Improving economic conditions and easing of capital restrictions will make investors target the high-growth natural personal care sector in 2010, analyses Organic Monitor in its new Strategic Insights report [1].
After a lull period of 18 months that followed the financial crisis of 2008-2009, major deals have restarted in the natural personal care industry. Bare Escentuals was acquired by Shiseido last month in a US$ 1.7 billion deal, whilst Clarins completed its purchase of Kibio a few weeks ago.
European companies are expected to be involved in major deals in 2010 because of the lack of ‘investable’ companies in North America. Indeed, “many leading American companies have already been acquired, leaving relatively few suitable privately-owned companies.”
Companies in North America - such as Bare Escentuals and Burt’s Bees - have been purchased at over 3-5 times their sales revenues. High prices are being paid by investors looking to emulate Estee Lauder’s success with Aveda. Since its purchase in 1997, Aveda has grown manifold to become a global brand of natural personal care products.
The report finds the most successful natural personal care companies are those that receive investment and continue to operate as separate entities. Aveda and Burt’s Bees are cited as such companies that have continued to show positive growth. In comparison, those that have been acquired and integrated into larger corporations (such as Sanoflore, bought by L’Oreal in 2006) have not realised their growth potential. “A major reason is that natural personal care companies are typically small enterprises with strong ethical values which do not always fit well into larger profit-driven organisations,” Organic Monitor comments.
Organic Monitor’s upcoming Sustainable Cosmetics Summit, taking place at Grand Hyatt Hotel, New York, 24-26th March 2010, will highlight the report’s key findings, with details of the major deals and future growth projections.
