Most of the haul of acquisitions that the Unilever has brought in have been skin and hair care brands - the list includes REN, Seventh Generation, Dollar Shave Club, Dermalogica, and more - and also fit into the premium category.
The major personal care and food multinational has stuck to smaller, more nimble and fast-growing brands: they tended to have revenues under USD 1 billion but with strong growth potential.
Buy small to go big
In a recent report from Nasdaq, this strategy by Unilever is described as ‘acquiring small and making it big’:
“With its reach in around 190 countries, Unilever has the capability to expand the presence of these brands worldwide which is likely to help it secure more share in the skin & hair care market.
“Unilever might be using the strategy of acquiring small and making it big by taking advantage of its size,” the publication suggests. It picks out male grooming to illustrate this idea.
“For instance, Dollar Shave Club had revenues of only $152 million and had a presence in 3 countries before its acquisition. Whereas Gillette, owned by Unilever's primary competitor P&G, sweeps in around $8 billion of revenues and has a presence in over 125 countries. However, if Unilever leverages its reach in 190 countries and manages to provide DSC with a similar platform as of Gillette's, then it can possibly compete with the latter in the future.”
Taking on ‘intense competition’
In a recent operational review, Unilever acknowledged that across the global stage, the beauty and personal care market is diversifying into an ever-increasingly competitive arena.
The multinational said that its slower growth in last year’s third quarter review “reflects intense competition in many of our markets, as well as the effect of a strong comparator last year.”