Mustela Owner Acquires Babo Botanicals
29-Oct-2018 | By: Allison Collins
French pharmaceutical business Laboratoires Expanscience has acquired New York-based Babo Botanicals LLC.
The deal gives Babo increased research and development capabilities, and Mustela more insight on penetrating the U.S. market.
Babo, founded by beauty industry veteran Kate Solomon in 2010, makes mineral- and plant-based skin-care, sun-care and hair-care products that target babies, children and adults. The brand’s products are Environmental Working Group-certified and center around botanical ingredients. Terms of the deal were not disclosed, but industry sources said Babo has about $20 million in retail sales. The business had a minority investment from private equity firm JMK Consumer.
The baby segment has become a key launch area for beauty companies in recent years. Category newcomers include Made Of, a line of organic baby skin-care and other products; Petite Planet, a Johnson & Johnson line that launched in February, and Dr. Barbara Sturm Baby & Kids, which also hit the market earlier this year.
The global baby skin-care market did nearly $3.3 billion in sales for 2017, according to data from Euromonitor. The U.S. segment posted nearly $345 million in sales in 2017, Euromonitor data shows. The global baby sun- and hair-care markets are nearly $765 million and $1.9 billion, respectively, while in the U.S., those markets are nearly $225 million and $167 million, respectively.
Babo, one of the more established indie players, has been growing double digits since its launch, according to Solomon, and is expected to roll out in all U.S. Whole Foods locations in the coming months. For 2019, Babo is expected to further penetrate the natural channel, Solomon said.
As part of Laboratoires Expanscience, Babo will join Mustela, a line of 95 percent natural skin-care products for expecting mothers, babies and children. That business has about 164 million euros in sales. The parent company also owns Piasclédine 300, an arthritis medication.
For Babo, joining Expanscience gives Solomon and the team access to increased research and development capabilities, as well as logistics help. On the other end, Babo’s U.S. exposure is expected to help Mustela further establish itself in the U.S. market.
Both brands target Millennial moms, who are increasingly shifting toward natural products to put on themselves and their children.
“I am the consumer,” said Solomon, who had a beauty career that spanned LVMH Moët Hennessy Louis Vuitton, Avon and L’Oréal before starting Babo. “The ethos of the brand is very much about health and well-being.…I saw an incredible opportunity that wasn’t being addressed, which was this need for natural family care. I myself was a natural mother, always mixing things in my kitchen sink.”
“The target now for baby products are Millennial moms, and they’re super sensitive to what they put on their babies’ skin and their own skin,” said Elsa Berry, the Vendôme investment banker who orchestrated the deal on behalf of Expanscience. “This is part of the clean beauty movement, and Babo is one of the leaders there.”
At Babo, 40 percent of the products are mineral sun care, and the hero stock keeping unit is the brand’s Sheer Zinc Sunscreen Spray, $22. In baby care, the best sellers are Moisturizing Baby Shampoo & Wash, $19.95, and Miracle Moisturizing Face Cream, $11.95. The company’s sun portfolio in the U.S. gives Expanscience access to that category, where regulations vary by geography.
“I’m a passionate product developer,” Solomon said. “I have tons of products I want to develop and expand our portfolio into more adult skin care for sensitive skin, and more family skin care, and hair care for sensitive skin.”
Expanscience’s R&D facility, which Solomon described as “immaculate and light and clinical and clean,” was a big part of the draw, she said, noting that before she was approached by the company she was not in the market to do a deal. But the two are both big on corporate-social responsibility — Expanscience, for example, uses every part of the avocado in its Mustela formulations, according to Stanislas Baudry, managing director of Expanscience in the U.S. and Canada.
“We don’t want to damage what Kate’s done so far, and what she has in mind,” Baudry said. “The way the brand resonates to the Millennials and the consumer is very key for us, and we will be nourished by that.” He also expects that Mustela will be able to glean insights about how to build up a brand in the natural channel and how to adapt a French brand to the U.S. market from Babo, he said.