We launched Unilever Prestige in 2014 when we identified an opportunity in what we call modern luxury. It was founded by Group CEO Vasiliki Petrou with a vision to create a portfolio of highly innovative brands, each with a strong purpose led by the founder that runs through his DNA.
In 2021, the business reached the key milestone of €1 billion in turnover, several years ahead of the target we had set for ourselves. And today, it is one of the fastest growing parts of Unilever.
Our portfolio currently consists of nine unique industry-leading brands that share a mission to drive social change and minimize their environmental footprint while providing exceptional products and services.
As Vasiliki says: “When we started in 2014, we saw this blank space in the market in terms of luxury brands anchored in purpose and social impact. Our brands are what I call modern luxury powerhouses with purposeful missions.”
Here’s a look at how Prestige has gotten to this point and what the future holds.
Vasiliki Petrou, CEO of Unilever Prestige Group
Growth is organic and through acquisitions.
Of the incremental revenue since 2017, 45% was delivered through organic growth and the remainder through acquisitions. Average underlying sales growth between 2019 and 2021 was 11%. And while more than 50% of our total sales come from e-commerce, for some brands the percentage is much higher. We have already doubled the turnover of some of our acquired brands since they entered the business.
unique proposals
Three of our brands play in the ‘clinical derma cosmetics’ space, the fastest growing area of prestige skincare. Dermalogica is the world’s #1 professional skin care brand, rooted in education. Murad is a doctor-led clinical and wellness brand, with the best-selling retinol line in the US and there’s Kate Somerville, a pioneer of medical aesthetics whose products are loved by celebrities and influencers.
Three brands are in the ‘clean and clinical’ space. Paula’s Choice is a highly effective brand, known for ingredient transparency, and direct-to-consumer power. REN works with natural bioactive ingredients to create clinically proven high performance products. And Garancia, which was the fastest growing premium skincare brand in French pharmacies last year.
Then we have three brands in other high-growth spaces. Hourglass is an innovative brand for consumers and makeup artists alike, and a leader in cruelty-free premium cosmetics. Tatcha, a luxury skincare brand rooted in Japanese rituals, is recognized as a social and digital pioneer. And Living Proof is a hair science biotech brand created in conjunction with MIT, with over a hundred patents worldwide.
Acquisitions that add value
We have rigorous criteria for evaluating new acquisitions and are only looking for strong brands with global appeal that will enhance our portfolio, remain relevant for at least the next 15 years, and bring new capabilities and talent. Of the hundreds of opportunities that exist, we will consider very few. Being selective and patient ensures that we create value for our shareholders in the long term.
“I always look for strong brands with authentic and differentiated stories,” says Vasiliki. “For me, a strong brand is one that has its own unique concept and is globally relevant in a high-growth space.
“After forming a partnership with a brand, we work with the founders and leadership teams, helping them by bringing inspiration and resources into the mix, especially around where the future is, how to scale and get to the future faster. ”
Where we stand in the broader premium beauty market
While the €130 billion premium beauty market is smaller than the mass market, it is growing at a faster rate. In fact, it is projected to grow by 8% in the next five years.
It is made up of four main categories: skin care, fragrances, color cosmetics, and hair. Skincare is at the core of our portfolio and seen by consumers as the most expert-driven. It was a strategic decision to move into skincare early, anticipating its growth potential.
Geographically, just ten markets account for more than 75% of sales. So the imperative for us is to win in the markets that matter. Currently about 60% of our revenue comes from the US and 40% from international markets. There are many growth opportunities in our key priority markets.
As Vasiliki explains: “Our priority is not to reach the largest number of consumers. Instead, it is vital to reach the right markets in the right way. While our mass-market brands benefit from being widely available, at Prestige a certain level of scarcity drives convenience.”
Our brand-first business model
We have created a business model that preserves the integrity of our brands while unlocking constant growth. The key to that is how our founders play a vital role in helping us shape the future, with all but one remaining involved post-acquisition.
For example, Dermalogica was created to be education first, product second, and today trains 100,000 therapists each year in more than 80 countries. Another example is the choice of Paula. Thirty years ago, Paula was way ahead of the industry when she published her book, Dispelling Ingredient Myths. This continues through the brand’s philosophy ‘beauty begins with truth’.
“I have always actively sought out the brands where the founders will remain deeply entwined in the business,” Vasiliki says. “It’s very important that we work with founders who really care about being involved in growing the brand.”
Building on strong heritage and iconic status, all of our brands take a social-first approach. This creates global communities of loyal fans who become the brand’s most influential advocates. The power of this strategy was made clear during the recent launch of Tatcha in the UK, which generated unprecedented demand with waiting lists, record sales and top-notch press coverage.
Moving with speed and agility
Our decentralized business model means we can react quickly to the latest trends. For example, our brands have moved quickly into social commerce. Dermalogica is enjoying success on TikTok and has launched a virtual reality store. Living Proof has a number of long-term influential associations. And we’ve gotten into gaming too, with Tatcha introducing her own island in Animal Crossing to mark the release of a new cleaner.
During Covid, we moved quickly to offer more of our products through e-commerce. This led to online sales increasing from 39% to over 50%.
“I am proud of the business model we have created, with a unique brand-first approach where there is no one-size-fits-all,” adds Vasiliki. “This model allows us to act quickly, react to evolving landscapes, and experiment, test, and innovate.”
Authentic social impact and purpose
Prestigious consumers have high expectations. Naturally, they demand excellent products and results. But they also want to be a part and contribute to something bigger.
Each of our brands has a clear mission of social impact. For example, REN’s We Are Allies campaign is a collaboration with competing brands to reduce packaging waste. And Tatcha supports a fund in partnership with Room to Read, which is dedicated to girls’ education around the world.
“If a brand doesn’t have a purpose,” says Vasiliki, “then it doesn’t belong here. We are building a business of authentic, principled brands that consumers trust and believe in. Consumers want to see the brands they love standing up for something bigger than beauty.”
A technology-first mindset
We have led the way in a number of market-first or industry-first technologies. For example, Natalia from Dermalogica is the first virtual human to provide skin care education to professional therapists. Earlier this year, Living Proof launched an advanced AI diagnostic tool to give consumers a better scientific understanding of their hair. And Murad’s Custom Face Serum is an online exclusive that has been used for over 100,000 digital self-diagnostic sessions.
Innovation that sets trends
Our goal is to predict what consumers want before they know it themselves, identifying future trends many years in advance and experimenting first before launching new product lines.
An example is Hourglass Red 0. Our goal was to create a red lipstick without carmine, an ingredient used throughout the industry to achieve red pigmentation, which is derived from female beetles. This innovation took three years, 19 formulations and 170 color experiments.
Living Proof Dry Volume & Texture Spray has a patented technology for long-lasting volume. This is just one of over a hundred patents held by the brand.
And Murad’s Targeted Wrinkle Corrector shows how innovation can create a snowball effect of positive momentum with great consumer reviews, viral online status, and impressive press coverage.
We welcome the fact that some larger companies see us as disruptors. As Vasiliki says: “I believe that increased competition drives our innovation and ensures that we continue to reinvent ourselves. We always want to interrupt ourselves before we are interrupted.
“What motivates us is creating the future instead of reapplying the past; The best is yet to come”.
Source: news.google.com