Continuous growth and encouraging consumer trends make it an exciting time to be in the spray tanning business, and investors have taken notice. The recent acquisition of Sunless, Inc. by New York private equity firm Castle Harlan is certainly another positive indication of the direction the industry is headed, and their investment and commitment will also serve to further propel progress, according to Sunless, Inc. CEO Peter van Niekerk.

In this Smart Tan exclusive interview, Van Niekerk shares his perspective on the company’s new ownership and how Castle Harlan’s support will help the entire tanning industry capitalize on the vast opportunities that already exist in that segment of the marketplace.

Q: Why is Castle Harlan’s acquisition of Sunless, Inc. a promising development for everyone in the tanning business?

I guess the question is what is different about Castle Harlan compared to Riverside, our previous owner? The answer is that they are a much smaller firm resulting in a more intimate relationship – much more engaged in our business. They’re very enthusiastic about spray tanning. They all spray, from the most senior to the most junior in the office, so it’s extremely encouraging. Even the folks on the board of directors spray tan. It’s a change from Riverside, who was a fantastic owner but a much larger firm and more distant from the business.

Why did they invest in Sunless? They saw a compelling growth opportunity: the time has come for spray tanning. It’s the beneficiary of a number of strong and positive consumer trends: primarily anti-aging awareness and the trend for consumers to want to have control of their lives and appearance. The beauty of the spray tan is you flick a switch and choose your shade. That instant gratification is something that especially the millennials have a strong penchant for. They want their tan, they want it now, and then they want to show it off with a selfie on Instagram! Another related consumer trend that we are taking advantage of is the interest in natural and organic, which obviously runs pretty wide. We have recently come out with a number of products with natural and organic ingredients, and that’s getting huge support from customers.

Castle Harlan saw these trends and recognized that Sunless is well placed. Then, they did analysis of the industry and saw that, in terms of numbers, tanning salons have halved over last 10 years, but lo and behold, spray tanning sessions and solution sales have grown through that period – it’s shown rock-solid growth through a very difficult period in the industry. What has resulted is a survival of the fittest process. The most sophisticated salons are the ones still standing, and they are now benefiting and thriving. That is good for our business, because spray needs to be run differently from UV. These operators get it, they run a successful spray tanning business, which, as a result of these dynamics, has now become a substantial portion of their revenues – not 10 percent anymore, but closer to 30 percent.

As one large successful operator told us, “This year for the first time our growth from spray tanning exceeds our revenue losses on UV.” That’s a tipping point that Castle Harlan saw in the industry. For the major players that control the space, spray tanning is an engine of growth and the main growth business, not the sidebar it has been for many salons for a long time.

In the industry today, you see the leaders growing their spray tanning businesses by double digits every year. We’ve attended one of the leading players’ conference this year, and the level of energy and enthusiasm and excitement around their spray growth performance and future plans is just palpable.

The handheld side of the business has not been hampered by the same issues that drove down salon numbers. The number of spray technicians has been on a steady climb and has ticked up strongly over the past year as we’ve overhauled and expanded Norvell University, and gotten more aggressive in terms of the quality and pricing of entry-level spray equipment. This has resulted in an influx of new spray techs from the smaller independent salons and from the beauty industry.

So, these are some of the things Castle Harlan saw in the industry and in Sunless’ business and why they invested.

Click here to read the entire article in the latest issue of Smart Tan Magazine online.