The Evolution of Value Creation in Personal Care and Beauty Brands

A Green Circle Capital White Paper

By Francesco Lorenzetti, VP,

With Stu Strumwasser, Managing Director

January 2026  ©

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Key Takeaways:

  • In the personal care and beauty markets, the evolution to clean labels with natural ingredients has become “table stakes” for consumer acceptance of new brands.
  • Despite rapid consumer adoption, sales from naturally positioned brands still make up only ~7.5% of the global personal care category, indicating substantial whitespace for growth.
  • The natural segment is growing nearly 2X faster than the broader personal care industry.
  • Consumers have begun to also demand evidence of efficacy backed up by clinical trials.
  • Biotech-enabled innovation (fermentation, novel molecules, bioidentical actives) is accelerating reformulation and differentiation across the category.
  • Beauty remains one of the strongest and highest-multiple segments within consumer verticals when it comes to M&A.
  • Asian markets, particularly South Korea and Japan, utilize natural ingredients + efficacy supported by clinical testing to create value in brands.
  • The confluence of these attributes makes investing in personal care and beauty brands with clean labels and science-backed efficacy statements a compelling opportunity for value creation in the consumer sector today.

Intro

As investment bankers, advisors and operators of growth-stage consumer brands for more than two decades, we witnessed firsthand the acceleration of investment in the early-stage food and beverage sector.  Since the 1990s, the industry has evolved away from manufacturing processed foods with lengthy ingredient decks and chemical preservatives to provide more natural, organic and/or clean-label alternatives.  Substantial value was created in brands that broke out as pioneering and/or leading innovators of the natural movement in their respective categories.  That trend has clearly taken root in other consumer segments as well, and there is still meaningful opportunity for founders and investors to participate in the substantial remaining runway.

The Natural Gold Rush is Not Subsiding for Personal Care and Beauty

As we have written about in other whitepapers (see SMID-Sized Consumer Brand Mergers For Scale and Profitability and After The Natural Gold Rush), headline-generating exits of natural and better-for-you food and beverage startups motivated new consumer funds to launch and generalists to invest in a sector they had traditionally avoided.  For example, between 2016 and 2019 alone, Bai sold to Dr. Pepper for approximately $1.7B,[1] Hershey acquired Amplify Snacks (anchored by SkinnyPop), for around $1.6B[2] and Atkins bought Quest for approximately $1B.[3]  From about 2014-2021, capital flooded the space and valuations soared as more generalist investors took a liking to consumer brands.  In 2022, that bubble popped; now, small to mid-sized food and beverage brands seeking capital face a more challenging funding environment.  From a macro perspective, the IPO markets have yet to unfreeze and overall, according to Pitchbook, completed fundraises are down from relative peaks in 2018 and 2021.[4]  

Over the last 20 years, nearly every legacy food category has seen disruption from a new, more natural, better-for-you alternative or two… or twenty.  While the work of reshaping our food system for the betterment of human health and the planet is hardly finished, large strategic acquirers appear to be less motivated to pay high revenue multiples for the fifth or sixth natural entrant into every category.  In response, growth-stage investors are less motivated by the “BFY Alternative to X legacy food category” playbook.

That is not the case for all consumer verticals, however.  A transformation, similar to what occurred in food and beverages, is still occurring in other categories.  Personal care and health and beauty brands continue to innovate, and more and more seem to purvey a brand positioning based around cleaner labels, natural ingredients, cruelty-free testing policies and transparency—and efficacy claims backed up by clinical testing.

The Evolution to Natural Ingredients as a “Have to Have”

The natural personal care market only represents roughly 7.5% of the overall global industry, according to Persistence Market Research, but it has grown at a rapid CAGR of 9.2% from 2019 to 2024 and is projected to grow at a similar clip through 2032, substantially outpacing the broader industry’s growth of only about 5%.[5]  According to Straits Research, the global beauty and personal care products market size was valued at $556B in 2024.[6] 

Encore Consumer Capital is a private equity firm in San Francisco that identified the trend for clean beauty early on.  Encore Co-Founder and Managing Director Robert Brown said that when the firm invested in MyChelle in 2008, “It was the number one facial skincare brand in Whole Foods at the time…but outside of those channels the sector was still very nascent.” Years later, as the trend toward clean beauty got legs in 2010, Encore invested in Tarte and saw that brand build out an extensive line of “High Performance Naturals” that became broadly available in Sephora, Ulta and on Amazon.  Subsequently, Encore invested in Supergoop! and participated in a storied exit to Blackstone in 2021.  When asked by Green Circle whether being clean label has become a “nice to have,” or a “must have,” for personal care and beauty brands Brown said, “Now it is table stakes, and you are unwise to launch a brand that is not doing this.”  Encore is back at it having recently partnered with Tisha Thompson to back her clean cosmetics brand, LYS Beauty, and Brown points out that, “Sephora and Ulta are phenomenal launch partners for clean prestige brands.  What remains to be seen is how the tremendous opportunity in grocery/drug/mass will be harnessed by emerging clean brands that are not first launched in prestige channels.”

We created a chart (see below) of global interest in key search terms in the space, such as “clean beauty” and “natural cosmetics,” utilizing a decade of Google Trends data, international reports and business articles.

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Terms like “transparent beauty” and “non-toxic skincare” have skyrocketed with interest in just the last couple of years, while interest in “clean beauty” has seen a steady rise.  A recent poll by NPD Group showed that 68% of personal care consumers now seek out brands that use “clean” ingredients.[8]  In addition, Personal Care Insights has documented a 60% yearly growth in new product launches with natural or organic claims from 2022 to 2025 alone.[9] 

In the EU, roughly 300 ingredients that may pose a risk to consumers are prohibited from being included in cosmetics, whereas in the US it is just 11.  This regulatory gap illustrates the significant whitespace for brands that proactively reformulate according to the stricter global standards to build sales in the US, giving them a branding advantage with an increasingly ingredient-conscious consumer.  Daniel Bonoff, a partner with Goode Partners in New York told us, “The US has inexplicably lagged other countries in banning certain ingredients whose risks and dangers have been scientifically proven.  Bonoff added: “It seems that much of the present-day innovation among both emerging and established companies is heavily influenced by an expectation that this regulatory tightening will continue.  This would seem to be a catalyst for increased M&A.”

Last year our firm represented Humble Brands, the best-selling deodorant brand in the Natural Channel.  An analysis of SPINS data in the MULO channel (conventional retail channels) from last year, which we utilized in marketing that opportunity, revealed a stunning example of the trends discussed herein:  In the 52 weeks ended in May of 2024 brands deemed to be “naturally positioned” stole over seven points of share from conventional incumbents versus the prior year, and accounted for a whopping 77%+ of growth in the category.  Terry Tierney is an operating partner with Hummingbird Equity Partners, a firm that recently invested in Humble Brands, where he is now the Chairman.  Terry is also the former CEO of MyChelle and a longtime operator in the natural products space.  His view is as follows: “The personal care category is experiencing a rapidly accelerating transformation characterized by consumers choosing challenger brands over legacy brands.  Challenger brands with superior value propositions built upon natural, efficacious ingredients, simple ingredient statements and an intimate understanding of the benefit that scent plays in the overall brand vibe will likely win in the marketplace.”

Growing awareness and demand for sustainability, transparency and animal welfare have transformed how products are manufactured, labeled and marketed today.  Biotech, or more specifically biomanufacturing techniques such as fermentation, has also been an enabler for such a shift, replacing the need to source certain molecules and ingredients from animals.  For example, companies such as C16 Bio and Jellatech (with which we are acquainted from the Foodtech industry) are innovating in cosmetics as well.  The latter is developing a scalable process for culturing bioidentical collagen cells—no cows necessary.

Established beauty brands are also reformulating.  Revela created Procelinyl and Fibroquin, novel molecules developed by synthetic biotech processes that offer targeted efficacy for hair growth and skin health.  Amyris, in partnership with Givaudan, pioneered the use of fermented sugarcane to create Neossance Squalene, a widely used moisturizing ingredient originally sourced from shark liver.

While the trend toward natural ingredients and clean labels has gone from a novel idea twenty years ago, to “table stakes,” it is no longer a differentiator or a foundation upon which to build a brand architecture—on its own.

Science is the New Frontier

Today, the key determining factor for value creation is efficacy backed up by scientific substantiation and clinical trials.  In food, professionals often say that taste is not just a factor, but a prerequisite.  In personal care and beauty, clean labels are becoming a prerequisite, but science-backed evidence of efficacy is quickly becoming critical as well.  Not only do winning personal care brands highlight the use of carefully selected, natural ingredients and clean labels, but they must formulate products that are clinically proven to perform and have a compelling marketing story with which to tie it all together.

Olivier Garel, Head of Venturing at Unilever, one of the world’s largest marketers of “Beauty & Well-Being” products, summed it up as follows:  “Today, [natural and clean-label] are largely table stakes.  You can still build brands on that platform, but it is no longer where the real equity value is being created.  What we are seeing now is the rise of science-backed beauty and wellbeing.  Consumers want proof, not promises.  Clinical validation, dermatologist-led positioning, diagnostics and measurable outcomes are what drive conversion and repeat purchase.”

Scott Potter is the Managing Partner at San Francisco Equities, whose portfolio includes Jane Iredale, a global cosmetics brand and SV Labs, a formulator and manufacturer of beauty and personal care products serving both emerging brands and global CPG brand leaders.  Potter said, “Clinical validation is a critical differentiator…  This has always been true in efficacy-driven categories like clinical skincare, acne, problem/solution haircare, etc., but is now pervasive in more lifestyle-driven categories.”  Potter even went so far as to say that there has been a “commoditization of other product attributes such as ‘natural/clean’ ingredients.”

The safety and efficacy testing market itself is growing rapidly in response to demand from brands. According to Global Growth Insights, the market for cosmetics and personal care product safety and efficacy testing is approximately $530M in 2025 and is expected to grow at a steep CAGR of 9.6% through 2033 to become a billion-dollar industry unto itself.  The report highlights trends in “testing for microbiome balance, vegan and ethical testing protocols, and large usage of in-vitro studies.”[10]  Major highlights from the report include the fact that “over 66% of brands now treat testing as a strategic investment […] over 74% of cosmetics brands now conduct third-party safety evaluations prior to launch,” and “approximately 58% of skincare manufacturers have adopted ingredient transparency protocols that require efficacy validation.”10  Furthermore, McKinsey’s study on Gen Z consumer behavior with regard to beauty products found that Gen Z consumers “are willing to pay more for beauty products from a sustainable brand or for high-quality products,” and that “nearly half of Gen Z consumers… research beauty products extensively.”[11]  The study also noted that in the “wellness space” more broadly, “consumers are looking for science-backed, clinically proven ingredients more than just ‘clean’ ingredients.” 11

In recent years there has also been a notable increase in demand for Asian brands (specifically for skincare and beauty products).  South Korea and Japan are at the forefront of these segments, winning by establishing brand positionings around strong clinical foundations, natural ingredients and quality.  Perhaps this is partly related to the leading global positions both countries enjoy in the pharmaceutical industry.  According to iMarc, the K-beauty market was worth approximately $14.7B in 2024 and is expected to continue growth at a nearly 9% CAGR.[12]  The study notes that demand is driven by interest in “innovative” and “high-quality” solutions, especially from younger consumers.15  And, as highlighted by Vogue, South Korea’s cosmetics exports reached $10.2B in 2024, supported by perceptions of quality and next-gen science validation.[13]  Japanese brands have also long enjoyed the perception of a quality halo from Western consumers across many categories, from tech to cars to watches.  iMarc reports Japan’s beauty and personal care markets are worth over $31.3B today.[14]

Furthermore, in recent years, a growing cultural focus on women’s health and wellness has changed how we view beauty: no longer as purely aesthetic, but as part of a comprehensive health regimen.  This shift is illuminated by the size and expansion of the women’s health and beauty supplement market, which was valued at nearly $60B in 2024.[15]  Rather than focusing solely on cosmetics, more consumers are embracing “beauty from within” and investing in vitamins, botanical supplements, and products aimed at skin health, hormonal balance and long-term wellness.

Clean Labels and Scientific Evidence Build Enterprise Value

Neda Daneshzadeh, Co-Founder and Managing Partner of Prelude Growth Partners, explains that the key positioning for value creation is, “clean with active ingredients.”  Coherent with the sentiment of other leading investors in the space, Daneshzadeh said, “Consumers want efficacy and results even in personal care – the ‘skinification’ of personal care with active ingredients that works is where the growth is versus just natural.”  A review of recent trends and notable exits in the space backs up her point.   Scott Potter pointed out the following:  “In an era of influencer-driven marketing and chasing the ‘viral moment,’ the sustainability of a brand’s marketing model is often overlooked.  Sustainable marketing tactics focused on profitable customer acquisition and retention over the long-term needs to be clearly demonstrated to support a brand’s staying power.”  Strategic acquirers seem to have read the memo.

All of the leading investors with whom we spoke see clean labels and clinically validated efficacy as key for modern, emerging personal care and beauty brands.  Still, there is more.  “As we move towards products with ‘cleaner’ ingredients and greater efficacy, these claims/characteristics need to be easy to understand and fully trusted by the consumer,” said Nick Giannuzzi, Managing Partner at Humble Growth in New York (not to be confused with the previously mentioned Humble Brands).  “The initial interaction with the product/brand is often determinative of product-market fit and consumer acceptance.  When the consumer first encounters the brand—in those first seconds—is where brand aesthetics and clarity of the positioning really make the difference.”

M&A and growth investment in personal care and beauty segments remain strong.  The beauty sector is a bit of an outlier among consumer segments and is projecting robust deal activity into the future.  In the graph below, one may note that in 2025 beauty multiples remained significantly higher than the consumer sector more broadly.

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In the figure below, the middle market rebound in funding is significant, with further innovation and consumer spending habits continuing to drive growth and interest from investors. 

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Recent marquee exits in this space demonstrate these trends

  • L’Oreal acquires Aesop for $2.5B in 2023.  Aesop famously markets a combination of sourcing both plant-based and lab-developed ingredients with “proven records of safety and efficacy.”[17]
  • Unilever acquires Tatcha (Japanese clean beauty brand) for $500M in 2019.  Tatcha boasts a range of traditional Japanese, natural ingredients with clinical results, including Abaca leaf fiber, Camellia oil, and Cranberry extract.[18]
  • Shiseido acquires Drunk Elephant for $845M in 2019.  Drunk Elephant’s mission statement underscores isolating “the most effective ingredients that directly benefit the health of the skin.”[19]
  • E.L.F acquires Naturium for $355M in 2023.  Naturium highlights its standard of paraben-free, cruelty-free, vegan, gluten-free, dermatologist-tested products, “[unlocking] full benefits of natural botanicals and powerful actives with innovative technology.”[20]
  • Unilever acquires Wild (leading natural deodorant brand in UK) for $290M in 2025.  Wild is touted for its plastic-free deodorants and lip balms, positioning itself as premium and eco-friendly.

Key Conclusions for Founders and Investors

These factors point to a transformation taking place in enormous markets that may be part of an enduring structural shift.  Just as “natural” reshaped the investment environment in the food and beverage industries over the last two decades, personal care and beauty are still undergoing an evolution.  At a penetration of less than 10%, the demand for clean labels clearly has legs.  More consumers are also demanding products that demonstrate efficacy with scientific evidence and clinical trials.  Marrying the two attributes has been a winning formula for value creation (and large M&A exits) and should be for the foreseeable future.

The demand for better, healthier and more efficacious products is growing, not slowing down, and innovation rarely comes from industry leaders.  As the incumbents look to stay relevant and ahead of the curve, they may do so by continuing to acquire the breakout brands that threaten them with those aforementioned attributes.  That will drive the flow of venture capital into early-stage brands which set out to become one of those acquisition targets.  The landscape for high-margin, innovation-rich products should lead to more growth-stage brands that generate outsized returns in healthy exits.  For these reasons we believe that natural and science-backed beauty and personal care brands represent compelling investment opportunities within the consumer sector. 

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Green Circle Capital Advisors is a leading investment banking advisory firm based in New York that services growth-stage Consumer business, typically with revenue between $10M and $100M.

To discuss your company’s options for raising capital, or strategic M&A opportunities, please contact:

Stu Strumwasser, Managing Director, Green Circle Capital Advisors, stu@greencirclecap.com

Francesco Lorenzetti, Vice President, Green Circle Capital Advisors, francesco@greencirclecap.com

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