After growing the haircare market from the roots, black-owned haircare manufacturers are splitting at the ends. Close inspection of shampoo and relaxer labels uncovers a worrisome prospect: Owner by owner, blacks are losing control of the ethnic haircare industry.
Like heavy machinery toppling buildings to leave barren inner-city lots, multinational conglomerates are demolishing one of the foundations of the African American economy. Company by company, mergers and acquisitions are dismantling black-owned haircare businesses. In 1993, majority-owned IVAX, a Florida-based generic drug company, acquired Johnson Products Co. Then, in 1998, L’Oreal bought Soft Sheen. Ownership of Johnson Products changed hands that same year from IVAX to Carson Inc., a mainstream company based in Savannah, Georgia. In March 2000, Alberto-Culver, a $1.6 billion personal-care products manufacturing company in Melrose Park, Illinois, bought Pro-Line Corp., the third largest black-owned manufacturer, for an undisclosed amount.
The moment of truth came last summer when L’Oreal acquired Carson. When the dust settled, the top two black-owned haircare companies (Johnson Products and Soft Sheen) were joined under the L’Oreal umbrella. (However, L’Oreal is being required by the Justice Department to divest the Johnson name and several of its products.) Based in France, L’Oreal is the world’s dominant manufacturer of ethnic haircare products, with Soft Sheen/Carson brands such as Dark & Lovely and Optimum Care as its top sellers. Soft Sheen/Carson is the name L’Oreal has given to the newly merged Soft Sheen Products and Carson Products businesses.
“What we’re getting now is a Microsoft of the haircare industry with L’Oreal,” says Nathaniel H. Bronner Jr., executive vice president of Bronner Bros., based in Marietta, Georgia. “That’s fundamentally what we are dealing with, a totally different scale of money.” With gross sales of $33 million in 1999, Bronner Bros., maker of BB products and African Royale, ranks No. 80 on the black enterprise industrial/service 100 list.
Sales of L’Oreal’s ethnic market divisions are in the $250 million range, and those of Alberto-Culver are in the $100 million range, estimates Lafayette Jones, president and CEO of Segmented Marketing Services Inc. Jones is also publisher of Urban Call, a trade magazine for urban retailers and businesses, and Shades of Beauty, a magazine for multicultural salons.
“The combination of L’Oreal’s massive marketing power plus the acquired brands of Soft Sheen and Carson will work to squeeze black manufacturers from the retail shelf,” says Alfred Washington, chairman of the American Health and Beauty Aids Institute (AHBAI) in Chicago, the group responsible for the Proud Lady logo on all black-owned haircare products.
AHBAI estimates L’Oreal’s position will be 61.9% of the hair color market and 51.2% of the women’s relaxer market, cementing its position as the world’s largest manufacturer of ethnic haircare products. In mass merchandise stores alone, it will represent 71.8% of the hair color market, according to AHBAI.
L’Oreal disputes those numbers, noting that according to its calculations, it will control slightly more than one-third of the relaxer market-about 35%, according to a L’Oreal spokesperson. Yet even by its own conservative estimates, this is more than a