To kick off the New Year, Centric Brands announced the acquisition of Taste Beauty.
Taste Beauty, founded in 2015, is best known for its viral products, like its holiday-focused LOL Surprise toy in 2018, and its licensing agreements with Disney and Nickelodeon. Taste Beauty maintains three different business divisions: its own brand Taste Beauty, Taste & Friends licensing, and Taste Labs incubation and private labeling. Taste Beauty products sell through over 50,000 retail doors, including Walmart and Sephora. Centric Brands designs, develops and markets apparel products to kids, women and men and has over 100 licenses, with fashion brands like Calvin Klein and Kate Spade.
Taste Beauty’s three co-founders, Tom Crowley, Sabrina Vertucci and Alex Fogelson, will stay on, and Fogelson, who serves as Taste Beauty CEO, will also join Centric Brands as its beauty division president. Fogelson declined to state the size or revenue of Taste Beauty, but in 2018, it had 10 employees. Industry analysts expected it to earn $50 million in revenue by 2021, according to previous Glossy reporting. Terms of the Jan. 4 deal were not disclosed. Centric Brands emerged in Oct. 2020 from bankruptcy which it filed in May 2020.
“The opportunity for us is that we can drive significant value for our retail and brand partners by being a [creator and provider] for licensed and private-label products,” said Fogelson. “We’re looking to be at the forefront of innovation and collaboration in the beauty and personal care category.”
Taste Beauty’s own brand focuses on Gen Zers through its frequent use of food-shaped lip glosses and other nail and lip products. Taste Beauty does not maintain its own e-commerce site and instead sells on Amazon (through fulfilled by Amazon) and relies on brick-and-mortar distribution through tween retail partners like Claire’s and Justice. Recently, Taste & Friends teamed with Netflix for a collection of “Stranger Things” makeup in 2019 as well as with Disney on Baby Yoda in 2020, both of which created viral pop-culture moments. But the company’s licensing collaborations more frequently involve evergreen brands, as with its Oreo cookie lip balm and Mountain Dew lipgloss. Taste Labs previously worked with notable retailers and brands like Sephora and Buzzfeed in 2017.
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“[This acquisition] strengthens our bath and beauty product offering while expanding our entertainment licensing platform into complementary categories and properties,” said Jason Rabin, Centric Brands CEO.
Centric Beauty had been hit hard by the Covid-19 pandemic when it filed for bankruptcy, noting it furloughed approximately 1,346 employees and let go of approximately 660 employees, according to its bankruptcy filing. At the time, it had $1.7 million in debt and ultimately was taken over by its private equity lenders Blackstone, Ares Management and HPS Investment Partners.
Despite Centric Brands’ own struggles, licensing collaborations underwent a rebirth in 2020, driven by incubator companies and a shift from traditional influencer and celebrity collaborations. Recent successes include incubator HipDot’s collaboration with the rock band My Chemical Romance. The nearly 2-year-old HipDot has a smaller portfolio of collabs and brands compared to Taste Beauty, with Spongebob and Kesha Rose (featuring the singer Kesha) as standouts.
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The acquisition of Taste Beauty follows Centric Brands’ long-term ambition to expand its licensing business. In October 2018, under its previous name Differential Brands Group, Centric Brands acquired a significant portion of the North American licensing business of Global Brands Group Holding Limited. It paid approximately $1.2 billion in cash and changed its name to Centric Brands. According to the bankruptcy filing, 51% of 2019 sales came through its kids division, which included licensed beauty products and private labels. Taste Beauty’s focus on younger demographics could aid in expanding Centric Brands’ kids business. Centric Brands already works with Walmart through the private-label kids brands George and Wonder Nation and has licenses with entertainment properties including Disney, Marvel and Nickelodeon, all three of which it has in common with Taste Beauty.
Fogelson said that moving forward, he is bullish on 3D printing — notably used for the LOL Surprise product — which has been central to the company’s quick development of new product molds and of fun primary packaging shapes. He added that trendy ingredient formulations will also be a central focus moving forward. Taste Beauty’s supply chain is dependent on third-party manufacturing and will expand under Centric Brands, he said.
“By leveraging technology more, we’re able to do more things 24 hours a day, in all aspects of the business. By seeking new technology solutions, we can drive the business and additionally [grow] our Amazon e-commerce,” said Fogelson.
