Updated: May 17
Aēsop was sold to L'Oréal for an astronomical amount of €2.5 billion. The recipe? A gross margin of 87% and a very strong brand. We take a look at how the brand was built.
Based on a passion
The brand with the well-known brown apothecary bottles looks like it comes from the same Scandinavian wave of the 2000s as brands such as Samsøe Samsøe, Hay, etc. However, Aēsop does not have its roots in the Nordics but down under. The brand was started almost 40 years ago by Australian hairdresser Dennis Paphitis. He was looking for a solution to balance the strong ammonia odours (of colouring products) in his salon and came up with the idea of mixing scent oils with his products. When his customers asked where they could buy those products, Aēsop was born. Paphitis took the name from the Greek storyteller known for his dubious and inaccurate fables. With that, Paphitis winked at the screaming slogans and hollow promises of the big cosmetics brands in the 80s.
Aēsop chose to sell their products in apothecary bottles, without unnecessary cardboard boxes, with simple labels, a simple logo, and without exaggerated claims on the bottles. This approach created a perception of a high-quality and reliable brand. Despite the modern look of the brand, the bottles, logo and visual identity have remained almost unchanged for those 40 years. Paphitis' passion and goal was to do things radically differently. His luxury brand would provide value rather than just promises. He wanted to create skincare products that were composed with attention to detail, with a focus on effectiveness and sensory pleasure. He carried that vision throughout the entire company: At Aēsop, you see and feel it in everything they do. The Aēsop brand identity and experience are very clear.
Until 2004, the range was mainly distributed through specialty stores and supermarkets, but Paphitis felt that this prevented him from conveying a part of the true brand experience that Aēsop stands for. So Aēsop opened their first flagship store in Melbourne. The store, in a converted parking garage, set the tone for the unique and unusual interiors they are now known for. Aēsop does not believe in made-up uniform perfection but loves real authentic beauty. Aēsop briefs their (usually local) designers to work around what is there with the fixed Aēsop brand elements and local materials, in a wabi-sabi way. The character of the façade, the layout, and condition of the building are highlighted instead of hidden. As a result, their 230 flagship stores are all unique. In New York, the furniture is made from 400,000 recycled New York Times newspapers. In Melbourne, the shelves are made from more than 3,000 shipping boxes.
The right context
Aēsop has managed to transform an everyday routine like hand washing into a wellness experience. That is mainly because the brand has made sure that we have all seen and tested their product range in places and at times when we already felt pampered. Aēsop has done everything possible to become the brand within high-quality hospitality.
The Gramercy Park Hotel in New York, with its consumption of 250,000 Aēsop products, reaches a lot of people all over the world. Just like the Hyatt in Tokyo, the Waldorf Astoria chain, and other carefully selected hotels and restaurants worldwide. Collaborations at that level were noticed by the pioneers in our region. Before you knew it, you could see Aēsop products nicely integrated into the toilets of Michelin-starred restaurants like The Jane, ‘t Zilte & Pure C, where they make sure everyone walks back to the table and says to themselves, "My god, it smells so good, I need to have this at home too."
A brand should be felt.
Those who know us a little know that we also attach great importance to experiencing a brand. This goes beyond how it looks or what it promises. At Aēsop, they also focus strongly on experience and immersion: when you enter one of their stores, you are greeted with a bag of green tea as a welcome gesture. The Aēsop team is trained not to engage in small talk with customers but to give a proper explanation of the products. Your credit card is always taken with two hands as a sign of gratitude, and the salesperson comes specially to the counter to hand over your purchases - also with both hands.
Their strong brand program is also reflected in their consistent pricing: a premium brand with similar pricing. When The Guardian confronted Paphetis in 2016 about the fact that the products were quite expensive, he replied briefly: "We make exceptional products with great care and attention." Which today results in a turnover of 38 billion.
If your story is true, you don't need to shout.
Thanks to their brand focus, Aēsop could do things differently in terms of marketing. By making their customers feel every day as if they were in star restaurants or luxury hotels, Aēsop could completely withdraw from the competitive and budget-consuming price competition within the market. With their strong image and clear positioning, Aēsop does not need promotions, discounts, or big expensive campaigns. They simply do what they have been doing for 40 years: selling quality products with a focus on effectiveness, with attention to detail and sensory pleasure, and with a great love for pure, imperfect beauty.
In 2010, Aēsop was able to grow with money from an Australian private equity fund, and in 2012, Paphitis sold 65% of his company to a Brazilian cosmetic brand for more than 70 million. L'Oréal has now acquired it for more than thirty times that amount. It will be exciting to see how the brand will continue to develop under L'Oréal.
What we can learn from the Aēsop brand:
Start from your passion, translate it into your brand, and stay true to it.
A clear brand doesn't always need big marketing campaigns. When everything is right, your story will translate itself.
Your store, showroom, or office is where your customers can experience your brand with all their senses. Let them into that world.
By collaborating with strong brands that share a similar vision, you can ride on their reach and success.
A strong brand is more than just a nice package and a beautiful logo: it's the beliefs on which you run your entire business.
A strong brand is worth its weight in gold.