Yellow Wood Partners Creates Sexual Wellness Platform
Yellow Wood Partners is forming a new company for its sexual wellness brands.
The private equity firm, after acquiring several sexual wellness brands sold in the mass channel, is forming a new platform called Beacon Wellness Brands.
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The company will oversee PlusOne and Deia, as well as tools from Plum Beauty, and grooming and beauty products from Clio, PalmPerfect and Mowbie. PlusOne and Deia were acquired from parent company Clio, although terms of the deal were not disclosed.
The brands are distributed in Walmart, Target, CVS Pharmacy, Walgreens, Meijer and Amazon. Yellow Wood did not comment on sales, although industry sources estimate the businesses to have reached a volume of $100 million at retail in the past year.
The sexual wellness category has increasingly gained traction from retailers — especially department stores, such as Bloomingdale’s and Nordstrom Inc. Earlier this year, both Dame and Maude have entered Sephora, a new category for the retailer.
“As we look at data, we noticed that sexual wellness is a growing category, and we took a look at stores,” said Jennifer Roach Pacini, principal, Yellow Wood Partners. “It seemed like there was just increasing shelf space at retailers, especially in feminine hygiene categories.
“We did some research and talked with consumers and there is increasing consumer adoption of this category as people are talking more openly about it, especially the Millennial and Gen Z generations,” she continued. “From there, we discovered Clio and PlusOne, these brands that had great retail presences in the sexual wellness space with sexual devices, which was a really unique proposition because a lot of these brands have no retail presence.”
Yellow Wood has not ruled out any means to expand on Beacon’s portfolio. “We are looking at this as a platform opportunity for sexual wellness, so we are actively looking at add-on [acquisitions],” Roach Pacini said. “Some of the most interesting categories in that arena for us have been like PlusOne, those that have strong devices segments but also have more consumable products.”
Currently, Yellow Wood has Isle of Paradise, Tan-Luxe, Tanologist, Dr. Scholl’s and Freeman Beauty under its umbrella, among others.
“The strength of these brands is in the food and drug mass channels, which really fits where some of our strengths are in the past,” said Tad Yanagi, partner, Yellow Wood Partners. “We’re going to work closely with the founder to accelerate growth, expand distribution and e-commerce capabilities.”
As the lines between mass and prestige beauty blur, though, it is increasingly looking at opportunities with higher price points.
“Acquisitions are a key part of our strategy for building the platform,” Yanagi said. “We’re also looking at where we can launch and incubate new brands as well. We’re doing that currently within the sexual wellness category, with a brand launching this year. It is a bit more of a premium product. It will be a mix of growing the platform between organic launches with new brands, and then acquisitions.”
The brands also have unusually high repeat purchase rates with customers. “They are likely to buy a second device or a third device,” Yanagi said. “As we look at it, this is a lower purchase cycle category, though we were surprised in our data to see the number of people that purchased multiples, and we were happy to see that the customer satisfaction level is such that their future purchase intent was very, very high.”
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