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Acquiring Dr. Barbara Sturm Demonstrates Puig’s Ambition to Become a Global Beauty Giant

Spanish beauty giant Puig has announced the acquisition of a majority stake in the high-end German skincare brand Dr. Barbara Sturm. Founded by Dr. Barbara Sturm in 2014, the German molecular cosmetics brand will see her retaining a minority stake in the company. Dr. Sturm will continue to serve as the Chief Product Development Officer and brand ambassador. Puig, the Spanish beauty powerhouse, has demonstrated impressive performance in recent years and has been actively acquiring additional brands to expand its influence.

Dr. Barbara Sturm’s retail sales is reported to reach $150 million in 2023

Dr. Barbara Sturm is a German medical professional specializing in orthopedics, and aesthetics, and is recognized as a pioneer in anti-inflammatory approaches. She completed her studies in Medicine and Sports at Heinrich Heine University in Düsseldorf and initiated her medical journey in orthopedics. Dr. Sturm actively contributed to a team dedicated to advancing treatments for inflammatory conditions such as osteoarthritis. Their innovations involved leveraging the body’s natural proteins and healing factors to halt inflammation and facilitate the recovery of joint tissue. However, her interest in anti-aging and regenerative medicine led her to explore the intersection of medicine and skincare.

In 2002, Dr. Sturm founded her own medical spa in Düsseldorf, Germany, where she developed a reputation for her unique, non-surgical anti-aging treatments. Her expertise lies in creating customized, minimally invasive procedures that focus on skin rejuvenation and overall well-being. In the same year, Dr. Barbara Sturm introduced the MCX treatment, a Platelet-Rich Plasma (PRP) facial commonly known as the ‘Blood Facial.’ This was followed by her renowned ‘MC1’ cream, a personalized moisturizer derived from plasma, leveraging the body’s own proteins for a skin-healing formula.

Subsequently, Dr. Sturm’s patients began requesting a comprehensive skincare regimen from her. When she couldn’t find any products on the market that addressed her skincare concerns, she decided to create her skincare solutions. Against this backdrop, in 2014, the high-end skincare brand, Dr. Barbara Sturm, and the complete anti-inflammatory Molecular Cosmetics series were born, named after her.

Dr. Sturm’s skincare line, often referred to as the “Molecular Cosmetics” range, reflects her scientific background and commitment to effective, results-driven formulations. The products are designed to promote skin health and combat signs of aging by harnessing the power of molecular and cellular-level processes.

One of her standout innovations is the use of Purslane, a potent anti-inflammatory botanical ingredient, in many of her formulations. Additionally, Dr. Sturm incorporates advanced ingredients such as hyaluronic acid, peptides, and antioxidants to address various skincare concerns, including hydration, firmness, and protection against environmental stressors.

Her skincare line has garnered a strong following among celebrities, beauty influencers, and skincare enthusiasts globally, contributing to its status as a luxury and effective skincare brand. Dr. Barbara Sturm’s commitment to science-backed skincare solutions has positioned her as a leading figure in the beauty industry, with her products sought after by individuals seeking premium and results-oriented skincare. According to BOF, sources close to the company said that retail sales for the company hit $150 million in the year 2023.

Betting on high-end skincare, expanding the product portfolio

Regarding the reasons for this acquisition, Puig said in a statement, “The acquisition of Dr. Barbara Sturm reinforces Puig’s competitive position in the premium skin care segment by welcoming a globally recognized luxury cult brand developed through its digital channels and worldwide spa and boutiques network, offering high-performance treatments with deep expertise in skin care.”

Marc Puig, chairman and chief executive officer of Puig said, “We are very excited to welcome a brand of the caliber of Dr. Barbara Sturm to our ‘house of love’ brands.”

The acquisition of Dr. Barbara Sturm is a continuation of Puig’s consistent high-end strategy. This skincare brand acquisition is a crucial step in expanding and balancing its product portfolio.

Puig operates its business in three divisions, namely Beauty and Fashion, covering the majority of Puig’s brands such as perfume brands Paco Rabanne, and Carolina Herrera, and the Swedish brand Byredo. It also includes lifestyle brands like Adolfo Dominguez, Shakira, and Benetton. Puig states that this division, with its perfume portfolio, positions the company as the fifth-largest player in the fragrance industry, holding nearly 10% market share, and its three brands rank among the top twenty globally.

The remaining two divisions focus on the beauty sector, with one being an independent makeup division formed by the acquisition of the British beauty brand Charlotte Tilbury in June of this year. The beauty brands Uriage, Apivita, and Isdin are consolidated into a new division called Derma, focusing on skincare.

According to Puig’s latest annual report data for 2022, its net revenue reached €3.62 billion, marking a significant 40% year-on-year increase, with a net income of €400 million, reflecting a 71% year-on-year rise. Breaking down the business segments, the Beauty and Fashion division experienced a substantial 40% growth in revenue, reaching €2.665 billion, constituting 73.6% of the total group’s net revenue. This division can be considered Puig’s most crucial growth engine.

The UK makeup brand Charlotte Tilbury, acquired by Puig in 2020, generated revenue of €626 million in 2022, representing 17.29% of the total group revenue.

In fact, in 2022, the proportion of revenue contributed by brands subsequently acquired by Puig exceeded 20% of its total revenue, highlighting the company’s significant emphasis on accelerating its acquisition pace.

On the other hand, the Derma skincare products business division recorded a net revenue of only €328 million in 2022, accounting for a mere 9.06% of the total group’s net revenue—less than 10%. Moreover, it exhibited the slowest growth rate among the three business divisions.

Puig naturally does not underestimate the significance of the skincare business. In fact, in the past year of 2022, the skincare category has consistently garnered substantial attention from investors. According to a compilation by CHAILEEDO on 80 global beauty industry investment and financing transactions in 2023, skincare led with 30 transactions.

For Puig, in recent years, leveraging its presence in fashion and beauty, the company has seen a significant increase in performance, particularly driven by the high growth in the fragrance sector. This growth has outpaced many other international beauty giants. In comparison to comprehensive product portfolios offered by industry giants like L’Oréal and Estée Lauder, which cover skincare, makeup, and hair care, Puig’s product portfolio may appear relatively limited. Despite a recent decline in global mergers and acquisitions in the beauty market, major players are still actively acquiring mature independent brands, seeking new avenues of growth. Therefore, for Puig, the acquisition of Dr. Barbara Sturm represents a crucial step in expanding its product portfolio and seeking new growth opportunities.

Coty and Puig share similar strategies. Despite experiencing six consecutive years of losses, Coty’s fragrance business, under the leadership of the new CEO, Sue Y. Nabi, turned a profit for the first time in the fiscal year 2022 after a six-year continuous loss. Recognizing the need to diversify, Coty has also ventured into expanding its skincare business. In September of last year, Coty unveiled a new skincare strategy during an investor event in Monaco.

Among Coty’s six key strategic growth pillars, a focal point is the company’s high-end skincare brands. Lancaster and Orveda are pivotal brands aimed at driving growth in the high-end skincare category, particularly in the Asia-Pacific market. Lancaster is one of Coty’s few successful skincare brands.

Simultaneously, in the spring of 2023, Coty initiated an accelerated strategy for high-end skincare, introducing new products and robust marketing campaigns for Lancaster and another proprietary brand, Philosophy. These initiatives have already shown very positive early results, with Lancaster and Philosophy achieving double-digit revenue growth in the fourth quarter.

For Puig, in recent years, two significant acquisitions underscore its ambitions in the beauty industry. The first was the acquisition of the British makeup brand Charlotte Tilbury in 2020, with the establishment of a dedicated division for the brand. The second was the acquisition of the upscale Swedish fragrance brand Byredo in 2022. These moves demonstrate Puig’s aspirations to make strides in the beauty and cosmetics sector. The latest acquisition of Dr. Barbara Sturm undoubtedly represents a crucial initiative to expand its skincare product portfolio.

Ambitions of Puig’s positive global expansion

This acquisition of Dr. Barbara Sturm is also a crucial step in Puig’s global strategy.

Puig has consistently engaged in global acquisitions and investments. In addition to the 2020 acquisition of the British makeup brand Charlotte Tilbury, Puig made three significant acquisitions in 2022. These included acquiring a majority stake in the upscale Swedish fragrance brand Byredo, entering the Indian market with the acquisition of wellness brand Kama Ayurveda, and expanding into the Latin American market with the acquisition of natural perfume and cosmetics brand Loto del Sur from Colombia.

The acquisition of Dr. Barbara Sturm not only enables Puig to penetrate the German market but also aligns with Dr. Barbara Sturm’s presence in spa centers and boutiques in various locations such as London, New York, Miami, Los Angeles, Dallas, Jakarta, and Singapore. This aligns well with Puig’s global strategy.

In June 2023, Puig collaborated with King Power International Group to inaugurate a new Penhaligon’s counter at King Power Rangnam in Bangkok. This launch signifies the debut of the niche fragrance brand’s presence in Thailand’s travel retail sector.

In addition, Puig opened a regional Americas travel retail hub in Miami last year. This hub is strategically positioned to strengthen the company’s presence in the Latin American market and facilitate the expansion of its North American travel retail division. Puig emphasizes that the Miami hub will enhance connections with suppliers and retailers in the Americas while leveraging local talent pools. Additionally, it aims to elevate the visibility of its prestige brands in the region and carefully expand its niche portfolio.

Puig outlined a three-year plan in March 2021, targeting sales of 3,000 million euros by 2023 and 4,500 million euros by 2025. The objective was to double the sales from 2020 within three years and triple them within five years. Due to the robust growth experienced in the past two years, the company has successfully surpassed its goal of doubling the net revenues of 2020 one year ahead of schedule. This achievement positions the company strongly on track to attain the revenue target of 4,500 million euros by 2025. Puig is expected to achieve its sales target of 4.5 billion euros in 2024.

In September 2021, Puig exclusively invested in the Series B financing of the Chinese fragrance brand “Scent Library,” with Index Capital serving as the exclusive financial advisor. The financing is earmarked for ongoing research and development of original fragrance products based on contemporary Chinese culture, creating immersive cross-channel consumer experiences, advancing the optimization and integration of the international supply chain, and building a talented team.

To expedite its presence in the Chinese market, starting from the second half of 2021, Puig has successively opened stores for its high-end fragrance brands Panhaligon’s and L’ArtisanParfumeur, as well as the beauty brand Charlotte Tilbury. These three brands initially entered the Chinese market through online channels, and after their offline debut in 2021, they collectively opened more than 10 stores.

Among them, Charlotte Tilbury has the fastest store expansion rate, with information from the official WeChat account indicating that it has currently opened 7 offline stores in cities such as Beijing, Shanghai, Nanjing, and Shenzhen. Christian Louboutin Beauty, represented by the Puig Group, opened its first offline store in Beijing’s SKP in July 2021 and has rapidly expanded its total store count to 5.

The acquisition of the Swedish high-end fragrance brand Byredo in 2022, with a value close to 1 billion euros, has become a sought-after addition to shopping centers. Currently, Byredo has opened offline stores in Shanghai, Beijing, Shenzhen, Nanjing, Hangzhou, Chengdu, Wuxi, and Xiamen, and the expansion into the makeup category has further enriched the product offerings in these stores.

“China is very important for Puig and the whole industry. Why? Because the most exciting developments and the biggest area of growth is China,” said Camila Tomas, Puig’s head of global innovation and new technologies.

These initiatives have yielded positive results for Puig, as indicated by its 2022 financial report, showing a significant 36% increase in net revenue in the Chinese market.

In WWD’s 2022 Global Top 100 Beauty Companies, Puig secured the sixteenth position. According to Puig’s projections, it is poised to surpass 4.5 billion euros in net revenue by 2024. For comparison, Bath & Body Works, the largest bath product chain in the United States, ranked eleventh with a 2022 revenue of 4.6 billion euros. With Puig’s robust performance, entry into the top ten global beauty companies seems imminent. The Chinese market is anticipated to be a pivotal driving force behind this achievement.