Facing many challenges in 2013, the U.S. cosmetics and toiletries industry has still managed to grow by 2.4% at the manufacturers’ level, which is a slightly lower growth than in 2012. The top 10 companies still control the market, accounting for almost 62% of the total sales, down slightly from 63.5% five years ago. However, the strongest sales gains continue to come from smaller, niche players, as well as some of the larger companies, such as L’Oréal, that have made acquisitions over the year.
Procter & Gamble remains the leading player, but barely manages to grow its sales in 2013. However, some of the other market leaders, such as L’Oréal, Estée Lauder, Colgate-Palmolive, and Guthy-Renker, are enjoying a moderate but steady growth. L’Oréal’s sales grow in 2013, driven by an array of factors, such as the introduction of new products (Advanced Hair Care), entry of its brands into new categories (skin care products for men and shaving products), brand acquisitions like Urban Decay in 2012, aggressive media expenditures, and innovative marketing activities, such as placing interactive vending machines filled with L’Oréal’s products in a select NYC subway station in Bryant Park. Brand sales rose nearly 30% in 2013.
Smaller companies playing in the niche, yet growing product segments, such as the men’s grooming segment, anti-aging skin care, naturals or organic segment, or products aimed at specific ethnic populations, make themselves appealing candidates for acquisition. Some of these smaller companies include The Art of Shaving and Yes To, a manufacturer of natural face, body, and hair care products, witnessing well above-industry-average growth.
M&A deals are often seen as a step by marketers to either foray into a segment where they have either no or limited presence or to leverage the capabilities of the acquired company to sustain their growth plans. The latter is the case of L’Oréal, with the company busy on an acquisition spree in 2013, buying the following: Chinese brand Magic Holdings, Indian brand Cheryl’s Cosmeceuticals, men’s grooming brand Nickel from Interparfums, Decléor and Carita from Shiseido, and the Brazilian brand Emporio Body Store. Revlon’s acquisition of The Colomer Group, which offers salon hair care and nail products, including brands such as American Crew and Creative Nail Design (CND), takes place in 2013.
2014 is shaping up to be just as busy as last year with Merck’s Consumer Care business acquired by Bayer for $14.2 billion. The acquisition is a major milestone in the nonprescription drug world and will also pave the way for Bayer’s presence in the sun care products category. Find out more about the current activities on the OTC market and read the recently published article from the DCAT Connect where Kline’s Industry Manager Laura Mahecha comments and explains the important strategies for growth in this market.
Cosmetics & Toiletries USA report is an industry staple and authoritative source on the personal care products industry, encompassing market size and share data, retail sales, channel breakdowns, trends, and forecasts for 26 major product categories and detailed profiles of about 30 leading marketers, and an analysis of media spending. Kline also offers a highly esteemed mergers and acquisitions advisory service able to deliver effective, objective, and executable strategies built on deep industry expertise, analytical and management consulting capabilities, and a collaborative approach.