Why Big Brands Buy Instead of Build

The skincare industry’s biggest players have a dirty secret: they’ve largely stopped innovating. Instead, they wait for small brands to do the hard work, prove a concept, build an audience — then write a cheque.

The Acquisition Machine

L’Oreal bought SkinCeuticals. Estee Lauder bought The Ordinary. Shiseido bought Drunk Elephant. Unilever bought Paula’s Choice. Johnson & Johnson bought Dr. Ci:Laba. These aren’t isolated deals — they’re a business model.

The pattern is consistent: a founder spends years developing something genuinely different — a formulation philosophy, a pricing model, an ingredient approach that challenges industry norms. They build a devoted customer base. They prove it works. Then a conglomerate absorbs them.

For shareholders, this makes perfect sense. Why spend a decade building a brand from scratch when you can buy one that’s already proven? Why invest in formulation R&D when you can acquire someone else’s intellectual property?

What Big Companies Have (And What They Don’t)

Large beauty conglomerates have enormous advantages: manufacturing scale that drives unit costs down, distribution networks that span continents, marketing budgets that dwarf entire indie brands’ revenue, retail relationships built over decades.

What they don’t have — what they can’t have, structurally — is the patience to spend years developing products within tight constraints for a niche audience.

The economics don’t work at their scale. A formulation team at L’Oreal isn’t going to spend three years perfecting a vitamin C serum that needs to hit a specific ingredient standard, because those three years of R&D need to be amortised across millions of units. The product needs to appeal to everyone, ship globally, have a long shelf life, and avoid any formulation choices that might generate customer complaints.

That’s not a criticism — it’s just how scale works. The constraints of mass production are different from the constraints of a founder who cares more about getting the formula right than getting to market fast.

What Happens After the Acquisition

This is where it gets uncomfortable. Post-acquisition, brands tend to follow a predictable trajectory.

Year one: Nothing changes. The acquiring company promises autonomy. The founder stays on. Customers barely notice.

Year two: “Synergies” begin. Procurement gets centralised — cheaper ingredient suppliers, standardised preservative systems. Manufacturing moves to larger facilities. Some products get quietly reformulated.

Year three: The founder leaves (or gets pushed out). The brand becomes one of many in a portfolio. Decisions get made by people who never understood what made it special in the first place.

Year four and beyond: Line extensions multiply. Price points drift. The brand you loved becomes a trademark attached to products that would have horrified its creator.

This isn’t inevitable — some brands survive acquisition with their soul intact. But the gravitational pull is always toward homogenisation. Toward safe. Toward what works at scale rather than what made the brand worth acquiring.

The Formulation Trade-Offs Nobody Mentions

Small brands can make choices that big brands can’t. They can:

Choose shorter shelf lives if it means better actives. A conglomerate needs products that survive 18 months in a warehouse, six months on a retailer’s shelf, then another year in your bathroom. That’s three years of stability — and stability often comes at the cost of potency. A small brand selling direct can formulate for 12-18 months and tell you to use it.

Use ingredients that are harder to source or process. When you’re making 50,000 units, you can work with suppliers who won’t return a call for an order of 5 million. You can use raw materials that don’t scale. You can formulate without being constrained by what’s cheap in bulk.

Maintain standards that reduce margin. Maybe you won’t use certain preservatives. Maybe you insist on actives at therapeutic percentages even though it doubles your ingredient cost. At scale, those choices get overruled by a finance team. At a founder-led company, they are the point.

The Knowledge Gap

There’s something else acquisitions transfer: expertise. A founder who spent a decade learning formulation chemistry, who understands why certain ingredient combinations work and others don’t, who knows the research literature inside out — that knowledge doesn’t survive a PowerPoint handover.

When a conglomerate buys a brand, they’re buying formulas, trademarks, customer lists, and supply relationships. They’re not buying the obsessive attention to detail that made the products good. They can’t — it walked out the door with the founder.

The marketing team can replicate the messaging. The operations team can replicate the packaging. What nobody can replicate is the person who rejected seventeen versions of a formula because they weren’t quite right.

What This Means For You

None of this is to say that products from acquired brands are necessarily bad. Many are still excellent. Some were mediocre before acquisition and remained mediocre after.

But if you care about what’s in your skincare — if you’ve chosen brands specifically because of their formulation philosophy, their ingredient standards, their approach — it’s worth knowing who actually owns them now and how long it’s been since the acquisition.

Questions worth asking:

Is the founder still involved? If they left within two years of acquisition, the brand you’re buying may not be the brand they built.

Have the formulas changed? This is hard to verify, but long-time users often notice — texture differences, scent changes, altered efficacy. “New and improved” sometimes means “cheaper to produce.”

Where is the product made? Post-acquisition manufacturing often shifts. That’s not inherently bad, but it’s worth knowing.

What’s the parent company’s track record? Some acquirers have a history of maintaining brand integrity. Others have a history of extracting value until there’s nothing left.

The Indie Alternative

Independent brands — truly independent, not “acquired but marketed as indie” — can do things differently. Not always better. Sometimes worse. But different in ways that matter if you care about formulation.

They can optimise for efficacy rather than shelf life. They can hold ingredient standards that would be impractical at scale. They can make decisions based on what’s right for the product rather than what’s right for quarterly earnings.

The trade-off is often convenience. They might not be in your local Boots. They might have shorter production runs, meaning your favourite product is occasionally out of stock. They might cost more — because the good ingredients cost more, and they’re not making it up on volume.

Whether that trade-off is worth it depends on what you value. But the choice exists — and it’s worth knowing you’re making it.

The Uncomfortable Truth

The skincare industry’s innovation engine runs on indie brands that eventually get acquired. The money flows to founders who create something new, not to the conglomerates that buy them. The research happens in small labs, not corporate R&D centres.

This is the system working as designed — for investors, for founders looking for exits, for conglomerates that would rather buy proven concepts than bet on unproven ones.

The question is whether it’s working as designed for you — the person actually putting these products on your skin.

Next time you’re comparing products, look past the branding. Find out who owns it. Check how long ago it was acquired. Ask whether the things that made it special are still there — or whether you’re buying a name attached to a formula that’s been optimised for everyone except you.