THG Expands D2C Empire With Buys Of Dermstore.Com, Claremont, Berryman’s

U.K.-based THG Holdings, which owns direct-to-consumer (D2C) brands such as Glossybox and Perricone MD, said it has agreed to acquire professional skincare e-tailer Dermstore.com from U.S. retailer Target Corp. for $350 million in cash. THG said the buy will enable it to increase the scale of its burgeoning beauty box business by adding Dermstore.com’s customer base.

THG said that Dermstore.com is expected to add sales of £135 million ($182.2 million) to THG’s 2021 revenues. The deal is subject to approval by U.S. regulators.

THG also announced it has paid £59.5 million in cash to acquire nutritional product makers Claremont Ingredients and Berryman’s. Claremont is a leading flavor developer and manufacturer of nutritional products in the U.K., while Berryman’s specializes in fruit-based ingredients. THG said the companies will help build out its nutritional product lines while still generating revenue from third-party customers.

Claremont and Berryman’s are expected to add around £15 million ($20.2 million) in sales to THG’s 2021 revenues.

Also known as The Hut Group, THG raised $7 billion in its initial public offering on the London Stock Exchange in September, according to CNBC.

“A key driver behind the decision to list THG on the London Stock Exchange just over three months ago was to enable the Group to make major global investments, such as Dermstore.com. Accessing capital through a London listing has enabled us to accelerate our growth plans and build out a global leadership position within the exciting beauty industry,” said Matthew Moulding, THG’s CEO and chairman, in a statement.

“We are also pleased to announce the acquisitions of Claremont and Berryman’s. These two businesses are highly complementary, with Berryman’s accelerating our capabilities in drinks range development for the individual brands within THG Nutrition. Claremont will play a key role in developing flavors tailored to local tastes across the globe. Together, these acquisitions will enable THG to significantly accelerate the launch of further product innovation to global markets, while increasing the proportion of THG Nutrition products wholly manufactured in-house,” Moulding added.

Consumers’ buying habits have shifted as retailers face new rules and restrictions, with each side adapting to brick-and-mortar store closures or reconfigurations as well as increased online variety and competition. This trend means it is crucial to present multiple options to customers so they can mix and match how they shop and make purchases as they go, Carolyn Bojanowski, senior vice president and general manager of eCommerce for beauty retailer Sephora, said in a recent PYMNTS interview.

Meanwhile, direct-to-consumer sales have been taking off. Consumer packaged goods (CPG) brands and their merchant partners held eCommerce at somewhat of a distance for years, even as they steadily increased their investments in digital. Because brick-and-mortar stores did the big numbers, the old rules favored physical retail.

But with the onset of COVID-19, D2C engagement took over almost organically as lockdowns kept stores off-limits. And like other digital shifts observed in 2020, the move looks to be enduring.

“Our research strongly suggests that CPG brands face a unique opportunity to capture customer loyalty and drive engagement,” according to PYMNTS’ new D2C and the New Brand Loyalty Opportunity Report, done in collaboration with sticky.io. “The current shift’s durability will depend on brands’ abilities to deliver product availability, offer seamless eCommerce experiences and leverage digital tools to forge long-term, personalized relationships with customers.”