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France: Sanoflore Snapped up by L'Oreal
Sanoflore, a leading French producer of organic cosmetics, has been
bought by L’Oreal. Sanoflore’s acquisition is the latest move by
large cosmetic companies muscling into the natural & organic sector. |
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Sanoflore is one
of the pioneers in the French organic products market. Established
in 1972 as a producer
of organic herbs, it started
production of organic essential oils in 1986. The company has grown
to become a leading producer of organic oils and natural
cosmetics. It currently has 147 employees
and is expecting 60% sales growth to EUR 15 million this year. Like
most French companies, it is reporting high growth since media
reports elevated consumer awareness of natural cosmetics last year.
L’Oreal is
acquiring Sanoflore to get a foothold in the organic & natural
products sector, the fastest growing in the cosmetics industry.
Natural & organic cosmetic sales are increasing by over 20% a year
whereas the conventional cosmetics industry is stagnating. Unlike
The Body Shop, which was acquired 6 months ago
and remains a stand-alone business, Sanoflore will become
part of L’Oreal’s Active Cosmetics division. L’Oreal plans to
leverage its international presence to make Sanoflore a global
brand. It is also likely to use Sanoflore’s expertise to launch
natural cosmetics under its other brand names.
Organic Monitor
sees the acquisition as an important
development that is likely to shake up the natural cosmetics
industry. The European market is highly fragmented with the presence
of a large number of small-medium size enterprises. Few brands have
a strong presence outside their home markets. With capital injection
from L’Oreal, Sanoflore is likely to build a pan-European presence
and challenge the leading brands.
L’Oreal’s market
entry is also envisaged to trigger industry consolidation similar to
what has occurred in
North America. Tom’s of
Maine, a leading
producer of natural oral care products, was purchased by Colgate in
March. Hain Celestial, the largest
American natural & organic products company, has acquired a number
of natural cosmetic companies in recent years. Large companies now
characterise the American natural cosmetics market, a development
which is almost certain to occur in Europe.
Large cosmetic
companies are attracted to the natural & organic sector because of
the high growth potential. Some have launched certified organic
products, like L’Occitaine which introduced a range of organic skin
care products in the summer. Others will follow L’Oreal and favour
the acquisition route. Finding a suitable partner will prove
difficult however since established brands like Weleda are not for
sale.
Large cosmetic
companies maybe forced to buy small brands and build them up.
Clarins has adopted such a strategy with its EUR
3 million investment in French company Kibio earlier this
month. Kibio is a small producer of organic cosmetics that mainly
sells its products via the internet.
Industry
consolidation is inevitable as investment comes in from the large
cosmetic companies. As large companies muscle
into this dynamic sector, dedicated natural & organic
companies that remain successful will be those that adjust to the
changing market conditions.
Related Reports:
#1001-60 The European Market for Natural Cosmetics
#1301-60
The French Market for
Natural Cosmetics
Posted: October 24th 2006
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