The brands business, which will sit within Alliance Boots’ retail division and be run by its own commercial director, will adopt an FMCG approach – rather than a traditional retail one – to take labels such as cosmetics brand No7 and suncare brand Soltan to new heights.
The initiative has the enthusiastic backing of KKR partner and European head of healthcare and consumer products Dominic Murphy who, along with chairman Stefano Pessina, took Alliance Boots private last June in an£11.1 billion deal.
No7 and Soltan are the leading brands in their categories in the UK and the intention is to claim a bigger share of the global£21 billion skincare market.
The potential was illustrated last June, when Boots’ No7 Protect & Perfect Beauty Serum featured on the BBC programme Horizon. Shoppers seeking a miracle wrinkle cure swamped stores in search of the product and the retailer reportedly sold almost 6 million 30ml tubes of the cream, priced at£16.75, in the nine months after the programme aired.
Alliance Boots sells own-brand products already through wholesale and to selected retail partners in countries such as the US, Dubai, Hong Kong, Norway, Russia, Switzerland and Taiwan.
One industry observer said the venture is evidence of the scale of the retailer’s ambitions. “Alliance Boots knows it has a set of properties in its own brands and it clearly wants to find a way to exploit them internationally,” he said.
“There is a massive difference between how a retail business is run and how a consumer goods division is run and separating the two out makes sense to get the best out of them.”
“In the UK, these own-label brands are seen as the crown jewels and there is scope for growth here and the rest of the world.”
Alliance Boots is likely to recruit heads for key brands, including No7, Soltan and organic bath and body brand Botanics, as part of the initiative.
An Alliance Boots spokeswoman said: “We are continually looking to develop the Boots brands, continually investing and are considering all the options.”
* As Retail Week went to press, a syndicate of banks was understood to be close to selling off a big tranche of Alliance Boots’£9 billion debt. A successful sale would be evidence of improving credit market conditions.