The company’s opening gambit was a strong one: It snapped up Dermalogica, a highly sought-after professional skin care brand that had shunned acquisition advances for years. The purchase price? An estimated $1 billion.
The prestige portfolio has two brands knocking on the door of billion-euro status: Dermalogica and Paula’s Choice. Five brands exceed $100 million in turnover — Murad, Living Proof, Tatcha, Hourglass and K-18, while Ren, Kate Somerville and Garancia, a French skin care brand Unilever acquired in 2019, are thought to be less than $50 million in revenue. While Unilever overall is focused on making big bigger, Petrou said for now, she has no plans to sell off the smaller players.
Petrou, who is based in London but travels quarterly to Los Angeles, where most of her brands are based, has an insatiable curiosity for what’s happening in popular culture, be it social media or a social movement. When she was choosing an office location for the Prestige division, she chose the trendy Farringdon neighborhood, for example, rather than Unilever’s stately headquarters in central London. “I always say the biggest risk is to be irrelevant.
“Founders are part of the soul and DNA of a brand. People ask if we have the same recipe for how we deal with them, and the answer is absolutely not,” Petrou said. “Every founder has different ideas of how they want to be involved in the business. We play to their skills and their long-term vision, and we have learned a lot about how you focus the business for the long-term.”
The light-touch approach dates to the beginnings of the division, under former Unilever CEO Paul Polman. Dermalogica founder Jane Wurwand recalls an early conversation with Polman where she likened their relationship to that of a speed boat in a world of big ships. While analysts seem content with the overall direction of the prestige division, the question looms as to whether Unilever is doing enough to really drive the business. “The brands seem to be a good set of brands and we think prestige is the right thing to be doing. They seem to be performing reasonably well,” said Henry Dennis, a senior associate analyst at Bernstein Autonomous in London. “The growth has been double digit, which is what you want to see.
Another key tenet of the strategy has been a focus on the core business of each brand, rather than a relentless cycle of new products. “Especially in North America, a lot of retailers are very innovation-hungry, but one of the things we’ve focused on is to consistently continue to promote the core,” Petrou said.