Retail & DPH: 2025 M&A Review

An Essential and Resilient Market, Despite Polarization

A Resilient Global Dynamic, Driven Mainly by Perfume

The DPH sector (Drugstore–Perfume–Hygiene) covers fast-moving consumer goods related to daily hygiene and personal care. It comprises three complementary sub-segments:

• Personal hygiene: shower gels, shampoos, deodorants, intimate care products.
• Perfumes and cosmetics: fragrances, beauty products, and cosmetics.
• Drugstore products: cleaning and care items sold primarily in supermarkets.

While most products are sold through supermarkets, other channels—pharmacies, parapharmacies, hard discount and low-cost stores, e-commerce, and specialty stores—also play a role.

The 2025 M&A review confirms that this market remains a pillar of daily consumption, supported by hygiene imperatives and growing wellness awareness. Globally, the market is strong, fueled by lasting post-pandemic behavioral shifts, heightened health awareness, and urbanization, which broadens access to diverse personal care routines. Growth is increasingly concentrated in premium and specialized segments, while sustainability and naturalness expectations—especially among younger generations—drive market expansion.

The perfume and fragrance segment stands out as a key growth driver, surpassing $36B in 2025, fueled by premiumization and digitalization of purchase journeys, with e-commerce accounting for nearly one-third of global distribution.

France: Growth and Distribution Channel Recomposition

In France, the beauty and personal care market grew 4.5% annually, targeting $19B by 2030. The 2025 M&A review shows that recent acquisitions have consolidated key players’ positions and fostered innovation in perfume/luxury and hygiene segments. Growth is primarily in high-value categories:

• Perfumes drive momentum, led by personalization, “fragrance tech” (AI), and strong niche traction (unisex +45%) and ultra-luxury (Global Growth Insights).

However, the personal hygiene segment—worth over €6B in June 2025—shows signs of saturation, with limited growth (+0.5% YoY). This mature market is highly concentrated, with four groups capturing over 50% of revenue, and faces price pressures due to purchasing power arbitrages despite disinflation.

The supermarket channel, while dominant, faces stricter regulations, notably the Descrozaille law, which limits promotions and discounts. Rising private-label brands and low-cost imports (Eastern Europe, Turkey, China) intensify price competition, particularly squeezing the mid-market.

International expansion remains strategic: France leads globally in shampoo exports and ranks third in cosmetics, with 30% of sales now generated abroad.

Distribution channels in France are also shifting: supermarkets still account for 65% of volume but are losing ground due to regulatory constraints and declining foot traffic. Pharmacies and parapharmacies are emerging as winners, growing +7–8% thanks to consumer demand for advice and trust (Xerfi: personal hygiene industry).

Consumers: Rational Trade-offs and Demand Polarization

Globally, in 2025, consumers do not forgo beauty but make more rational choices. Economic constraints drive purchases based on perceived value—the best balance of performance and price.

• Mass and masstige segments (+4% H1 2025, $34.6B) benefit most.
• Prestige grows more moderately (+2%).
• 63% of consumers now believe accessible products rival premium alternatives (Capstone Partners).

This value-driven approach fuels fast beauty and affordable brands, capturing global demand for efficiency at lower cost. Examples:

• NYX Professional Makeup (L’Oréal) – accessible international digital-first positioning.
• SHEGLAM – viral fast-fashion-inspired brand leveraging rapid launches and social media.
• Essence – low-cost alternative in the “dupe culture,” competing with premium offerings.

Three drivers structure international demand:

1. Effectiveness and scientific credibility – “science-led beauty” with clinical evidence, dermo-cosmetics, and biotech.
2. Naturalness and sustainability – driven by Gen Z, representing ~33% of global growth, fostering responsible innovation.
3. Price pressure – weakening undifferentiated mid-market products (Global Growth Insights).

Category-specific trends:

• Fragrances: driven by premium, identity, personalization, and experience.
• Dermo-scientific products: appeal due to perceived reliability and clinical differentiation.
• Daily essentials: dominated by price-based trade-offs, especially in Europe and France, amplifying competition between accessibility and expertise.

Overall, beauty is a safe-haven value globally: accessibility does not mean compromise, but pragmatic trade-offs between performance and perceived fair price.

2025: A Pivotal Year for M&A

French M&A Rebound: Attractive Luxury Assets and Mid-Market Consolidation

The 2025 M&A review shows a significant rebound in French beauty and hygiene, with strong transaction appetite despite political and economic uncertainty.

• Total deal value: ~€91B (+12% vs 2024, Kearney).
• Deal volume in beauty: 56 transactions (-6.7%), mostly industrial buyers (89.3%).
• Average valuation: 14.9x EV/EBITDA (vs 9.8x for other FMCG).

Two complementary market tiers:

1. Perfume / Luxury: Large assets remain attractive. Example: L’Oréal acquires Kering’s beauty division, including fragrance licenses for Gucci, Bottega Veneta, and Balenciaga, valued ~€4B.
2. Mid-market: Strong activity in mid-sized companies where product expertise and brand DNA matter:
   • Hygiene & care: Cottage (~€18M revenue).
   • Accessories: ABC Distribution (LBO).
   • Independent growth brands: Borntostandout, investors include L’Oréal BOLD.
   • Industrial capacity + brand DNA: Léa Nature (~60% of Groupe Berdoues).

Beyond France: Selectivity and Qualitative Criteria

Internationally, 2025 confirms a disciplined market, with opportunistic deals replaced by solid, value-justifying targets. Buyers now favor:

• Scientific expertise – science-led beauty, dermo, clinical proof.
• Profitability & resilience – repeatable models with demonstrated performance.
• Brand identity & sustainability – differentiated, credible engagement.

Illustrative deals:

• Medik8 acquisition ($1.1B, Capstone Partners): dermo-scientific assets with strong clinical credibility.
• Rhode by e.l.f. Beauty (~$1B): premium skincare D2C traction.
• Space NK by Ulta Beauty: consolidating prestige retail internationally.

2026–2030 Outlook: Accelerating Quality

2025 trends signal a more polarized and selective beauty and hygiene market.

• Growth will focus on premium and specialized segments, while mature everyday categories remain under pressure.
• Consolidation will target strategic-value assets: science-led, clinical-proof, dermo-cosmetic brands.
• Sustainability and naturalness, led by Gen Z, remain key growth drivers, requiring credible differentiation and responsible innovation.
• K-Beauty brands highlight new international standards combining efficacy, accessibility, and virality.
• France retains strategic advantages: strong export capacity and growth of specialized channels (pharmacies, parapharmacies) offsetting supermarket decline.

Expert Insight – Doryane Bellegy-Hardy on 2026:

“In 2026, the DPH – Hygiene & Beauty sector enters a phase of qualitative rather than quantitative growth. Consolidation will focus on assets combining health expertise, dermo-cosmetic credibility, scientific authority, environmental engagement, and clear consumer value. M&A will favor differentiated models resilient to price pressure while addressing new health and performance expectations. For structured players, 2026 is a strategic window to create value via consolidation and specialization.”