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The Surging Landscape of Fragrance M&A as Niche Brands Disrupt the Market

The fragrance category has long been dominated by legacy brands with huge marketing budgets. Niche fragrances have always existed however it’s been a challenge to spot the big bets from an investment and exit perspective. The ‘clean beauty’ movement’ has also a somewhat lagged behind that of categories comparative to fragrance. The category has been associated with fashion, emotive and adapting quickly with trends.  The combination of these factors has meant that it has lagged behind almost all other beauty categories with regards to M and A activity, until now …

D.S & DURGA

This month Manzanita Capital announced the acquisition of American fragrance brand D.S and Durga. A niche brand that has disrupted in the true sense of the word to stand out. Fragrance such as ‘Pasta Water’ and ‘Peanut’ have differentiated the brand along with ‘cooler than cool’ positioning. As well as the obvious capital, investment from Manzanita brings non-capital benefits including distribution in portfolio company Space N.K.

The 7 Virtues

Shortly before Christmas, it was announced that True Beauty Ventures and Unilever Ventures co-invested a minority stake in US fragrance brand, The 7 Virtues. This marked the first fragrance investment for both parties. The 7 Virtues is a B.Corp certified and ‘Clean at Sephora’ brand. Further illustrating investment promise in the category.

Other fragrance brands that are making interesting moves include Ffern, Bibbi, and Henry Rose and E11even.

It is clear that the investment sector overall is not as comfortable in the fragrance category as more surefire categories such as skincare. We are however seeing considerably more activity in this sector as investors at all levels look to bet on the next big scent.

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