Unilever confirms sale of Elida Beauty’s iconic brands to focus on “core strategic growth priorities”
18 Dec 2023 --- Unilever confirms it will offload its Elida Beauty division after receiving a binding offer from private equity firm Yellow Wood Partners.
Unilever tells Personal Care Insights this latest sale is all part of previously laid-out plans to sell off non-core beauty and personal care brands to bring focus back to its higher-growth initiatives.
“As we continue to sharpen our portfolio for long-term growth, it’s important to focus investment on our top Power Brands aligned with our core strategic growth priorities. Elida Beauty comprises iconic brands with longstanding heritage, and we have been proud to be a part of the journey.”
The Elida Beauty division is home to well-known personal care products such as Ponds, Q-Tips, Caress, St. Ives and Zwitsal in Europe. Unilever says that the business generated a turnover of around €800 million (US$1.01 billion) in 2022.
Financial terms of the binding offer are not disclosed, but market experts previously suggested the sale would not top US$1 billion.
The Elida Beauty division is home to personal care products such as Ponds, Q-Tips, Caress and St. Ives.
Elida Beauty makeover
For years, Unilever tried to create a scenario that would make the sale of Elida Beauty attractive for a potential buyer and Unilever’s bottom line.
The UK-based company reportedly struggled in 2021 with that process, as companies allegedly engaged in picking and choosing select brands instead of making an offer for the entire division.
That same year, Unilever reportedly abandoned its plan to sell Elida to work on making the division an autonomous unit by “refounding iconic brands for the many.”
The company restructured its business model in 2022, creating five business groups with Elida Beauty placed under Personal Care.
Yellow Wood adds more “iconic” Unilever brands
Yellow Wood has a history with Unilever, purchasing the longstanding American hair care brand Suave earlier this year. Suave debuted in the 1930s as an alternative to salon-quality brands.
Elida’s brands will reunite with Suave at Yellow Wood, which also sells another famous brand, Dr Scholl’s foot and skin care products.
Yellow Wood has a history with Unilever, purchasing the longstanding American hair care brand Suave earlier this year.
Tad Yanagi, Partner of Yellow Wood Partners, says he’s “excited to work with the Elida Beauty team to lead these brands into their next phase of growth and expansion. Consumers around the world love these brands as they are an important part of their daily lives. We believe the brands will flourish in the Yellow Wood operating model where our teams will work to build and enhance growth and accessibility.”
Unilever prioritizing “organic growth”
Before the Elida Beauty announcement, the FMCG giant had already eliminated 50,000 SKUs to work on streamlining its personal care division, delisting some 60 local brands.
The consumer goods industry has struggled in recent years, with soaring costs related to shipping and the ingredients used to make the many products under its vast umbrella of offerings.
Hein Schumacher came on board last July to replace Alan Jope, who retires at the end of the year. Schumacher said he would be “very focused on working with the Unilever team to deliver a step-up in business performance.”
We asked Unilever to expand on Schumacher’s plans for Unilever and were told, “Hein laid out Unilever’s focused action plan in October 2023. We have a clearly expressed capital allocation framework that prioritizes organic growth. As Hein expressed at our Q3 results, we will continue to prune the portfolio in areas that are less strategically attractive for us.”
Unilever’s third-quarter earnings were met with a lukewarm response from analysts. Schumacher promised to focus on 30 of Unilever’s strongest brands, which account for 70% of company sales.
Investors are digesting news of Unilever’s latest move, with the stock down about a half-percent in London at the time of writing this article.
The binding offer is subject to routine closing conditions, regulatory requirements, and consultation processes. The sale is expected to be complete by mid-next year.
Meanwhile, Unilever is facing a “greenwashing” investigation in the UK, and regulators are turning up the heat on unsubstantiated “green” claims.
By Anita Sharma
