HUL's Mega Deal: Premiumizing Beauty and Beyond

HUL's Strategic Acquisition

Hindustan Unilever Ltd (HUL) has made a remarkable move by acquiring a massive 90.5% stake in Jaipur-based skincare brand Minimalist for nearly ₹2,960 crore. This acquisition marks one of the largest deals in the Indian direct-to-consumer (D2C) market.

Premiumization Trend

"It's a significant development for the industry," said Satish Meena, an advisor at Datum Intelligence. "We can anticipate stronger consolidation in the consumer segment in 2025, as this deal has demonstrated the potential of up-and-coming brands with a loyal customer base and strong revenue."

Despite India's slowing consumption, demand for premium products remains strong, fueling a surge in D2C startups. However, fierce competition has led to higher expenses in research and marketing, making it challenging for these ventures.

HUL's Beauty Portfolio Transformation

HUL's acquisition of Minimalist aligns with its strategy to elevate its beauty and well-being portfolio into a "high-growth" premium category. Founded by Mohit Yadav and Rahul Yadav, Minimalist will join HUL's portfolio alongside regional brands like Indulekha and new-age ventures like Oziva and Wellbeing Nutrition.

Minimalist's Market Positioning

Minimalist has gained significant traction in India's personal care market by tapping into the growing popularity of active ingredients like vitamin C, retinol, and alpha arbutin. The brand has targeted younger consumers who are becoming increasingly mindful of the products they use on their skin.

"This is the era of 'skincare routines'," Meena said. "Everyone has one, and consumers are knowledgeable about the ingredients in their products."

Profitability and Value

Minimalist stands out among other beauty and personal care startups due to its profitability. In 2023-24, the company doubled its profit after tax to ₹10.5 crore while increasing its revenue by 90% to ₹350 crore.

According to Meena, brands with top lines between ₹100 crore and ₹300 crore are the sweet spot for acquisitions. "At this stage, they have established a significant customer base and can leverage the distribution network of an FMCG brand for further growth."

Premiumization in HUL's Portfolio

HUL has long catered to India's beauty and personal care market through brands such as Sunsilk, Dove, Lakmé, and Fair & Lovely. While Dove and Glow & Lovely generate annual revenues of over ₹2,000 crore, brands like Pond's and Lakmé have exceeded ₹1,000 crore in sales.

However, HUL's beauty portfolio has lacked a strong premium segment. Minimalist, with its products priced significantly higher than HUL's mass-market brands, will help fill this gap.

Future Growth Outlook

Minimalist will be led by Harman Dhillon and will benefit from HUL's distribution network to expand into offline and overseas markets.

HUL's investment in Minimalist's in-house manufacturing capability is a strategic move, providing the company with differentiation in the competitive beauty and personal care space.