Unilever Acquires a 75% Stake in Equilibra
Published September 26, 2018
2018 is shaping up to be a big year for multinational powerhouse, Unilever. Responsible for such brands as Axe, Clear, Dove, Hellmann’s, Lipton, and a multitude of others, the home and personal goods manufacturer has long held a place of prestige within the broader marketplace.
Being a seasoned player in the secondary packaging automation industry, we at INSITE pay close attention to the happenings of such large conglomerates that rely so heavily on secondary packaging automation. With over 2.5 billion consumers utilizing a Unilever product on any given day, the company understandably utilizes a secondary packaging system that includes state-of-the-art case erectors and sealers to distribute their wares to the global market. And with the addition of a 75% stake in Italian personal care and wellbeing business, Equilibra, Unilever will be dispensing more products than ever in the 2018-2019 fiscal year.
Unilever’s Shift Towards Beauty and Personal Care Products
In years past, Unilever’s Foods division had made up 30% of the company’s revenue. But, starting in 2011, we saw these numbers fall from 30% down to 23% in 2017, while surprisingly, their personal share segment grew from 33% to 38.5% within the same period. This shift in consumer demand is not one that is unique to Unilever.
The broader market is seeing increased performance in the personal care sector as younger demographics begin to invest in at-home personal care as opposed to more costly service-based offerings and as consumers seek more natural, and eco-friendly replacements to add to their existing daily routines.
On the whole, the personal care segment is projected to grow as much as 9.2% in the coming years, leading to a potential market volume of $67,982m by 2023. Already, the industry has seen a 4% compound annual growth rate, with all data pointing towards a continued upwards projection.
Within Unilever’s personal care sector, you’ll find skin, hair care, deodorant, and oral care divisions. In fact, 70% of the personal care division’s profits stem from the skin and hair care segments alone. As new products emerge through submarket growth, such as anti-aging, eco-friendly, men’s grooming, and multifunctional products, Unilever is actively adjusting its focus to narrow in on its ever-growing personal care sector. Their latest move? Acquiring Italian personal care and well-being company, Equilibra.
A Brief Equilibra Profile
Equilibra was founded in 1987 by Franco Bianco, who rooted the company in a natural personal care philosophy, leading to the creation of plant-based skin and hair care lines that revolve around aloe, argan, almond, and karité (more commonly referred to as shea butter) formulas. The company also holds a growing position within Italy’s nutritional supplement market.
In a press release published by Unilever, Fulvio Guarneri, General Manager Unilever Italy, had this to say of the new partnership: “Unilever has a successful track record of scaling partnerships with quintessential Italian brands on a national and European level. Unilever and Equilibra will leverage their complementary expertise to grow the Equilibra business, bringing sustainability, wellness and the Italian spirit to people in Italy and abroad.”
While many of the terms of the agreement were not made public, it was announced that Equilibra will continue to be run as a standalone business led by CEO Marco Bianco along with the Bianco Family and management team. Franco Bianco will additionally be staying involved through the new acquisition as Honorary Chairman. The Equilibra headquarters will be remaining in Turin for the foreseeable future.
Potential Ramifications of Unilever’s 75% Acquisition of Equilibra
While Equilibra stated that the company looks forward to helping Unilever grow within the “wellbeing space” both in Europe and beyond, what does this mean for Unilever? While Unilever brands already include many natural-inspired beauty and wellness products, the acquisition of a 75% stake in Equilibra will allow Unilever to further expand into the organic and natural personal care market, a sector that is expected to grow to $25 billion by 2025.
Many other companies have made a jump to providing their clientele with highly desirable beauty and wellness goods. Wal-Mart Stores, Inc, for example, has worked to expand its proprietary program to reduce the number of potentially harmful substances used in its beauty products, as well as broaden their list of chemicals to be avoided. Target Corporation, likewise, has taken pains to reimagine their stores and promote all-natural beauty and wellness wares.
Through this 75% acquisition, Unilever stands to become a powerhouse in the beauty and wellness sector, more so then they are even now. With the addition of Equilibra to the Unilever name, the company is poised to further penetrate the skin and hair care segments by providing its customers with specially targeted products aimed at addressing the individual needs of its users. While the change will not be revolutionizing, it will cement Unilever’s growth in the natural, holistic beauty and wellness market.
Thanks to this acquisition, Unilever’s personal care EBITDA margin is projected to reach 24.4% by 2022. In 2018, initial numbers show us that personal care products will potentially account for up to 40% of Unilever’s revenue. Skin and hair care revenues alone have already grown by over a billion dollars in revenue, leading to the conclusion that by combining forces with Equilibra, Unilever will be able to see increased revenue across their personal care sectors as the new partnership yields the high-value products that consumers are hungry for. We predict that 2018 will be the year of exploration as the two brands find their way through this new partnership and 2019 will be the year that the combined efforts of these two brands will fully saturate the market, leading to increased revenue across Unilever’s personal care sector. Enough to finally edge out L’Oréal? Only time will tell.
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