Thus for the purposes of this article, I would like temporarily to emulate such politicians, assuring our readers that I, too, am a decent, sincere, nice consultant. Last January in Happi, I stuck my neck out and made a number of predictions for 2008. So this year I felt I ought to produce some sort of scorecard, if only to try and add some vestige of credibility to what I am forecasting for 2009.
Clearly, there is a whole raft of significant, major issues to consider at the macro economic level, which will impact our industry. But given the amount of TV airtime which has already been devoted to far wiser economists than ourselves, I thought I’d stick to specifics, on the basis that I might as well be hung for a sheep, as for a lamb, etc.
Mergers & Acquisitions
2008: I said there would be no mega deals, but that some smaller-sized companies, highly geared by private equity, would go on the block for more reasonable numbers and get snapped up by trade buyers with funds.
It may be a stormy, turbulent year for the global personal care industry.
2009 prediction: More of the same. Several of our larger clients report being almost spoilt for choice, in that they are now faced with a whole lot of smaller, niche targets to consider for acquisition by way of portfolio in-fill, etc., as these smaller companies’ owners feel the need for cash. So, that’s good for large, publicly traded companies with plenty of cash. Not so good for owners looking to pay off their borrowings, etc. Specifics, well, that would be telling, but...look for more U.S. hair care business to fall into European hands.
2008: I said to expect a lot of exciting stuff happening in developing and emerging markets.
Scorecard: Well, some quite exciting moves did happen in terms of acquisitions by Western companies in China, India and Latin America. But as far as I can tell, sales volumes there have not exactly been gladdening the hearts of CFOs back at corporate headquarters.
2009 prediction: Steady as she goes; i.e., more investment in D&E markets, especially China, as that sleeping giant awakens and reaches for the toothpaste, soap, shampoo and makeup.
2008: I argued the case for Chinese beauty retailer Watsons to make its first move in the U.S. I also pointed out that the current prohibition on chain pharmacy in continental Europe was starting to crumble, and wondered whether the likes of CVS and Walgreens would decide to participate. And I asked how long it would be before one of the major international brand manufacturers finally grasped the nettle and invested in QVC?
Scorecard: Watsons did not make a move in the U.S., but I think I was probably just premature in terms of timing, rather than plain wrong (see 2009 prediction). As a European, I did, however, fail to foresee the highly significant move of North American drug chains into prestige, whether it was CVS with Beauty 360 or Walgreens’ Beauty or Shoppers Drug Mart’s Murale. Clearly, these represented a more logical, domestic option, first, before plunging into Europe. In terms of QVC, Estée Lauder stepped up with Clinique & Bobbi Brown, as did L’Oréal with YSL. Clarins opted for HSN along with P&G’s Prestige Boss & Hugo Boss.
CVS Beauty 360 is changing the pace of prestige marketing.
2008: I said to watch for one of the big players doing a major number in spa. I speculated about P&G’s Olay as well as J&J’s post-Pfizer portfolio of skin care brands.
Scorecard: Wrong! Although rumors abounded of large manufacturers investigating the spa scene all around the world, nothing major happened—at least, above the surface, anyway. Instead, Olay started testing a new $40 a pop, “professional” line in bright red packaging. Nothing big surfaced from J&J's now widespread skincare portfolio.
2009 prediction: Mass skin care will become more technical, with some new players e.g. Coty’s new Home Skin Lab start-up. Tight consumer purse strings will inhibit major growth in the spa sector, although Unilever will probably expand their test of Dove Day Spas. Look out for further testing of home electrical devices which are designed to work with skincare products, e.g. Philips recent JV with Reliant Technologies, developer of the Fraxel laser systems.
2008: I thought P&G would come out of their professional tent and take the fight to world leader L'Oreal in the salon market. Unilever would remain under pressure in retail hair care Western markets, not least because of its decision not to compete in the profitable professional channel, from whence competitors had been deriving their war chests. And specifically, Unilever's Axe was failing to get into the growing male hair care sector.
Is Axe hair care going to be a winner?
2009 prediction: Something major to come from P&G in the professional arena – surely? Unilever to continue to struggle in hair care— maybe even a dalliance with professional at last? But Axe’s new hair offering in the U.S. will be a winner, and pave the way for a rollout in Europe and elsewhere. Beiersdorf will rollout its new, revamped Nivea For Men Recharge hair range across Europe, and may well take a special interest in the U.S.
But like the politicians say—of course we don't really know what's going to happen, but trust us, we’re decent, sincere, nice people, after all…