Over the past several years, we’ve witnessed the healthy, natural and ethically sourced trend permeate throughout almost every segment of the food and beverage industry. This trend (which clearly is now here to stay), has since spread to other consumer spaces like pet food and products, and has driven growth in numerous health and wellness segments including vitamins, herbs, sports supplements and healthy aging. Two significant M&A transactions announced in Q4 2016 have signaled another health and wellness sector ripe for further disruption and consolidation: personal and beauty care.

Beauty CarePersonal and beauty care is an enormous category and we believe it is next in line after food and beverage to be disrupted by natural and ethically sourced products. Pacifica Beauty LLC, which offers natural-focused beauty products that are “vegan and cruelty-free,” announced recently a “significant minority investment” from the consumer-focused private equity firm Alliance Consumer Growth (ACG). According the release, the investment will enable Pacifica to continue product innovation and expand its disruptive line of “accessibly priced, premium beauty collections.”

Millennial and Generation Z mindsets also are driving disruption in the space, and beauty care disruption now is happening in channels too. Estée Lauder consumers are used to going to department stores, whereas younger consumers are getting exposed to edgier, more entry level brands at stores like Ulta and Sephora. To capitalize on this trend, The Estée Lauder Companies Inc. (NYSE:EL) announced recently that it is acquiring Too Faced, a fast-growing, playful makeup brand that has become known for its innovative formulas, irreverent product names and bold packaging. Too Faced boasts over 7.3 million Instagram followers and 2016 net sales are expected to top $270 million. Too Faced is a buzzworthy brand, and the transaction is expected to help Estée Lauder tap into the millennial audience and plant a strong foothold in the specialty-multi and online channels.

For more information on the disruption taking place in the health and wellness industry, please access SDR’s health and wellness reports.