What lies behind our fast-growing Prestige Beauty business?

We launched Unilever Prestige in 2014 when we identified an opportunity in what we term 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, founder-led purpose running through its DNA.

In 2021, the business reached the key milestone of €1 billion turnover, several years ahead of the goal we set ourselves. And today, it’s one of the fastest-growing parts of Unilever.

Our portfolio currently consists of nine unique, industry-leading brands which share a mission to drive social change and minimise their environmental footprint while delivering exceptional products and services.

As Vasiliki says: “When we started in 2014, we saw this white space in the market in terms of luxury brands that were 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 reached this point and what the future holds.

Growth is organic and through acquisitions

Of the incremental turnover since 2017, 45% was delivered through organic growth and the rest through acquisitions. The average underlying sales growth between 2019 and 2021 was 11%. And while more than 50% of our total sales are from eCommerce, for some brands the percentage is much higher. We have already doubled the turnover of some of our acquired brands since they joined the business.

Unique propositions

Three of our brands play in the ‘clinical dermacosmetics’ space – the fastest-growing area in prestige skin care. Dermalogica is the No.1 professional skin care brand globally, rooted in education. Murad is a doctor-led clinical and wellness brand, with the top-selling retinol line in the US. And there’s Kate Somerville, a medical aesthetics trailblazer whose products are loved by celebrities and influencers.

Three brands are in the ‘clean and clinical’ space. Paula’s Choice is a highly efficacious brand – known for ingredient transparency – and a direct-to-consumer powerhouse. REN works with natural, bioactive ingredients to create clinically proven, high-performance products. And Garancia, which was the fastest-growing premium skin care brand in French pharmacies last year.

We then have three brands in other high-growth spaces. Hourglass is an innovative brand for both consumers and make-up artists, and the leader in cruelty-free premium cosmetics. Tatcha – a luxury skin care brand rooted in Japanese rituals – is recognised as a social and digital pioneer. And Living Proof is a biotech hair science brand created alongside MIT, with over a hundred patents globally.

Acquisitions that add value

We have rigorous criteria for evaluating new acquisitions and only look at strong brands with global appeal that will enhance our portfolio, stay relevant for at least the next 15 years, and bring new capabilities and talent. From the hundreds of opportunities out there, we will consider very few. Being selective – and patient – ensures we create value for our shareholders over the long term.

“I always look for strong brands with authentic, differentiated stories,” says Vasiliki. “A strong brand, for me, is one that has its own unique concept and is globally relevant in a high-growth space.

“After we form a partnership with a brand, we work with the founders and the 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 sit in the wider premium beauty market

While the €130 billion premium beauty market is smaller than the mass market, it’s growing at a faster rate. In fact, it’s projected to grow 8% in the next five years.

It’s made up of four main categories: skin care, fragrance, colour cosmetics and hair. Skin care is the core part of our portfolio and seen by consumers as the most expert-driven. It was a strategic decision to move into skin care 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 is plenty of opportunity for growth in our key priority markets.

As Vasiliki explains: “Our priority isn’t to reach the greatest number of consumers. Instead, it’s vital to reach the right markets in the right way. While our mass-market brands benefit from being widely available, in Prestige a certain level of scarcity drives desirability.”

Our brand-first business model

We have created a business model that retains the integrity of our brands while unlocking consistent growth. 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 set up to be about education first, product second, and today it trains 100,000 therapists every year in over 80 countries. Another example is Paula’s Choice. Thirty years ago, Paula was way ahead of the industry when she published her book dispelling ingredient myths. This continues through the brand’s ‘beauty begins with truth’ philosophy.

“I’ve always actively searched for the brands where the founders will stay deeply intertwined in the business,” says Vasiliki. “It’s so important that we work with founders who really care about being involved in the growth of the brand.”

Building on strong heritage and iconic status, all of our brands take a social media-first approach. This creates global communities of loyal fans that become the brand’s most influential advocates. The power of this strategy was clear during the recent Tatcha launch in the UK which generated unprecedented demand with waiting lists, record sell-outs and top-tier press coverage.

Moving with speed and agility

Our decentralised business model means we can react fast to the latest trends. For example, our brands have been quick to move into social commerce. Dermalogica is enjoying success on TikTok and has introduced a virtual reality store. Living Proof has a number of long-term influencer partnerships. And we’ve stepped into gaming too, with Tatcha introducing its own island on Animal Crossing to mark the launch of a new cleanser.

During Covid, we moved fast to offer more of our products through eCommerce. This led to online sales increasing from 39% to more than 50%.

“I’m 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 fast, react to evolving landscapes, and experiment, test and innovate.”

Authentic social impact and purpose

Prestige consumers have high expectations. Naturally, they demand great products and results. But they also want to be part of – and contribute to – something bigger.

Each of our brands has a clear social impact mission. For example, REN’s We Are Allies campaign is a collaboration with competitor brands to reduce packaging waste. And Tatcha supports a fund in partnership with Room to Read, which is dedicated to girls’ education globally.

“If a brand doesn’t have purpose,” says Vasiliki, “then it doesn’t belong here. We’re building a business of principled and authentic brands which 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 first-to-market or first-to-industry technologies. For example, Dermalogica's Natalia is the first-ever virtual human to deliver 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 product which has been used for more than 100,000 digital self-diagnostic sessions.

Trendsetting innovation

Our goal is predicting what consumers want before they know it themselves, identifying future trends often years in advance and experimenting first before launching any new product lines.

One example is Hourglass Red 0. Our aim was to create a red lipstick without carmine – an ingredient used across the industry to achieve red pigmentation, that’s derived from female beetles. This innovation took three years, 19 formulations and 170 colour experimentations.

Living Proof Dry Volume & Texture Spray has a patented technology for long-lasting volume. This is just one of over a hundred patents the brand owns.

And the Murad Targeted Wrinkle Corrector shows how innovation can create a snowball effect of positive momentum with great consumer reviews, viral status online and impressive press coverage.

We welcome the fact that some bigger companies see us as disruptors. As Vasiliki says: “I believe that heightened competition drives our innovation and ensures we keep reinventing ourselves. We always want to disrupt ourselves before we get disrupted.

“What motivates us is to create the future rather than reapplying the past ­– the best is yet to come.”