The coronavirus pandemic has put a damper on a lot of things, but wellness M&A is not one of them.
Consumer interest in being healthy has never been higher, experts agree, and during the COVID-19 pandemic that has translated into higher sales in categories like supplements, at-home fitness and self-care. Deals have followed, with Lululemon paying $500 million for Mirror, an interactive at-home fitness service, Grove Collaborative acquiring Sundaily, a gummy supplement brand centered around skin health, and Nestlé Health Science agreeing to buy a majority stake in Vital Proteins, which makes collagen supplements, beverages and food products.
“Wellness has become the number-one priority for consumers through COVID-19, and likely to remain the top priority for consumers after COVID-19,” said William S. Hood, founder and chief executive officer of William Hood & Co., an investment bank that specializes in the supplements space. “Any consumer product that functions as an ingredient to a healthy lifestyle has generally performed well through COVID-19 and is positioned to perform very well [going forward]. Obviously supplements are one ingredient, but others [are] functional food and home fitness.”
Three Key Takeaways:
1. Wellness M&A has continued through COVID-19 and is only expected to accelerate, especially in categories such as supplements, online fitness and better-for-you consumer goods geared toward Millennial moms.
2. The Black Lives Matter movement is expected to have a lasting effect on the wellness category. Consumers are paying attention to company practices around diversity and inclusion, and investors say they will do more to invest in Black-owned wellness brands.
3. Brands with a strong digital presence and online sales are going to be more attractive to investors as consumers continue to be wary of in-store shopping throughout the global pandemic.
