01: Amorepacific Acquires Tata Harper
What does this mean for the brand?
Earlier this month, it was announced that South Korean beauty conglomerate, Amorepacific (behind lines including their namesake Amorepacific, and the higher-end Sulwhasoo), has acquired one of the original green beauty brands, Tata Harper Skincare.
While deal terms are undisclosed, it’s reported that Tata Harper Skincare had an annual sale between $60M-$65M in 2017. Additionally, Tata Harper herself is confirmed to stay on as founder and continue to lead the brand.
Update: According to the latest filings, it appears Amorepacific will invest $124M in the deal. Which might indicate recent annual sales for Tata Harper were not hitting the reported $60M+ from 2017, given the low multiple, or it could indicate that the beauty industry multiples have cooled.
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Many are curious why a South Korean beauty company would be interested in acquiring a green beauty brand. There may be many reasons:
Korean Beauty and Clean Beauty, respectively, have been the two largest growth categories in skincare in the past decade, and constitute a significant portion of newly launched brands at key retailers like Sephora. While a lot of KBeauty indeed qualifies as clean beauty, there hasn’t been one that has honed that “farm to face” organic message nor appealed directly to the green beauty crowd that Tata Harper reigns in.
Tata Harper has global aspirations, particularly in Asia. Amorepacific may provide that much needed expertise with their track record of success in Asia, particularly in China, where portfolio companies Sulwhasoo and Laneige posted double digit growth in 2021.
Asian investors are diversifying in the US: this has been a trend since the pandemic where cash-rich Asian investors are looking for opportunities in the US which has traditionally led trends, but where business is notoriously susceptible to downturns and market volatility. The post-pandemic timing of this acquisition could be the spark that both players are looking for to move forward and reignite momentum. Amorepacific has resources, but needs to work on messaging and connecting with an audience, and Tata Harper has clear messaging with their “healthy farm-fresh beauty” formulas but could use those resources to further expand.
Amorepacific, which reported sales down 9% year-over-year, and posted a 13.4% drop in profit for the same period in Q1 2022, must diversify its portfolio which has been Korean-only as the pandemic has shown the degree to which government policies can immediately impact business.
Hedging bets: In 2021, the highest growth sector in the US skincare category was ‘clinical skincare,’ and the shift to science-backed, premium skincare may make it harder for Tata Harper Skincare, who prides themselves on picking ingredients from their Vermont farm, to acquire new customers. South Korea has become known for innovation, and could give a boost in both formula and brand reputation that would let Tata Harper play more in the clinical skincare category. Conversely, in Asia, organic remains one of the most desired qualities of any consumer product, and Tata Harper’s American farmland storytelling will surely connect to the desire for healthy beauty.
What this could mean for Tata Harper products: with Tata Harper remaining in the driver’s seat, we don’t imagine there will be a drastic change to quality or philosophy. Besides potentially more scientific, clinical formulas, there is talk about “streamlining internal processes” which we’d guess potentially means that the farm fresh ingredients might be going out for cheaper, more readily-available, commercial skincare ingredients. Time will tell what other changes we might see, but in general, we believe this is a positive step for the brand.
Clean Beauty Deals have been on a roll lately, here’s a couple others:
Ilia and Pai both acquired by Clarins
Youth to the People acquired by L’Oreal
Grown Alchemist acquired by L’Occitane
A couple that industry insiders say are primed for inking a deal in the future include: Bobbi Brown founded Jones Road Beauty, Kosas, Summer Fridays, Tower 28, and Indie Lee.
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Disclaimer: By nature, some analysis may be speculative, and should not be taken as fact. Views and opinion expressed are just that, and should not be taken as endorsements, nor advice (financial or otherwise).
Disclosures: Newsletter may use affiliate links. Underneath It All is run by Garçon’s Media, which is not a shareholder of any beauty company, nor vice versa.
What to make of Clarins acquiring two green brands so quickly?
Love this insightful analysis! What do you think about Tata Harper only sharing their annual sales from 2017? What does that mean?