Clean Break: Why Unilever is shutting REN Skincare

Unilever recently announced the closure of REN Skincare. What went wrong? And if consumer conglomerates can't make a success of a brand, what chance does anyone else have?

I was personally devastated when beauty influencer Tori Duckitt informed me that REN Skincare would be closing. In a press release issued on 1 May, consumer goods giant Unilever announced “the difficult decision to begin formal steps to close the REN business”, with trading expected to cease before Q4 of this year.

My first thought was “How will I survive without their Ready Steady Glow AHA toner and Glycol Lactic Radiance Renewal Mask”, two products that have been staples in my skincare routine for the better part of a decade. This was quickly followed by wondering about the factors that meant Unilever could not make a success of this. And why close down, instead of pursuing an exit?

Background: The REN story

REN was founded in 2000 in the UK when founder Antony Buck’s wife experienced skin sensitivity during pregnancy (the brand is famously entirely pregnancy safe, somewhat of a rarity as many products with active ingredients have not been tested for this). It stood out as a “clean” skincare brand (something which today is more or less table stakes, and in some ways means little due to the proliferation of greenwashing). It gained a strong following in its home market and beyond, specifically for its cult products including the two I mention above.

The Unilever acquisition

The brand was acquired by Unilever in 2015 (financial terms were never disclosed, unlike Tatcha (2019, for a reported $500M) and Paula’s Choice (2021, $2B)). The brand fell under Unilever Prestige, a sub-division of Beauty & Wellbeing incorporated in 2014. In the same year as the REN acquisition, Unilever also acquired Kate Somerville, Dermalogica, and Murad.

Post-acquisition the focus was on scaling REN globally, including expanding in the US and Asia. Indeed, access to large conglomerates’ distribution networks is a huge advantage for the brands they acquire. In the 2023 McKinsey x Business of Fashion State of Beauty Report we highlighted the challenge beauty brands face in scaling after the early days of getting up and running. In a group of 46 brands with global retail sales of $50-200M in 2017, only 4 (9%) surpassed the $400M mark five years later. Continuing their growth trajectories requires regional- and channel expansion, something seasoned beauty conglomerates offer in the case of an acquisition.

REN doubled down on its “Clean to Skin. Clean to Planet".” messaging, extending to more sustainable packaging (including refillable), but by then it was facing competition from buzzy, innovative challenger brands such as The Ordinary and Drunk Elephant (although after the most recent Shiseido earnings showing Drunk Elephant declining by 65% YOY, the latter feels uncomfortable to use as an example today). Even cult products struggle in a saturated market that is driven by trends.

Context: Unilever Prestige

Ten years after launching Unilever Prestige, the unit boasted thirteen successive quarters of volume-led growth, with 60% of turnover increase since 2017 being organic. Tatcha and Hourglass had by then doubled (in ~4.5 years) and tripled (in ~6.5 years) their turnover respectively since being acquired by Unilever. Still, in 2023 the Prestige unit contributed only €1.4B, ~2% of the Unilever’s €60B revenue that year. In the second half of 2024, shortly after Unilever Prestige CEO Vasiliki Petrou announced her departure, it became known that Unilever was looking to sell both REN and Kate Somerville.

So what went wrong?

Unilever has completed ~80 acquisitions and disposals 2010. Why is REN not among these? Unilever Prestige may boast impressive organic growth figures but it is ultimately a buy-and-build strategy so to close a decades-old, established, global brand rather than selling it must mean a sale was either impossible or not worth pursuing. Here are potential reasons for that:

• An increasingly challenging landscape: I have touched on the fact that the beauty space is saturated (with both established- and challenger brands), which makes it highly competitive. Current macroeconomic factors such as rising costs, falling consumer sentiment, threat of recession and trade wars, and general uncertainty don’t help either. Although this sale would have been on the cards before the latest economic headwinds came into play, recent events such as the pandemic, war(s), and other global events would have put further strain on efforts to succeed in a tough industry

• Weak brand positioning: As already mentioned, being “clean” is no longer a differentiator, and despite consumers wanting sustainable products there is a lot of skepticism around these claims. REN’s positioning weakened as more and more challengers came to market offering lower prices (The Ordinary), stronger sustainability credentials (Dr Hauschka), more eye-catching packaging (Glow Recipe), and better formulations (Paula’s Choice)

• Size: In 2022, ~90% of beauty deals* came from conglomerates rather than private equity firms. REN’s revenue figures are not known but are likely not only small compared to Unilever’s other brands, but probably too small to tempt most strategic buyers in beauty

• Insufficient growth potential: Prestige is already a small contributor to Unilever’s overall revenue, and a brand within such a small unit that shows neither historical growth nor the potential for significant future growth will not warrant investment from the parent company. Stagnation follows stagnation, and the end result is exactly what happened here. This type of investment is especially necessary in premium beauty which requires high-touch marketing and community building, specialist retail relationships, and frequent new product development, all of which are expensive and challenging at scale

All of the above would not only shape the decision to get rid of the brand, but also affect Unilever’s ability to find an interested buyer. Carve-outs are complex and these processes take time and money and cause a fair amount of disruption to the business. If poor performance affects valuation negatively enough, the resources required may well outweigh the benefits of selling.

With global economic markets experiencing a huge amount of turmoil deal volume is likely to stagnate or even drop, especially in consumer industries, and any acquisitions that are made will have to be highly compelling deals. As much as I will miss its products, REN evidently is not that.

* For acquiring stakes of 30% or more