We have observed that a certain transformation, similar to what has already occurred in food and beverages, is now occurring in other consumer categories such as beauty.
Personal care, health and beauty brands continue to innovate, and more now seem to purvey a brand positioning based around cleaner labels, natural ingredients, cruelty-free testing policies and transparency – and efficacy claims backed up by clinical testing.
Here is how this positioning is changing the face of beauty in 2026.
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The evolution to natural ingredients as a ‘have to have’
The natural personal care market only represents roughly 7.5% of the overall global industry, according to analyst Persistence Market Research, but it has grown at a rapid CAGR of 9.2% from 2019 to 2024.
It is projected to grow at a similar clip through 2032, substantially outpacing the broader industry’s growth of only about 5%.
Encore Consumer Capital is a private equity firm in San Francisco that identified the trend for ‘clean’ beauty early on.
When asked by investment banking advisory firm Green Circle whether being ‘clean’ label has become a “nice to have,” or a “must have” for personal care and beauty brands, Encore co-founder and Managing Director Robert Brown said: “Now it is table stakes, and you are unwise to launch a brand that is not doing this.”
In the EU, roughly 300 ingredients that may pose a risk to consumers are prohibited from being included in cosmetics, whereas in the US it is just 11.
This regulatory gap illustrates the significant whitespace.
Last year, our firm represented Humble Brands, a deodorant brand in the natural channel.
An analysis of SPINS data in the MULO channel – conventional retail channels – from last year, which we utilised in marketing that opportunity, revealed a stunning example of the trends discussed herein.
In the year ended May 2024, brands deemed to be “naturally positioned” stole over seven points of share from conventional incumbents versus the prior year, and accounted for a whopping 77% increase in growth in the category.
Yet, while the trend toward natural ingredients and ‘clean’ labels has gone from a novel idea 20 years ago to “table stakes”, it is no longer enough of a differentiator or a foundation upon which to build a brand architecture – on its own.
Science is the new frontier
Today, the key determining factor for value creation is efficacy backed up by scientific substantiation and clinical trials.
Olivier Garel, Head of Venturing at Unilever, a giant of beauty and wellbeing products, summed it up as follows: “Today, [natural and ‘clean’-label] are largely table stakes.
“You can still build brands on that platform, but it is no longer where the real equity value is being created.
“What we are seeing now is the rise of science-backed beauty and wellbeing.
“Consumers want proof, not promises.
“Clinical validation, dermatologist-led positioning, diagnostics, and measurable outcomes are what drive conversion and repeat purchase.”
Scott Potter, Managing Partner at private equity firm San Francisco Equities, added: “Clinical validation is a critical differentiator…
“This has always been true in efficacy-driven categories like clinical skin care, acne, problem/solution hair care, etc, but is now pervasive in more lifestyle-driven categories.”
Potter even went so far as to say that there has been a “commoditisation of other product attributes such as natural/’clean’ ingredients”.
‘Clean’ labels and scientific evidence build enterprise value
Neda Daneshzadeh, co-founder and Managing Partner of firm Prelude Growth Partners, explains that the key positioning for value creation is “‘clean’ with active ingredients”.
Coherent with the sentiment of other leading investors in the space, Daneshzadeh said: “Consumers want efficacy and results even in personal care – the ‘skinification’ of personal care with active ingredients that work is where the growth is versus just natural.”
A review of recent trends and notable exits in the space backs up her point.
“As we move towards products with ‘cleaner’ ingredients and greater efficacy, these claims and characteristics need to be easy to understand and fully trusted by the consumer,” said Nick Giannuzzi, Managing Partner at Humble Growth in New York, US (not to be confused with the previously mentioned Humble Brands).
“The initial interaction with the product or brand is often determinative of product-market fit and consumer acceptance.
“When the consumer first encounters the brand – in those first seconds – is where brand aesthetics and clarity of the positioning really make the difference.”
M&A and growth investment in the personal care and beauty segments remain strong.
The beauty sector is a bit of an outlier among consumer segments and is projecting robust deal activity into the future.
Recent marquee exits in the space were fuelled by a combination of ‘clean’ labels and clinical evidence of efficacy:
- L’Oréal acquires Aesop for US$2.5bn in 2023
- Unilever acquired Tatcha (Japanese beauty brand) for $500m in 2019
- Shiseido acquired Drunk Elephant for $845m in 2019
- E.l.f. Beauty acquired Naturium for $355m in 2023
- Unilever acquires Wild, natural deodorant brand in UK, for $290m in 2025
Key conclusions for founders and investors
At a penetration of less than 10%, the demand for ‘clean’ labels clearly has legs.
More consumers are now also demanding products that demonstrate efficacy with scientific evidence and clinical trials.
Marrying the two attributes has been a winning formula for value creation – and large M&A exits – and should be for the foreseeable future.
The landscape for high-margin, innovation-rich products should lead to more growth-stage brands that generate outsized returns in healthy exits.
For these reasons, we believe that natural and science-backed beauty and personal care brands represent compelling investment opportunities within the consumer sector.
This article is a condensed version of a wider whitepaper written created by investment banking advisory firm Green Circle Capital Advisors
Click here for the full-length document.
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