L'Oréal's Acquisition of Clarisonic Is a Logical Choice

Kline's Carrie Mellage explains why the skin care device still has plenty of room for growth.

Related Expert's Opinion

By Carrie Mellage
Kline Group

The recent news of L’Oréal’s acquisition of Pacific Bioscience Laboratories, Inc., the marketer of Clarisonic, comes as no surprise to us at Kline. L’Oréal has a long and solid history of growing its business by acquiring and developing dynamic brands… Matrix, Kiehl’s, Skinceuticals, and Essie, just to name a few. L’Oréal is a leader in the global and U.S. beauty market; it has deep pockets; and is quick to act on market trends. The firm is also reporting solid financial results against the backdrop of a tough economy, with its first three quarters of 2011 up 5.1% on a like-for-like basis. The acquisition will also help bolster L’Oréal’s position in skin care in the U.S., which is relatively weak compared to its global standing.

Likewise, Clarisonic is a logical acquisition candidate. It is the #1 brand in the explosive $1 billion at-home skin care devices market in the U.S. It has the unique premise of sonic technology in addition to being fashion-forward and trendy. As we had predicted in our recent market research report, At-home Skin Care Devices 2011: U.S. Market Analysis and Opportunities, the market is ripe for acquisition activity, and we are happy to see L’Oréal be one of the first to make a move here.

There is a lot of potential for Clarisonic under its new owner. L’Oréal has strength in globalizing once-local brands, as it has done with Maybelline and Redken. The devices market is flourishing all over the world and is particularly advanced in Asia (which Kline plans to examine in the next edition of our study), so Asia could be a next logical step for Clarisonic.

Essie is another good example of Clarisonic’s potential at L’Oréal. In just a little over a year from its acquisition, Essie’s share of the U.S. mass nail polish market has reportedly grown from virtually nothing to more than 10%. L’Oréal clearly recognized Essie’s potential and quickly married it with the booming nail polish market to successfully generate quick results.

Clarisonic has strong potential in its own right. Its patented sonic technology is unique and could be extended beyond cleansing and anti-aging to other skin care concerns, perhaps at different price points and in different channels under L’Oréal’s other brands like Vichy or Garnier.

This definitely seems like a good match and we believe it is a win-win for both L’Oréal and Clarisonic.