L Catterton Buys Bellami
● The private equity giant sees a wellness angle and plenty of room to grow in the category.
L Catterton is going bigger in hair extensions — and sees plenty of opportunity for more growth as the category develops.
The consumer private equity giant started in the area last year, acquiring control of extension specialist Beauty Industry Group. Now, BIG has closed a deal to buy Bellami Hair, expanding its portfolio to 14 extension brands and opening up a new avenue of distribution.
Bellami, which was founded by Nikki Eslami and Julius Salerno in 2012, skips the distributor and sells its 100 percent Remy human hair extensions directly to salons with independent sales reps, a digital approach and educational support specialists.
That’s another angle on a category that Derrick Porter, chief executive officer of BIG, said is still in the early days of a dramatic growth curve.
“Right now only about 15 to 20 percent of hairdressers are offering hair extensions as a service,” Porter told WWD. “And only about 3 percent of American women are using hair extensions as a product.”
It took Porter a while to see the modern consumer potential in the age-old practice of applying hair extensions.
“Fifteen years ago we were convinced that hair extensions were a fad,” said
Porter, who had a third-party logistic company with his wife that worked with the Donna Bella Hair brand. “It was something that was really for the rich and famous movie stars and wasn’t talked about at all.”
But after getting a closer look at Donna Bella’s business, Porter went to the owner and said: “Your business is way better than mine. You have the ability to scale.”
That led to Porter becoming a partner, but still not a believer in the long term.
“We jumped in with both feet,” he said. “The first four or five years we were convinced that it was a fad and that it would end any day.”
After it didn’t fade, he thought maybe it was a trend that would go a little longer before finally realizing there was a more substantial business there.
“Wow, we’ve actually created a category where stylists are making a sizable amount of income from the service of hair extension,” he recalled thinking as the business solidified.
“Hair extensions might even be the wrong word for what we do now,” Porter said. “What we’re learning is that almost 67 percent of our customers purchase hair extensions to solve a problem.”
These include alopecia, thinning hair and other hair issues that can take an emotional toll and give BIG a powerful connection to consumers.
Porter compared hair extensions to hair color, a category that over the past 50 years has grown to become transformative for both the beauty industry and consumers.
“Hair extensions are ready to go prime time,” Porter said. “It’s already starting when you look at the data; we just have really never gone out and talked about it.”
Looked at as an emotional bastion — and one with big growth potential — the category also sits into a sweet spot for L Catterton, which takes a thematic approach to the market and has been putting money into the wellness category broadly with investments in Peloton, the Wells Group fitness company in China and others.
L Catterton, which has backing from LVMH Moët Hennessy Louis Vuitton, touts itself as the world’s largest consumer-focused private equity company. In addition to BIG, it owns Birkenstock, Bliss, Ganni, Etro and many others while holding minority stakes in Rihanna’s Savage x Fenty, Rhone, Gentle Monster, The Honest Company and more.
Avik Pramanik, a partner at L Catterton, said BIG plays in an area that is “completely misunderstood by both observers in the beauty category and by consumers.”
Where the perception might be that it’s the 25-year-old Ariana Grande fan looking for hair extensions, the reality is that most of the consumers are over 35 years old and are more concerned with self esteem, Pramanik said.
“It has never been more important to help this consumer address hair problems,” he said, adding that engagement opens up other opportunities. “We want to, over time, help that consumer in other ways that address her hair challenges.”
In the meantime, the category is simply good business.
“The profit pool in hair extension is good for almost everyone that touches it,” Pramanik said.
That extends from the people who sell their hair — giving about 15 percent to 20 percent of their hair in the process — to the stylists who specialize in the process. (BIG is a member of the United Nations Global Compact and publishes an environmental, social and governance report detailing priorities and safeguards in its operations.)
Pramanik said there are always new artists who are coming up with hair extension techniques and building new brands that can develop to become potential acquisitions for BIG, which has back-end teams that handle finance, demand forecasting, media buying and so on.
“After joining BIG, they have the opportunity to do what they love and not get bogged down,” he said.
Salerno, who leads BIG’s latest brand as CEO, said: “This transaction is an exciting milestone for Bellami as we continue cultivating methods to reach our consumers through authentic and effective channels. I look forward to working closely with the entire BIG team to bring Bellami to even more customers and accelerate our important investment in stylist education.”
Eslami, the brand’s other founder, will stay on as an adviser to BIG, noting: “Their likeminded focus on elevating the hair solutions category marks a natural evolution of Bellami’s mission over the past decade. With BIG’s support, Bellami will expand its reach in meeting the diverse hair needs of women, whether it be thinning, alopecia, dryness, postpartum hair loss, damaged hair, or length. It is no surprise that hair is emotional, and a critical part of many people’s identity. We want it to be a source of confidence.”
Terms of the deal were not disclosed.
“With BIG’s support, Bellami will expand its reach in meeting the diverse hair needs of women, whether it be thinning, alopecia, dryness, postpartum hair loss, damaged hair, or length.”
— Nikki Eslami, Bellami