Unilever buys Dr. Squatch, viral brand that sells Sydney Sweeny bathwater soap — but there are challenges | Explained

Unilever has announced that it will acquire men’s grooming brand Dr. Squatch for an undisclosed amount, with the transaction expected to close later this year.

The British consumer company in June announced that it had signed an agreement to purchase Dr. Squatch from private equity firm Summit Partners. While there was no disclosure of the acquisition amount, Financial Times later reported that Unilever will pay $1.5 billion for the same.

Founded in 2013, Dr. Squatch has gained huge popularity among GenZ men with its range of products and collaborations. Most recently, the brand went viral for collaborating with Sydney Sweeny to launch her ‘bathwater’ soap.

“Its viral social-first marketing strategies, partnerships with influencers and celebrities, and culturally-relevant collaborations with limited-edition packs have helped to drive sales and grow a loyal consumer following on social media platforms and beyond,” Unilever said in a statement.

Unilever, which often acquires smaller but promising brands, has run this deal before. In 2016, the FMCG giant acquired Dollar Shave Club (DSC) in 2016 for similar reasons

What happened with Dollar Shave Club?

Dollar Shave Club (DSC) went viral in the 2010s due to its marketing strategy that challenged industry giants. It rebelled against large companies, like Gillete, to provide affordable $1 razors to men and went viral after launching an expletive-laden advertisement that was never seen before in the industry.

Unilever seized the opportunity to acquire DSC when it came but eventually the brand’s original purpose got sidelined due to the broader corporate conventions.

Seven years after the acquisition, Unilever sold the company to private equities citing lack of expected returns. According to a report by Forbes, DSC’s ex-CEO Larry Bodner said the corporate giant had “neutered the vibe and fun of what the brand stood for. It just didn’t fit in a vanilla corporate entity.”

What does Unilever need to do now?

According to a report by Forbes citing Ranjay Gulati, who has researched on the soul startups, there are three crucial pillars that define a successful startup — a lofty business purpose, building close customer connections and providing autonomy and creativity to employees.

The report essentially indicates that Unilever cannot let a conflict happen between the startup’s essence and its priorities, taking lead from Google’s acquisition of YouTube that let the video platform function independently.

The second-most difficult challenge for Unilever, according to Forbes, can possibly be maintaining customer relations. While customer experience is key to make brands like Dr. Squatch successful, it may pose a challenge to Unilever, which is a large corporation and would naturally want to expand that brand.

Lessons for Unilever

As per Forbes, Unilever will now have to ensure that Dr. Squatch stays true to its purpose and continues to possess the ability to create campaigns that generate organic social media buzz.

When it acquired DSC, Unilever ventured beyond $1 razors and launched new and more expensive products, abandoning the company’s budget-conscious customer base.

The Forbes report mentioned that Unilever would do well if it keeps Dr Squatch’s essence alive and does not push the brand into too much of a mass market where it loses its identity to connect with GenZ men.

While DSC failed, Unilever is now armed with a roadmap to possibly make its acquisition of Dr. Squatch a success and let the brand flourish.