Because the black pound is worth it

It's a $1.7bn market, and L'Oréal and Unilever are going head to head to give one billion people a better hair day, writes Jason Nissé
Click to follow
The Independent Online

This weekend in Chicago, L'Oréal is opening a new research facility. There is nothing remarkable in that; the French cosmetics and haircare giant prides itself on its science. After all, it was founded by a chemist 100 years ago and already has three major research centres, and 16 smaller development operations worldwide. But what is unusual about this 5,000 square metre, six-storey facility, on which L'Oréal will have lavished $11m (£6.9m) before anyone walks through the door, is that it is solely dedicated to research into the hair and skin of people of African origin.

L'Oréal estimates there are a billion of these people worldwide, and the market for hair products alone could be worth more than $1.7bn a year. African-American women have been found to spend three times as much on haircare products as their white counterparts, while in the UK researchers say black women spend as much as six times the national average on hair and cosmetics. Not only do they splash out more money, they take more time preparing their hair: an average of 15 to 20 minutes in the morning using as many as six different products; at least two hours straightening their hair every six to eight weeks (often done at home by friends or relations rather than at hairdressers); and as much as eight hours when they want their hair braided.

What is more remarkable is that, five years ago, no big corporations were targeting this area. Now there is a good old marketing tussle between two of the industry's giants, L'Oréal and Unilever. And the two are coming at it from completely different tactical, branding and geographical directions.

L'Oréal identified the market as inter- esting in the mid-1990s. But lacking experience in this area, the group's British chief executive, Lindsay Owen-Jones, decided to buy the two largest players in the US, spending over $400m on SoftSheen, acquired in 1998, and Carson two years later. The deals made L'Oréal so dominant in the Afro-American haircare market that the US Justice Department forced it to sell off some leading brands. Even so, analysts estimate that it now has 40 per cent of the US market.

"Lindsay Owen-Jones used to tell us, 'You cannot be the world leader and forget about one billion consumers of African origin.' But we also wanted to be in the position of doing things right first time," says Alain Evrard, L'Oréal's managing director for Africa, the Orient and the Pacific. "We acquired SoftSheen and Carson and merged them into a new worldwide brand: SoftSheen Carson. The synergies are important: knowledge of the markets, critical size and the huge research capacity of the L'Oréal laboratories."

Unilever is in a totally different position. It is perhaps the consumer goods multinational with the biggest presence in Africa, generating sales of nearly €2bn (£1.4bn) last year. Yet, until recently, it had no haircare products specifically tar-geted at the 800 million consumers in the continent.

"Afro hair is a €500m market that we simply have not been in," admits Doug Baillie, the hyperactive Zimbabwean who runs Unilever's African operations. Five years ago, the company launched its first product, a hair relaxer. But only very recently has it brought out a full range of products - in fact two ranges, both under the Sunsilk brand but one marketed as Orange (for a more mature, affluent consumer) and the other as Green (for the funky, younger woman).

Unilever is putting a lot of marketing muscle behind the Sunsilk launches, with TV adverts, roadshows and direct marketing to hairdressers across Africa. "We have been looking at the market for a while, but we wanted to get the technology and the products right before we launched," says Mr Baillie, who has dubbed the market one of Unilever's "must wins" in Africa.

What has historically put big corporations off what L'Oréal calls the "ethnic market" and Unilever more directly terms the "Afro hair market" is that the biological make-up of Afro hair is very different from every other racial type. This means that products already developed for European consumers cannot be adapted for the Afro market in the way that shampoo and conditioners sold in the UK can be reformulated for, say, China or Saudi Arabia.

The main differences are dryness and density. Typically, someone of African origin has about 40 per cent less hair per square centimetre of head than a Caucasian person. They have fewer sebaceous glands and these are much less active, which makes the hair dryer, more brittle and up to 50 times harder to comb.

This means that shampoo is a far less important product and conditioners are applied to dry hair rather than in the shower, because they would be washed out before they could work. Hair food is widely used, as often as every two or three days, to make it stronger, and this is especially important as relaxing and braiding styles put a lot of stress on the hair and can lead to alopecia.

Both Unilever, at its African headquarters, and L'Oréal, at the new Chicago research centre, are keen to develop a pipeline of new products, arguing that the local entrepreneurs who traditionally dominated this market did not have the budgets or the research capabilities to innovate.

The two consumer goods giants are also pretty upbeat about having a major competitor in Afro hair. "L'Oréal's move into the ethnic cosmetic sector has generated attention by other major players," says the company's Mr Evrard. "We do not comment on competitors' actions, but we imagine that increased competition will contribute to developing the markets."

Unilever is confident that it can take on anyone in the African market, where it has better distribution than anyone else, and also believes it has a good foothold in Brazil, where there are 75 million potential customers for Afro hair products. In the US, Mr Baillie admits, "we will probably need partners".

Hair is only the beginning of the marketing war. L'Oréal has already decided that grooming is the next battleground for Afro products, producing research into products that stop bumps being produced after shaving (a big problem).

For a billion people, long ignored by the big cosmetics groups, looking your best may never be the same again.

Comments