L'Oreal to launch multi-cultural division starting with Carol's Daughter acquisition

By Deanna Utroske

- Last updated on GMT

L'Oreal to launch multi-cultural division starting with Carol's Daughter acquisition

Related tags Cosmetics

L'Oreal signed this week to acquire the multicultural beauty brand and plans for it to continue under current leadership while making full use of its expertise in the multicultural beauty sector.

The US is irrefutably a multicultural marketplace, with Hispanic, Black, Asian and mixed populations growing much more rapidly than the White population, according to market research company Kline.

For the beauty industry, an increasing population of multicultural consumers is an opportunity too good to resist:  "This acquisition [of Carol’s Daughter] will enable L'Oreal USA to build a new dedicated multi-cultural beauty division as part of our Consumer Products business, and strengthen the company's position in this dynamic market,"​ said Frederic Roze, president and CEO of L'Oreal USA.

Multicultural beauty

The multicultural beauty products market has grown by 3.7% this year, outperforming the overall cosmetics market, according to Kline’s Multicultural Beauty and Grooming report.

“Mainstream brands continue to develop tactics to capture a growing percentage of the ethnic personal care market,”​ said the market researcher, which also reports that multicultural consumers will be the majority in the US before long.  

This summer in an effort to further position itself as “the leader in the growing ethic beauty market,”​ L'Oreal announced plans to move its institute for research into ethnic hair and skin to New Jersey, home to the company’s US operations as well as the one of the most ethnically diverse states in the country.  

“It became increasingly important that those involved in this vital area of our business have closer proximity to the larger L'Oreal researchers at our U.S. innovation hub in Clark, New Jersey, as well as to our business and industry partners in the area,” ​the company then told Cosmetics Design in a statement. The company has a similar research facility in South America. 

Carol’s Daughter is headquartered in New York and will remain there following the acquisition.

Trend toward naturals

The Carol’s Daughter brand is as much about natural ingredients as it is about multicultural beauty. And, like multicultural beauty, the naturals market is outpacing the overall cosmetics market. In 2013 the segment saw 7% growth in contrast to 2% for the larger market. This year, Kline reports that the naturals market at the manufacturing level is approaching $30bn in global sales and has seen double-digit growth in the previous 12 months.

Financial worries

Carol’s Daughter closed all but two brick-and-mortar locations and filed for Chapter 11 bankruptcy in April of this year.  Reportedly, most locations had not been profitable for years.

The company positioned the bankruptcy as a shift in branding and distribution: The “filing in no way reflects the parent company’s healthy financial situation, and is a part of its plan to grow the brand through national retail outlets,” ​Richard Dantas, chief executive of Carol’s Daughter, told the AP.

Long-anticipated acquisition

Rumours that the multicultural beauty brand was up for sale were circulating as far back as spring of 2013. L'Oreal was then believed to be a prospective buyer, as were other large companies with distinct acquisition schemes including Estee Lauder, Shiseido, and Procter & Gamble.

Now that the rumours have been realized, the brand appears well positioned for success beyond the $27 million in net sales it had from September 2013 through September of this year.

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