'Very strategic addition’: L’Oréal to acquire US skin care brand Youth to the People

09-Dec-2021 - Last updated on 09-Dec-2021 at 15:42 GMT

LA-based skin care brand Youth to the People offered a range of superfood-charged products, including kale, green tea and spinach cleansers and exfoliants [Image: Youth to the People]

Beauty major L’Oréal has signed an agreement to acquire US superfood skin care specialist Youth to the People in a move set to deepen its ethical offering in an increasingly competitive market, say experts.

Founded in 2015, the LA-based skin care company manufactured a range of vegan skin care products made using what it described “unconventional superfood ingredients”, including kale, green tea and spinach, across a range of formats like cleansers, face creams, serums and exfoliants. Available in the US, Canada, Australia and select European countries, its products were stocked on its own-brand site, but also in a range of online and in-store retailers including Sephora, Cult Beauty and Amazon.

L’Oréal said Youth to the People’s 2021 sales were expected to hit more than €44.1m ($50m) –growth that had been supported over the years by investors Sandbridge Capital, Strand Equity and Carisa Janes. The acquisition, still subject to regulatory approvals and other customary conditions, would see Youth to the People integrate into L’Oréal’s Luxe division – a business unit that had also seen significant growth in recent months, with sales up 24.9% for the first half of 2021. L’Oréal also recently onboarded Japanese skin care brands Takami Co into the L’Oréal Luxe division in a move set to support skin care growth in Japan and the wider APAC region.

‘Healthy, vegan, high-efficacy formulas’

Cyril Chapuy, president of L’Oréal Luxe, said the Youth to the People brand, founders and its wider team were a good fit for the division. “Its skin care expertise based on healthy, vegan, high-efficacy formulas make it a very strategic addition to L’Oréal Luxe,” Chapuy said.

Importantly, he said the brand’s core values, solid reputation and “remarkable product quality” appealed to all genders, especially as it had a “distinct spirit reflected in its initiatives to amplify diverse voices, build a fairer world and enhance consciousness of the planet”. And these values, he said, would be “further celebrated at L’Oréal” given they were true to the beauty major’s own.

Stéphane Rinderknech, president of North America and CEO of L’Oréal USA, said: “We have been inspired by the passion and vision of the brand’s two founders, Joe Cloyes and Greg Gonzalez, in bringing the best of the health-conscious, California lifestyle to high performance beauty. We believe in the potential of this special brand, and we look forward to working with the Youth to the People team to help them realise this potential.”

Youth to the People founders Cloyes and Gonzalez said they were “beyond excited” on joining L’Oréal and with the opportunity to “amplify” the companies’ shared values and continue to invest in “a just and sustainable future for all”.

THE EXPERT VIEW

Latest in ‘wave of acquisitions’ by big beauty

Samantha Dover, global beauty analyst at Mintel, said L’Oréal’s move to acquire Youth to the People formed part of a wider movement of big beauty players snapping up “emerging brands”.

“Youth to the People has garnered a cult following with its ingredient-led formulations, alongside its commitment to both people and planet. Teamed with the brand’s growing sales and customer base, that conscious positioning makes it an attractive proposition for L’Oréal, which continues to ramp up its commitment to sustainability, particularly as consumers trust smaller beauty businesses more when it comes to ethical and eco-friendly practices,” Dover said.

According to Mintel data, 34% of UK adults believed small and independent beauty and grooming brands were more ethical than big brands. Data also showed most consumers in France (51%), Germany (63%), Italy (52%), and Spain (54%) were more loyal to beauty and grooming brands that were trying to reduce their environmental impact.

Dover said one point of interest with this acquisition to watch would be how the deal impacted Youth to the People’s #WeAreAllies campaign in which it had forged a commitment to work with competitor brands REN Clean Skincare, Caudalie, Biossance and Herbivore in order to tackle the sustainability crisis.

An ‘increasingly competitive’ beauty landscape

Carmen Bryan, consumer analyst at GlobalData, agreed and said the move to acquire Youth to the People was a “logical step” for L’Oréal.

“The beauty landscape is becoming increasingly competitive and 2021 has been marked by a number of key M&A activity, including Estée Lauder’s acquisition of Deciem and Sephora’s partnership with Zalando,” Bryan said.

Youth to the People’s current positioning, she said, made it well-placed to benefit from current consumer trends in skin care. “The brand claims that its formulations are vegan, cruelty-free, and ocean safe when washed off – all key concerns of the modern consumer.”

According to GlobalData’s Q3 2021 consumer survey, 45% of European’s find vegan claims in personal care products to be somewhat or very appealing, and half of respondents agreed that they were either somewhat (33%) or completely (18%) more loyal to brands supporting green or environmental causes.

“The acquisition will help L’Oréal better align to these trends as consumers seek ‘kinder’ and ‘clean’ products – both of which are trends that Youth to the People claims to champion. The brand’s use of superfoods also lends well in the current consumer climate, as many are seeking natural products. Superfoods such as green tea, spinach and kale have the added benefit of feeling familiar and safe to consumers in comparison to scientific-sounding terms that may be off-putting to some people,” Bryan said.

In Europe, natural ingredients remained “extremely popular”, with 84% of consumers agreeing they were very or somewhat appealing. Similar responses were seen on a global level (86%), she said, which also reflected the “strong potential” Youth to the People had with its range worldwide.