Oakland-based e.l.f. Beauty has acquired cosmetics pioneer W3LL People in a $27 million deal that reflects a jump in consumer demand for cosmetics that don't use harmful chemicals.
"What we see from a consumer standpoint is that more and more consumers are increasingly concerned about what's in their cosmetics and skincare," CEO Tarang Amin told Cheddar.
The goal of the acquisition is combining e.l.f. 's resources with W3LL's reputation for offering alternative beauty products. Started in 2008, the brand touts its cruelty-free, plant-based cosmetics that leave out fillers, propylene glycol, petrochemicals, and other harmful additives.
"W3LL People was one of the pioneers in clean beauty, which is strategically important because it's growing much faster than the rest of the category," Amin said.
The concept of "clean beauty" is a fairly recent phenomenon when compared to efforts in the food industry to distinguish chemical-free products, but major brands are starting to catch on.
In March, Avon released new skincare and makeup products under its Distillery brand that boast "no unnecessary fillers" and "vegan-friendly" ingredients.
Sephora last year was the first major cosmetics retailer to release a public chemical policy that "seeks to strengthen ingredient safety and transparency," a signal to brands to up the ante.
What exactly these terms mean isn't strictly defined though. The U.S. Food and Drug Administration does not approve cosmetic products or regulate marketing language.
In the meantime, third-party certifiers have stepped up to set standards to determine what exactly qualifies as clean beauty. W3LL, for instance, has gotten 40 of its products EWG VERIFIED, the leading industry standard for measuring the health and safety of cosmetics.
E.l.f. has also developed new products that fit the clean beauty bill, but the acquisition is a chance to "take it to a whole different level," Amin said.
He said that the company made its reputation with its e-commerce presence — which was a novelty for cosmetics when it started 16 years ago. Now the goal is to bring that affordability and access to the clean beauty market.
"We believe with our capabilities we can make it even more accessible," Amin said.
Looking forward, e.l.f. expects W3LL People will add another $7 million or so in net sales to the company and $0.01 to adjusted earnings per share in fiscal 2021.
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