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Hair News - March 2004 |
| Author: Karen Shelton |
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Date: March 2004 |
More Acquisitions Likely
As Salon Hair Care
Sales Continue To Slip
LITTLE FALLS, NJ, March 3, 2004
- In recent years, disappointing sales growth in the salon hair
care market has impelled product suppliers to expand their
businesses through a spate of acquisitions. Initial results
compiled by Kline & Company for a new market study indicate that
U.S. sales growth in this sector dipped even lower in 2003, and
that the trend toward supplier consolidation is likely to
continue.
"With all the M&A activity in the salon segment over the last
five years or so, there aren't that many companies still up for
grabs," says Lenka Contreras, vice president of Kline's Consumer
Products Practice. "Still, we can expect the larger companies to
continue to acquire smaller niche marketers and brands to keep
their product lines fresh and trendy."
L'Oreal and Procter & Gamble stand out in front of the leading
marketers that have been swallowing up salon hair care companies
and brands to bolster revenues in the face of flagging category
sales. L'Oreal has bought Redken (1993), Matrix (2000), Soft
Sheen (1998), Carson (2000), and most recently, Artec (2002).
These purchases give the French beauty products giant an even
stronger and more diversified position in the U.S. salon
products market.
P&G has also expanded its hair care portfolio with two
substantial moves. It bought Clairol from Bristol-Myers Squibb
in May 2001 and then acquired Wella in a multibillion-dollar
deal that closed in September 2003.
With the addition of German-based Wella, P&G not only gains a
foothold in the European salon hair care market, it also adds
the product lines from Graham Webb and Sebastian, both of which
Wella previously acquired.
Japanese marketers have also sought to strengthen their
positions in international markets. Zotos, which is owned by
Shiseido, acquired U.S.-based Joico in 2001, and Goldwell, the
German company owned by Kao, bought U.S. niche marketer KMS Labs
in 2002.
"The salon market continues to consolidate, but at the same
time, it's becoming even more of a global market," says
Contreras. "Companies are looking for growth, and since the U.S.
market is stagnant, many of them are turning to other countries
and regions to grow their business."
Preliminary estimates from Kline's study, SALON HAIR
CARE 2003, indicate that sales growth in the U.S. salon
hair care market, which was only 3.2% in 2001, may have slipped
as much as 1% further in 2003. These less-than-inspiring numbers
make it easy to see why marketers are focusing less on
developing new brands and more on acquiring existing ones,
according to Contreras.
"(Marketers) know it's much easier to acquire a brand with an
already established customer base than to start from scratch,"
she says. "It's often less expensive, too. Trying to convince
salons to use and distribute brand new products doesn't come
cheap."
SALON HAIR CARE 2003, the seventh edition of
Kline's study on the professional hair care products industry,
will examine category size and growth for the U.S. market,
market share of the leading companies and brands, and sales by
segment for in-salon use and salon retail purchases, with
forecasts to 2008. A series of regional reports covering other
key countries is also under consideration.
Established in 1959, Kline & Company (www.klinegroup.com)
is a business consulting and market research firm serving
clients worldwide in the cosmetics and toiletries, household
cleaning products, and other consumer products sectors.
For information on how to subscribe to this
study, go to
www.klinegroup.com/y357.htm or contact
Lenka Contreras
at (973) 435-3407. Potential subscribers based in Europe should
contact
Jonathan Duff
at +32-2 776 0738.
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