Manufacturing and consumer goods company BWX is branching out beyond natural beauty into vegan and cruelty-free products with its acquisition of leading eco-friendly online retailer Flora & Fauna. The acquisition, which was announced on Monday, will see BWX pay between $27.9 million and $30.8 million for 100 per cent of the Good Collective Pty Ltd, which trades as Flora & Fauna. This represents a multiple of between 1.6 and 1.8 times the online retailer’s FY21 revenue, which is expecte
cted to be between $16.4 million and $17.1 million.
It comes as younger consumers increasingly consider the environmental and ethical impacts of their purchasing decisions. The global vegan cosmetics market is expected to be worth US$20.8 billion by 2025, according to Statista.
“The younger generation are absolutely focused on purpose-driven brands, they’re focused on better products, and BWX recognises that this is a growing market, it’s not slowing down,” Julie Mathers, Flora & Fauna founder and CEO, told Inside Retail.
Mathers and her entire team of 47 people based in Sydney will join BWX once the acquisition is complete. That is expected to occur in July 2021.
An online retail powerhouse
The acquisition will also help boost BWX’s direct-to-consumer online offering. The company, which is currently known for selling natural beauty brands such as Sukin through major pharmacy and supermarket chains, is forming a new business unit around Flora & Fauna and Nourished Life, an online retailer focused on toxin-free beauty products that BWX acquired for $20 million in 2017.
“We are thrilled to welcome the Flora & Fauna team to the BWX family, and alongside Nourished Life, create a best-in-class ethical online retail platform,” Dave Fenlon, group CEO and managing director of BWX, said.
According to a spokesperson for BWX, there are no plans to merge the two businesses, which will continue to operate under their own brands. BWX expects the acquisition to be EPS accretive in FY22 and strongly EPS accretive by FY24 with the realisation of anticipated synergies.
“With complementary categories and minimal consumer and SKU overlap, the two brands will benefit from a strategic approach to customer experience and promotions, as well as operational efficiencies,” Fenlon said.
According to the spokesperson, Nourished Life is more firmly focused on the beauty category and targets a slightly older demographic, while Flora & Fauna offers a broader range of products, including many for the home, and caters to a younger audience.
Founded in 2014, Flora & Fauna currently ranges 10,000 SKUs in 10 key categories, including beauty, personal care, lifestyle, baby and kids, pet, food and health, and has a loyal following of 94,000 active customers. While it primarily sells online, it opened a bricks-and-mortar store at its warehouse in Sydney in 2019.
On the fast track to growth
For Mathers, who ranked first in Inside Retail’s Top 50 People in E-Commerce in 2019 and 2021, the BWX acquisition represents an opportunity to create a bigger impact through her business.
Flora & Fauna was one of the first retailers to become a Certified B Corp in Australia in 2017 and started offsetting 100 per cent of its carbon emissions in 2019. Last year, it launched an initiative to reduce plastic waste in the supply chain.
“Our purpose is to help everyone make better choices, so we need to get to everyone. We need to do a lot more in terms of marketing and we need to stock more products,” Mathers said. “It’s really key for us to be on a growth trajectory.”
And while Flora & Fauna has a track record of strong sales growth, with $12 million in revenue in FY20, up from $10 million in FY19, the investment from BWX, an ASX-listed consumer goods company that reported $187.7 million in net revenue last financial year, will help accelerate that growth.
“I’ve always been focused on growth and wanting to drive change on a big level, and in reality, you can only do it for so long using profits from your business. You need to get some investment and someone to help you,” Mathers said.