Coty and Estée Lauder bumped by newly top-ranked pro hair care company

Late last month, on October 26, Henkel announced it was acquiring Shiseido’s North American pro hair care business.

“This acquisition is part of our strategy to expand our position in attractive markets and categories,”​ Henkel CEO Hans Van Bylen, said at the time. “It will further strengthen our Hair Professional business in the US, the world’s single biggest hair professional market. The high-performance and high-quality brands are a perfect fit for our Beauty Care business. We are looking forward to welcoming Zotos’ experienced team at Henkel.”​

Pole position​

It’s this latest deal that puts Henkel in the lead among pro hair care companies in North America.

“According to data from Kline’s Salon Hair Care Global Series, this plus its earlier 2017 acquisition of Pravana will nearly double Henkel’s share in North America from 7.7% to 13.6%, ahead of Coty’s 11.1% and ELC’s 8.1%,” ​says the market researcher in a media release.

Commenting on pro hair care in the region generally and Henkel’s new rank in particular, Agnieszka Saintemarie, Kline’s salon hair care market expert, tells the press, “North America is an attractive market. Even though it is a large and mature region, it still returns consistent growth each year.”​

She goes on to say that “with a market so large, even a small percentage increase translates to tens of millions of dollars, so there is plenty of potential for all players. The acquired business is a nice addition to Henkel’s portfolio. The Joico brand in particular has performed well in recent years, investing into hair coloring, the fastest growing category on the market. It has also been at the forefront of the unnatural colors trend with its highly popular metallic shades.”​

Lead lap​

Pro hair care isn’t the only category where Henkel is likely looking to lead. Just last month Bloomberg.com noted that “Henkel may further expand its business in the United States via acquisitions,”​ and cited an interview where van Bylen told Welt am Sonntag, “If there are opportunities for acquisitions, we will take a look at whether they are a good fit in terms of strategy and price. In the United States we are for instance not yet a leading seller of beauty care products.”​

Though, analysts at Kline think the multinational may be better off looking outside the US to grow its business. “Henkel will need to continue to make power moves if it wants to reach the ranks of Coty or L’Oréal,”​ says the Kline release. “With a gap of still several hundred million dollars, it will need to add at least one other major business or several small-to-medium sized ones to achieve the same size as Coty. To better achieve this goal, Henkel might need to start looking outside the North American region…”  ​

In any case, the company is certainly tuned in to opportunity. In the release announcing the acquisition of Shiseido’s North American pro hair care business, the company’s CFO Carsten Knobel asserted, “At Henkel, we have strong capabilities to identify compelling acquisition targets with a clear strategic fit and attractive valuations.”​