One day in the not-too-distant future, consumers will be able to walk into mainstream retail stores and buy pleasure products like vibrators and dildos without raising an eyebrow. That’s the vision of Johannes Plettenberg, CEO of the newly formed Lovehoney Group, the world’s largest sexual wellness company following the merger this week of German sex toy distributor Wow Tech Group and global online retailer Lovehoney. “It will take some time, but in a couple of years, I think w
hink we’ll have a similar portfolio in drugstores and department stores as other electronic products, such as hair dryers and electric toothbrushes,” Plettenberg told Inside Retail. This process has already begun. Wow Tech’s bestselling Womanizer brand has been stocked in DM, Germany’s biggest drugstore chain, since 2018, and Lovehoney products have been available in British health and beauty chain Boots since 2019. “We’re selling at Walmart, Goop and Urban Outfitters,” Plettenberg said. “Every quarter, there’s a new knowledgeable mainstream account being added.” Sex toys go mainstream While the majority of Wow Tech’s revenue (pre-merger) came from the adult sector, Plettenberg sees the move into mainstream retail stores as a major opportunity for Lovehoney Group, which now controls some of the biggest sexual wellness brands on the market, including Womanizer, We-Vibe and Fifty Shades of Grey. “One store has to be courageous and pick up our products, then there’s more visibility,” he said. “So people think, ‘If Boots is now offering it, maybe I’m courageous enough to buy it.’ And if sales go up, then Boots will list another product or two.” It’s a positive feedback loop that is being driven by changing attitudes towards sex in many Western countries. Shame is out and frank discussions about the role of sex in happy relationships and mental and physical health are in. “It’s totally normal for couples — after they get married, or have kids — to see their libido go down over time,” Plettenberg said. They shouldn’t be embarrassed to purchase products that will help them reconnect. At the same time, studies show that sex has some serious health benefits — and not just the cardiovascular kind. “Not a lot of research has been done, but there are indications that [regular orgasm] increases your overall happiness and decreases risk of depression,” Plettenberg said. Earlier this year, Wow Tech conducted a study that found that women who masturbated during their period reported feeling less menstrual pain. “Our industry isn’t new, but the courage to speak about it is new,” he said. This can be seen in the partnership between British singer Lily Allen and Womanizer on the #IMasturbate campaign last year, which aimed to promote sex positivity and raise awareness of female masturbation. It came about after Allen mentioned that Womanizer was her favourite vibrator in her 2018 memoir, My Thoughts Exactly. “Sex toys are still seen as a taboo subject because they are related to masturbation and female pleasure. Female pleasure in itself is a taboo subject. The only way to make taboo subjects no longer taboo is to speak about them openly, frequently and without shame or guilt,” Allen said. She is now the brand’s chief liberation officer. Meet the modern sex shop The liberalisation of society is the biggest growth driver of the sexual wellness industry, according to Plettenberg, who founded Wow Tech in 2018 after acquiring the Womanizer brand from its German founder Michael Lenke in 2017. Currently valued at $34 billion, the industry is expected to grow at a CAGR of 8 per cent to exceed $52 billion by 2028. As more people become comfortable buying sex toys, the businesses that sell them are starting to change. “We have more people working in this industry who come from consumer goods and engineering companies and consultancies, who bring know-how and skill sets that might have been there, but not in that density,” he said. “So demand is rising and the offer is improving, lifting the whole category.” Customer experience and store design are becoming increasingly important for businesses to differentiate themselves. “We need highly specialised and nicely designed stores for those customers who want to touch the product and are happy to pay a premium because they get great advice from a person,” Plettenberg said. “Those offline stores that manage to transition from a shady store by the train station into a bright, fancy, centre-located store with very well-educated staff will survive and will grow.” The French adult retail chain Passage du Désir is a good example of this, Plettenberg said. “They have 10 stores [that are located] close to high-fashion brands, and they’re doing really well because they approach it that way.” For now, these changes are occurring primarily in Western markets, but Plettenberg is confident that others will follow suit. “China, Japan and Korea are the biggest markets for us [in Asia],” he said. “They seem to be more traditional, more conservative, so breaking the barriers takes more time, but they are moving and growing, and we see similar trends [happening there] as in the West, especially in Korea.” Lovehoney Group is well-positioned to meet the rising demand in Asia. It already has offices in Shanghai and Hong Kong, and one of its shareholders is Chinese investment firm CDH, which bought a majority stake in Wow Tech in 2020. “We know that sex toy sales in China are really big, but brand-focused sales are not yet, so we have a job to do to get our brands into consumers’ hands and show the difference between a toy and a Lovehoney toy,” Plettenberg said. $1 billion in revenue Lovehoney Group has said it will deliver over $400 million in revenue in 2021 and will be profitable from its inception. It won’t be long before the company achieves $500 million in revenue, according to Plettenberg. Then, it will set its sights on $1 billion. “We have overachieved our targets for the last four years, so I’ve stopped giving targets. We just run as fast as we can,” he said. The complementary nature of the two businesses is expected to drive this growth. Lovehoney has strong in-house IT capabilities, while Wow Tech currently has to outsource the building of its websites. On the flip side, Wow Tech can immediately offer select brands in Lovehoney’s portfolio to the more than 300 retailers and distributors around the world that it already has relationships with. “There’s a long list of integration potentials,” he said. The merger will give Lovehoney Group a presence on four continents. In addition to China, the company will have offices in the US (Atlanta and New York City), Canada (Ottawa), the UK (Bath), Germany (Berlin and Nuremberg), Switzerland (Zurich) and Australia (Brisbane) and more than 730 employees. British private equity firm Telemos Capital, which acquired a majority stake in Lovehoney in 2018, will retain a majority investment in the group. Lovehoney co-founders Neal Slateford and Richard Longhurst along with CDH and Johannes Plettenberg will retain minority positions. Each will hold positions on the group’s board of directors.