Bad Hair Days

Today, few ethnic haircare products are owned by black companies. Their decades-long legacy has been lost to mainstream manufacturers.

of fighting his competitors. In 1998, he received a $5 million growth investment from Patricof & Co. Ventures in New York, hoping to grow through acquisitions, but failed. Cottrell expressed interest in Johnson Products when it was being sold by IVAX, but Carson won the bid at $70 million.

“The companies that are buying these larger (black) companies are a hundred times larger than we are,” said Bronner. “Black companies simply cannot come up with that kind of financing power.”

“M&M Products was doing great-a $40 million company,” AHBAI chairman Al Washington says, “but the partners, Cornell McBride Sr. and Therman Mckenzie, didn’t see eye-to-eye on how to operate the corporation. They got into a financial bind, and had to sell the company a decade ago.” McBride and McKenzie were the originators of the Sta-Sof-Fro brand. They sold the company to Johnson Products in 1989. McBride is currently president and CEO of Atlanta-based McBride Research Laboratories, maker of Design Essentials and Wave By Design.

“As far as the others that remain in the industry-the Lusters, the J.M. Products, the Summit Labs-I see less of those kinds of internal problems and lack of commitment to the industry,” says Washington, who is also CEO of AFAM Concepts in Chicago. Founded in 1978, AFAM produces Vitale products, and sells primarily in the professional market to salons.

Blacks used to own 100% of the haircare retail market. Now they own perhaps 30%, estimates Washington.

“We have to look at different ways of doing business in order to compete in the marketplace. We don’t have the resources, so we can’t compete on the basis of resources,” says McBride. “We have to compete based on ingenuity and a different way of approaching the market.”

Chicago-based Luster Products Co. is the highest-ranking hair product manufacturer on this year’s be industrial/service 100 list. Luster, ranked No. 44, employs 316, and had $65 million in sales in 1999, but even its future is a toss-up. Of all the black-owned manufacturers, Luster will have to compete the hardest with L’Oreal because they both sell in the same place-the beauty supply store.

“Time will tell how well any of the companies do in this environment. Luster has some terrific brands, and so does L’Oreal, so it will be a battle of the brands in respective subcategories,” says Segmented Marketing Services’ Jones, adding that shelf space is equivalent to real estate.

One of the advantages that a L’Oreal or similar-sized manufacturer has is more resources and stronger relationships with the trade that will result in better shelf placement and the ability to force prices down.

In Luster’s favor, says Jones: “smaller companies like Luster have certain advantages. They can respond at a much faster rate than companies five times their size.”

In fact, according to Joyce Roche, former president and COO of Carson Products, size may be a serious disadvantage. “When you go large, you’re in danger of losing your nimbleness and the ability to move quickly to the ever changing needs of the consumer.” Adds Roche,

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