Estée Lauder's Latest Investment Is in Science-Based, Internet-Beloved Beauty Brand Deciem [UPDATED]

And not all Deciem fans are pleased.
Author:
Publish date:

Scroll down for updates to this post.

When Estée Lauder announced earlier this week that it would be discontinuing its millennial-targeted, Kendall Jenner-fronted beauty brand Estée Edit, the company said that it hadn't given up on reaching millennials, just that the creation of a new brand to do so hadn't been necessary. Rather, it's found success in promoting its existing lines with Millennial-targeted marketing, as well as investing in or acquiring existing brands that already have a strong Millennial customer base. And on Wednesday evening, it announced the latest of this type of investment: It has purchased a minority stake in Deciem, the innovative, rapidly growing company behind cult-favorite skin-care brands like The Ordinary and NIOD.

The four-year-old, Toronto-based multibrand company, which dubs itself The Abnormal Beauty Company, is unique for a number of reasons: For one, it's vertically-integrated, meaning it has its own laboratory, manufacturing, e-commerce sites, retail stores and marketing infrastructure that allow it to not only create and launch new products quickly, but also do the same with new brands; the company has already has 10 under its roster. Its inexpensive, straightforward hero brand, The Ordinary, has become an international cult hit with its foundation inspiring significant waitlists and even crashing its site; and the anti-aging products it's launched under the brand NIOD have also proven successful. While the cruelty-free company has a tight focus on uncomplicated, functional products made with science-backed ingredients, it's anything but niche, offering everything from skin care to haircare to cosmetics through a broad range of points of sale including its own stores, e-commerce, department stores and TV shopping networks.

"In four short years, [Founder and CEO] Brandon [Truaxe] and [Co-CEO] Nicola [Kilner] have established, in Deciem, a powerful engine of innovation and growth,” said Fabrizio Freda, President and Chief Executive Officer of The Estée Lauder Companies Inc, in a statement. "Through its unique business model, Deciem has produced some of the most creative independent brands on the market, capturing the passion and trust of devoted fans around the world – and they are just getting started. We look forward to engaging with the team and supporting their global growth aspirations." William P. Lauder, Executive Chairman of The Estée Lauder Companies Inc. added that the company is "well-positioned to create a new generation of successful beauty brands." A press release also touted Deciem's "vibrant following among millennials and diverse consumers" as an attractive quality.

"It's nearly unthinkable for a conglomerate to embrace a disruptive mindset like that of Deciem – and yet we have felt like family from the very first day we met the loving team at The Estée Lauder Companies," added Truaxe. 

The company has an engaged following on social media and the response by fans to the news is mixed, based on their opinionated comments on an Instagram announcement by Deciem. Some examples: "This is bullshit." "Hypocrites." "Do your thing but I invested a lot of $ into many of your products because you were different and unique but now you are one of them. Lame. No longer abnormal to me." Several expressed concern over the fact that some Estée Lauder products are tested on animals. "I wish you all the best and have a huge respect for how you built your brand but I have to say that I won't be purchasing any more products. I know Deciem doesn't test on animals but Estée Lauder does and there's no difference to me if the money I spend on your products ends up at Estée Lauder," wrote @lipstickaholic.

That this is a minority investment and not an acquisition is significant, as it allows Deciem to maintain control. As the company wrote using a relatable, conversational tone on its Instagram (describing Estée as "a really really big company behind really really big brands"), "Instead of trying to control things like big companies sometimes do, ELC insists that we continue to be who we are. We are really emotional today because we know that, together with ELC, we are going to lead innovation in beauty and bring you more and more of very good things (and less and less of very bad delays)." It also tacked on a number of P.S.'s reassuring followers that Brandon will remain the CEO, that it will be able to serve customers more promptly and open more stores, that it won't raise prices and that it will continue not to test on animals.

Deciem isn't the first cruelty-free brand that has faced a backlash after joining the Estée Lauder team. Fans of Too Faced expressed the same concerns after it was acquired by the beauty conglomerate last year. Similarly to the Deciem post, the founders of Too Faced reassured its fans in a video that it would absolutely not test on animals or enter the Chinese market, where all beauty products are tested on animals. Estée Lauder does sell products in the Chinese market, however, and even though its investment in Deciem is a minority one, Deciem's revenue and profit growth will directly benefit Estée Lauder, and that may be a problem for some of Deciem's fans.

UPDATE, June 16, 3:41 p.m.: Deciem's founder (and self-described "benevolent parent") Brandon Truaxe issued a candid and heartfelt statement about the move on the brand's website, laying out exactly what went into this decision on a financial level:

"A few months ago, we recognized that we could no longer support the growth of Deciem without outside support.... We started a formal process to raise funds. I was very clear in this process that we would in no way give up control of what we do at the operational level, the directorship level or the shareholding level of decision making. I was also very clear that we would not accept a bidding war between potential investors, because a higher bid could cloud our judgement of who the right partner for us would be. It was an even playing field for everyone," he wrote. 

He also went on to more specifically address the vehement backlash surrounding animal testing, promising customers that the brand would maintain its core beliefs and policies: "We will not change. We continue not to test on animals. We will not sell in mainland China because of its draconian, ridiculous and unnecessary animal testing requirements that have plagued the beauty industry; we will not change our formulations...we will not increase prices of products we sell to you; we will not change our mindset, our beliefs or anything that you have come to love about us. Ultimately, words may not mean much, but our commitment in the coming years will empower you to reflect and recognize that this partnership enabled us to be more of who we are." 

To read the full emotional message, head to deciem.com.

Want the latest fashion industry news first? Sign up for our daily newsletter.

Homepage photo: Instagram/@deciem