Swallowfield, a British subcontractor specializing in the development, formulation, and supply of personal care and beauty products, has entered into a conditional agreement to acquire the entire issued share capital of The Brand Architekts Limited for 11 million British pounds. Sallowfield sees in this acquisition an opportunity to strengthen its ‘owned brands’ strategic pillar, bringing critical mass to its owned brand portfolio and adding a proven, experienced London-based brand management team.
Brand Architekts owns and manages a portfolio of mid-premium beauty and personal care brands (includinf Dirty Works, Kind Natured, Argan, Happy Naturals, DrSalts, Superfacialist and Senspa) that are sold in major UK high street retailers and through export, notably in North America, Australia, the Nordics and Turkey. Brand Architekts currently outsources its production with suppliers in the UK and China. For the financial year to 31 January 2016 Brand Architekts generated net sales of £10.7m (after adjustment for promotional activity).
"Brand Architekts has built a very successful stable of brands that will complement our developing owned brand business. By combining the two businesses we believe that we can leverage both existing skill sets, including product development, R&D, supply chain, digital marketing, and online sales, to the benefit of all stakeholders. It further strengthens our business model of building two complimentary value streams (core contract manufacturing and owned brands) on one single common capability platform," said Chris How, Chief Executive of Swallowfield.
In the medium term, Swallowfield considers that the acquisition will provide further opportunities for accelerated growth. “Brand Architekts has an existing pipeline of new products and the Directors anticipate that further new products will also be driven from Swallowfield’s already established areas of expertise. At the same time, there is scope for both UK and international distribution growth, particularly through Swallowfield’s existing international sales offices. An important additional benefit is that Swallowfield will be able to sell its current owned brands through Brand Architekts’ distributor network thereby generating additional revenues for Swallowfield’s existing stable of owned brands.”
Finally, Swallowfield anticipates that the acquisition will generate benefits through economies of scale in areas such as logistic costs, sourcing synergies (particularly in China), finance and administration/customer service functions as well as giving Swallowfield’s owned brand portfolio critical mass when buying public relations, media and display exposure.
