Why did L’Oréal pay $2.5 billion for Aesop?

Aesop has pulled off the difficult trick of presenting itself as a luxury brand to everyone, and it turns out it’s paying off quite a bit.

Earlier this week, L’Oréal, the world’s largest beauty conglomerate by market capitalization, acquired the personal care and grooming line from Natura for $2.5 billion. The announcement ended months of speculation over who would buy the brand, which has been around since the 1980s but in recent years has become ubiquitous in the bathrooms of upscale restaurants and middle-class homes, not to mention the target of countless love-hate Instagram memes.

That combination of premium price point and mass appeal proved irresistible to L’Oreal, which has a portfolio of designer fragrance licenses and big brands like Lancôme, Kiehl’s and Urban Decay that are reliable earners but rarely attract anger.

Aesop has been “cool” among insiders and early adopters since the early 2000s, long before the Internet took notice. But in recent years, the line has become an online status symbol, and its $41 Resurrection Aromatique Hand Wash, scented with tangerine, rosemary and cedar, has become a cult item. Showing off your bathroom shows that you have good taste and some income. It says you’re done with the drugstore hand wash and something noisier. The minimalist cream and black brand has become popular among all genders, and a specific archetype of the man who buys Aesop has emerged online:

In the Skincare Matrix, Dewy Dudes, a meme page and podcast founded by Evan Shinn and Emilio Quezada Ibanez, categorized Aesop as “liberal, elitist” (Tyers is “liberal, working class,” Jack Black “conservative, worker.” class,” and La Mer “conservative, elitist”).

“Those guys will spend whatever it’s worth to have a hand sink in their apartment bathroom,” Sheen said.

Alex Hartman, the 26-year-old founder of Instagram’s Nolita Dirtbag, told me that the brand’s client, at least according to meme culture, has a “secret well-paying job and plays ‘creative director’ on the weekends.” » They might also have: a Western Hydrodynamic Research cap, a Carhartt jacket, even though they kid themselves that they still wear Carhartt (same goes for Aimé Leon Dore), and a Stussy tee or two. They also probably know about Kapital, but chances are they don’t have anything from the Japanese brand.

“It gets their feet wet into the world of leveling,” Hartman said. “They’ll have Mrs. Meyers soap by the kitchen sink, but then they’ll have Aesop in the bathroom.”

Aesop’s sales show that it has become a status symbol for more than a specific customer.

Owned by Brazilian personal care company Natura & Co and parent company of Avon and The Body Shop, Aesop’s sales have grown nearly twenty-fold, from $28 million in 2012 sales to $537 million last year. The brand has gone from a local, familiar line to mainstream popularity. L’Oreal is jumping in at about the same point that The Estée Lauder Companies did when the company acquired Le Labo nearly a decade ago, just as Santal 33 was exploding.

Memes aside, Aesop has three things going for it that other reputable body and personal care brands don’t: a large male customer base, a strong network of its own retail stores (about 400) and resonance in Asian markets.

A mainstream product is a death knell for first-wave fans, but that’s exactly what makes Aesop an attractive acquisition target. It’s also a safe bet for L’Oréal, which doesn’t deal in big risks (neither does any conglomerate).

“You can’t just make money selling kids in Los Angeles or New York,” Hartman said. “You need people in Ohio and Beijing to buy it, too.”

And right now, a company like L’Oréal could use a new addition to its reputation portfolio. Makeup line Urban Decay has struggled to stay relevant since a 2012 acquisition and the departure of founder Wende Zomnir. Atelier Cologne flopped even amid the perfume boom (L’Oréal is in the process of rebranding). In December 2021, the conglomerate said it would buy Youth to the People, which was a hit during the pandemic as Gen-Z discovered skin care. That brand complements Aesop, which tends to appeal to an older customer.

Aesop could help L’Oréal boost its portfolio, a newer ambition, and L’Oreal could supercharge what Aesop has already built, a tall order for conglomerates that have brings brands with an indie feel. If the conglomerate can respect the characteristics that make Aesop Aesop, the line can take advantage of L’Oréal’s infrastructure to enter new markets and make operations more efficient.

The two companies are clearly mismatched in their approaches to selling skin care. The L’Oréal model is driven by product launch, innovation, advertising, loudness and wholesale, while Aesop is understated, minimalist, curated by its product offering and driven by its in-store experience, explained Vincent Janiard. a beauty strategist who has worked for Burberry, L’Oréal and LVMH.

However, that may be why L’Oreal bought them.

“The two models are very different, but when you look at market trends, it’s going more in the direction of Aesop,” Janiard said, noting that Aesop is a “new luxury brand” and a “jewel” under its new owner. : can use for visibility and negotiating power in future deals and to bring new customers into its world.