Eric Vogelsberg, Kline

Both key and niche industry players are meeting significant sales success in the U.S. personal care market, according to a recently published report Cosmetics & Toiletries USA [1] by Kline & Company. “Procter & Gamble (P&G) maintains its lead in the U.S. personal care market; however, its market share across multiple categories is being challenged. With the exception of P&G, major companies - in particular, L’Oréal and Estée Lauder - are enjoying steady growth. Of particular note, smaller companies are making strong headway and highly viable impressions,” notes Kline.

Attractive potential acquisitions

However, the consulting and research firm considers it is at the macro level that the flourishing personal care market is offering the most promise. “Within the presently fertile merger and acquisition climate, smaller companies are increasingly attractive acquisition prospects by larger, cashed-up, and savvy players,” says Kline.

As a telling example, earlier this year, L’Oréal’s CEO Jean-Paul Agon announced that he was ready to make important acquisitions to maintain growth, and this has already been borne out by the recent acquisition of Interconsumer Products, one of Kenya’s largest manufacturers of personal care and beauty products.

Clearly, companies continue to emphasize growth agendas and make significant funding available – both strategic and financial sponsors – to realize such aspirations. Such an improving environment is increasingly attractive for merger and acquisition and a growing number of smaller, often privately held, cosmetic and toiletry companies are contemplating, developing, and/or executing exits. As such, 2013 portends to offer even greater deal flow as many companies look to invest in new growth opportunities,” remarks Eric Vogelsberg, Senior Vice President at Kline’s M&A Advisory.

Niche players

Thus Kline’s Minor Companies chapter from the Cosmetics & Toiletries USA report, consisting of almost 150 profiles of smaller and especially dynamic cosmetic and toiletry companies, reveals particularly promising companies that have been identified as positive net-value prospects and are also presently competing in segments that are expected to post higher-than-industry-average growth.

Among the profiles are companies such as New York City-based Anthony Brands with the high potential for acquisition based on a solid presence in the male grooming market and a high level of innovative product launches. Similarly promising is Vogue International, a distributor of hair care and other personal care products in nearly 42 countries worldwide with a potential based on prolific R&D, mass brands with broad appeal and a recognized name.

In terms of the overall cosmetics and toiletries market performance, the nail polishes category claims the most success, shining with 17.4% growth, fueled by continual innovation and high consumer demand. Additionally, skin care products for men show a strong performance in 2012, gaining formidable traction with innovative brands such as Lab Series Skincare for Men by Estée Lauder and Anthony Logistics For Men by Anthony Brands, performing exceptionally well and posting double-digit growth.