By Dr. Edward Tony Lloneau
MERGERS AND ACQUISITIONS
There have been several major acquisitions as of late
involving black owned firms that are now owned by majority firms. However, this trend is not new, in fact it
dates back to as early as the 60’s.
Prior to the 60’s, the black oriented hair care product business was all
but ignored by the general market product companies. But when market surveys accidentally revealed
that black consumer’s purchase cosmetic and related products well beyond their
proportionate numbers, (meaning that at that time Afro Americans were only 10%
of the total U.S. population, but were consumers of more than 25% of cosmetic
products that included for the most part hair care items). Also, Afro Americans paid more for
professional hair care services per visit then others. For example, the average black patron paid
about $30.00 for a full service treatment, meaning shampoo, press & curl,
perms, cut, conditioners and set. The
non-black patron spent about $12.00 for just a shampoo, set and style. Today the prices are higher, but the pay
scale and trend are the same, only now Afro Americans are 12% of the population
and consume over 33% of cosmetic products and services. The main factor as to
why the Afro Beauty Supply consumer market is so strong is: Afro women spend up to three (3) times as
much money per salon visit then do others.
Most other patrons get shampoos and sets per visit. Afro women generally get a full service
treatment such as Relaxer Perms, Curly Perms, Press & Curl, coupled with
Conditioning treatments as well as all forms of color services and hair
augmentations i.e. Weaves, Braids and Extensions. Many of these services are not even offered
in non-Black Salons, plus the Afro patrons return more often than other
cultures.
So armed with this information, the majority owned firms
wanted in on this potential profitable market that they had formerly ignored
and considered unimportant. Note: the
majority of Korean owned beauty supply outlets are directed at that market for
this and other reasons, resulting in the Koreans controlling 80% of
professional Afro hair care product, sales and distribution sold in beauty
supply stores. Also because Afro women
are the major consumers of commercial hair that the Koreans have control of, import
and distribution for the most part, resulting in their stores being in the
areas where the customer base is.
Revlon was one of the first majority firms to jump into this
market in a big way in the early 60’s. They first acquired a black owned firm
in Chicago (Deluxol) that manufactured a relaxer line and related products.
This product did so well under the original name with Revlon financial backing
for advertising and promotions, that Revlon came out with another similar line
under their own name of Revlon. They
have done quite well in that endeavor ever sense under several trade
names. Revlon was motivated primarily by
how well Johnson Products Company (a black owned product manufacturing company
in Chicago) was doing with their Ultra Sheen line of relaxer products. At that time, Ultra Sheen was the bestselling
relaxer line. Revlon’s advertising and
marketing and misleading advertising, “That was addressed by the U.S. Fair
Trade Commission” claims was aimed towards the Ultra Sheen market. With that ploy, they were able to infiltrate
and dilute Johnson market share by 50%.
The reason that Revlon did not introduce their Afro line under their own
name at first, is because they did not want to taint their name and reputation
if the endeavor was not successful or accepted.
Revlon later dropped the Deluxol name in favor of promoting their own
trademark name. After that, many other
majority companies jumped into that market with greater success than
anticipated. Company’s such as Alberto
Culver markers of VO5, developed TCB and later the Motions
line. Clairol acquired an Afro owned
line called Summitt Labs out of Indianapolis, Indiana. After a successful run, they sold the line to
their then Summitt director Clyde Hammonds who was with the company from the
start, who is black and runs the company out of Harvey, a suburb of Chicago,
Ill. Clairol decided to get out of the
ethnic product business because it was distracting from their main focus of
hair color products. However they
learned from that experience how to better serve and market to the Afro
consumer. This was the first time that
an original black owned company that was acquired by a majority firm was
reclaimed by a black owned company.
In the mid 60’s, a new look that was a draw back to the
original Afro hairstyle called the NATURAL.
This was to allow the hair to grow out naturally then groom and comb or
“fork” it out to a neat round appearance and cut to a well-rounded shape. The first company to offer a product that
conformed to this style was Magnificent Products in Los Angeles. Two barbers Dennis Taylor and Wilber Jackson
founded the company. The product and the
style it was related to became a nationwide phenomenon. Other companies tried to capitalize on the
merry go round, but none overcame the pursuit.
Later a majority owned firm J. Strickland of Memphis, Tenn., the makers
of Royal Crown and Dixie Peach products made the Magnificent Products an offer
that they could not refuse, and bought the company. But instead of furthering and enhancing the
sales and popularity of the products, they withdrew it from the market and shut
it down. The speculated reason for this
was because the Natural look was interfering with the sales of Royal Crown,
Dixie Peach and other similar products produced and sold almost exclusively to
Afro Americans. People wearing the
Natural did not need or use petrolatum-based products. Johnson Products picked up the slack with a
product called Afro Sheen, that did quite well until the fad was replaced by
the so-called Jeri Curl.
In the early 1980’s Worlds of Curls a black owned company in
Compton, Ca. became financially strapped due to diversifying into endeavors
outside of their niche market and the declining curl market. Worlds of Curls had the best-selling curl
maintenance products for both professional and retail. The company is now owned by the J. Strickland
Company in Memphis, Tennessee the makers of Royal Crown Products, as eluted to
above, concerning Magnificent Products.
Johnson Products of Chicago that was mentioned earlier in
this article, was acquired by a majority holding and investment firm a few
years ago, and has changed ownership three times sense then including the Walla
Corporation of Germany with U.S. headquarters in New Jersey. Walla’s major niche market is hair color
products (the best-selling hair color line in Europe). Clairol is the #1 seller. Later Walla was
acquired by Proctor & Gamble, and now Johnson has new owners (more about
that later in this article).
Soft Sheen Products of Chicago was the next product line to
be acquired by a major majority firm.
L’Oreal of Paris with U.S. headquarters’ in New York, Soft Sheen
manufactured the best-selling Afro Curl products, plus the Optimum and Mazoni
line. At the time of the acquisition
Soft Sheen was the largest Afro owned hair care firm in the world, with assets
well over $85,000.000.00. This
acquisition was the largest one of its kind ever recorded and put L’Oreal in
the Afro Hair Care market big time, plus they now own the Dark and Lovely
line. Prior to this, L’Oreal was the
largest manufacturer of hair care products to the general market in the world,
along with Bristol Myers (who also owned Clairol), that is now owned by Proctor
and Gamble. This acquisition also gave
L’Oreal the distinction of owning the largest Afro hair care company in the
world. L’Oreal later attempted to
acquire the Johnson Products Co. from the investment company, but was stopped
by the Fair trade Commission because it would have given L’Oreal an unfair
monopoly in the Afro hair care market.
This opened the door for Walla to purchase Johnson. Proctor & Gamble who also acquired
Clairol from Bristol Myers acquired Walla later.
Pro Line products of Dallas, Texas were acquired by Alberto
Culver (mentioned earlier in this article) in 2005. Pro Lines niche was strong in the retail
market for Afro hair care products.
Alberto-Culver was already strong in the Afro professional market, with
TCB and Motions, plus the fact that they were at that time the parent company of
Sally’s Beauty Supply Stores. This acquisition
gave them a strong position in the Afro retail market. In the latter part of 2010, Alberto Culver
was purchased by the Unilever Company head quartered in the UK, Pro-line and
the other Afro centric products (TCB & Motions) were a part of the deal. This made Unilever the third largest
manufacturer of ethnic related products.
A non-Afro firm in Chicago (JF Labs) now owns Hawaiian
Silky, originally home based in Shannon, Miss., owned by Mr. Harry Green. Mr. Green passed away in mid-2010. Leisure Curl was also Afro owned and is now
also owned by JF Labs. Namaste, makers
of ORGANIC ROOT STIMULATOR (the most imitated product line on the market today)
in Blue Island, Ill. (southwest of Chicago), was purchased by an India owned
firm called Dabur towards the end of 2010.
This was the largest such transaction of an Afro owned hair care company
in history, the owner of Namiste, Mr. Gary Gardner is the son of Edward Gardner
the former owner of Soft Sheen Products, prior to this transaction Soft Sheen
acquisition by L’Oreal was the largest
such transaction.
When Proctor and Gamble acquired Walla, Johnson Products
were a part of the deal. Due to the fact
that Johnson (Ultra Sheen & Gentle Treatment) was not the major reason for
the acquisition, it made Johnson vulnerable for acquisition by anyone
interested. Johnson was purchased in March of 2009 by an Afro owned holding company headed
by Eric and Renee Brown, a husband and wife team that are the son in law and
daughter of the former Afro owner of Pro Line Mr. Comer Cottrel. This is the second time that a hair care
company that was originally owned by a black concern, sold to a majority owned firm,
which sold back to a black entity. The
first time was the Summit deal alluded to earlier in this article. A company founded by Ernest Jhosua, JM
Products was headed by his son Michael after Mr. Jhosua’s death in 2005. In
October of 2009 the company went into receivership. The company had several divisions that
include production of the ISOPLUS and other trade name “Wet Goods” products,
and an aerosol plant. The Isoplus line
and other wet goods are now owned by the majority owned Murray Products Co. in
Detroit, MI.
A few of the hair care manufactures that are still Black
owned as of this writing are: Luster products of Chicago, Ill. Producers of the
Pink Moisturizer, Kizure Iron Works of Carson, Calif. (just south of Los
Angeles). Manufacture of Curling Irons, Pressing Combs, Stove Heaters and
several other related items, Summit Labs
in Harvey, Ill. Also a suburb of Chicago, Lloneau Products in Los Angeles, Ca.
makers of Liquid Gold Hair Bonding and Lace Front Adhesives, Bronner Bros. Of
Atlanta, Ga. with a complete line of hair care products. Bronner Bros. Also are the publishers of
Upscale Magazine and the producers of the most successful multicultural
Cosmetology Trade Show in this or any other country. Dudley Products of Kernersville, N.C. one of
the few Afro owned direct sales organization in this field. Dudley also owns a chain of Cosmetology
schools in several states. Johnson
Products that has recently come back under the Afro owned umbrella as stated
earlier in this article. Fashion Fair Cosmetics, owned by Johnson Publishing
(Ebony & Jet). Clentex of Chicago,
Ill. owned by Mr. Steve Luster the brother of the founder of Luster
Products. Research Labs in Atlanta, Ga.
owned by Mr. Cornell McBride with a line called Design Essentials. Mr. McBride was one of the original owners of
M&M Products. E.F. Young Products of Meridian, MS is now being run by a third
generation of a family owned business.
Mixed Chicks in Woodland Hills, CA.
Professional Products unlimited in Fayetteville, GA.
The preceding is a partial listing of Afro owned firms, but
does represent most of the major Afro owned players still in the game.
So if you were curious as to who’s who in regards to
ethnicity in the ownership of major ethnic directed product company’s you now
know part of the story. This story is
still unfolding as you read this article.
Dr. Edward Tony Lloneau,
Lloneau Products
No comments:
Post a Comment