The future looks even brighter for cult skincare beauty brands The Ordinary and NIOD, part of Deciem Inc.—following Estée Lauder’s $1 billion purchase for majority stake in the Canadian-based, multi-brand company.
Estée Lauder Companies Inc. announced that it will increase its investment in Deciem Beauty Group Inc., from 29% to 76%.
ELC, which owns a portfolio of leading beauty brands including MAC, La Mer and Bobbi Brown, made its initial investment in June 2017, and will purchase the remaining interest after a three-year period. Net sales at Deciem for the 12 months ended Jan. 31 were approximately $460 million.
“Over the last four years, we have built a truly special long-term partnership with the incredible Deciem team, and we are excited for what the future holds,” said Fabrizio Freda, president and chief executive officer at Estée Lauder Companies, in a prepared release.
“The company’s hero products, desirable innovation, and digital- and consumer-first high-touch approach have been instrumental to its success.”
In 2013, Brandon Truaxe founded Deciem, known as “the abnormal beauty company,” with the goal of raising transparency in the beauty industry. The company’s portfolio includes six brands; The Ordinary is its largest brand followed by NIOD.
The Ordinary, whose celebrity fans include Kim Kardashian, retails from $3.95 to $28.90, while the vast majority of products retail under $10. The brand’s top-selling product is the Niacinamide 10% + Zinc 1%, a skin blemish serum, for $5.90. According to the company, one product sells every second globally. If The Ordinary offers broad appeal with its budget-friendly prices, NIOD, whose slogan is “skincare for the hyper-educated,” is the higher-end crown jewel in terms of marrying science with skincare. For instance, the smaller-size 15 ml. Copper Amino Isolate Serum retails for $60. All of the Deciem products are created in house in the lab.
“One of the biggest marketing drivers is word of mouth and this can only be achieved by creating formulations that are loved,” said Nicola Kilner, cofounder and chief executive officer of Deciem. “Our products have high levels of trusted ingredients, clear percentages of actives, and most importantly they work.”
Part of the beauty products’ appeal is their simple, almost scientific-looking design.
“The bottles create a lab-like visual in a bathroom cabinet,” Kilner said. “The design has led to a larger conversation about ingredients, we have resonated with a newly coined consumer, the ‘skintellectual,’ who knows exactly what to put on their skin, what the formulas do and in which products to find these ingredients.”
Being a part of the Estée Lauder family will open up a whole new world for Deciem, the executive noted.
“You look at the ELC portfolio of brands and now The Ordinary can mix right next to La Mer,” Kilner said. “We always tried to push that price point does not define luxury.”
The acquisition will allow Deciem to have access to Estée Lauder’s vast resources to grow their brands, particularly global distribution and supply chain.
“We will continue scaling The Ordinary,” Kilner said. “Then we want to get back to the heart of Deciem, which is to be an incubator of brands. Our research and development chemists are working on formulations for new brands as we speak.”
The company’s journey and rise to cult beauty status was not without challenges and growing pains.
“Estée Lauder supported us at our lowest, continue to trust our decisions and most importantly they have loved us throughout,” Kilner said.
The $1 billion paid by Estée Lauder reflects a market value of $2.2 billion. Excluding this gain, Deciem’s net sales and earnings are expected to have a negligible impact on Estée Lauder’s fiscal year 2021 consolidated results, according to the release. The acquisition is expected to close in the quarter ending June 30.
Deciem’s founder Truaxe recognized the synergy between the brands and said Estée Lauder was the only “forever home” for the innovative beauty company.
“They put brand ahead of business and are family-orientated throughout—two values we ferociously hold dear,” Kilner noted.