it was said that in the last 30 years supplements on the market have increased from 4,000 to 90,000 without any major regulation changes. Instead, brands like Ritual, HumanN and Lemme are defining the standards.
In another panel executives with experience at Supergoop, Nest and Every Man Jack discussed growth in beauty including the blurring and expansion of categories. The beauty category is a resilient one, even in a recession, though today it’s about more than romance. As within the supplements category, the executives shared a need for transparency and the importance of “doing the right thing.” Now more than ever, it’s important to build a brand and retailers can help by educating on sustainability and clean ingredients on the shelves.
Notably, a category that the executives said has been growing quickly is men’s personal care. It’s important to serve the new generation of men, they said, and called out a growing interest in “below the belt grooming.”
To close the conference, Giorgos Tsetis, founder and CEO of Nutrafol, sat down with Brian Wood, managing director at Jefferies, who shared the journey of building an entrepreneurial, purpose-led company into a leading global health and beauty brand. The discussion specifically addressed Nutrafol’s alignment with many of the themes discussed over the course of the day, including the prioritization of scientific validation, outcome-driven products and maintaining the authenticity of mission even as a brand builds significant scale.
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