BLENDING INTO THE MAINSTREAM;PLUSES, MINUSES FOR ACQUIRED ETHNIC H&BA COMPANIES

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In the $600 million ethnic cosmetics and haircare industry, the minority is now the majority.

As minority-owned companies continue to land in the hands of established deep-pocketed cosmetics giants, the industry is learning a new truth: Minority ownership is no longer always a draw among black consumers.

"Ultimately, consumers will elect to use the product that gives them the desired result, regardless of the manufacturer," says George Boykin, director of marketing for Luster Products, marketer of such ethnic haircare products including as PCJ hair relaxer kits for adults and children.

The next domino that might fall is Soft Sheen Products-until recently the largest African-American-owned haircare marketer in the U.S. It is said to be drawing the interest of Bristol-Myers Squibb Co.

With that deal, Soft Sheen, with sales of $97.2 million, will join the ranks of Posner Laboratories and Johnson Products, both sold within the last two years to Florida pharmaceutical company Ivax Corp.

Also, privately held Carson Products Co. was acquired by former Snapple executives.

"We're seeing consolidation and retrenchment," says Charles Smith, senior product manager, TCB/Bone Strait, an ethnic line marketed by Alberto-Culver Co.

The heightened interest of the major cosmetics companies in what once was a minor category is simple: Industry executives predict sales of ethnic health and beauty aids (haircare, skincare and cosmetics) will top $730 million by 1997.

Annual sales gains, coupled with population trends that show the number of African-Americans and Hispanics outpacing growth among Caucasians, "make it much more likely that the bigger beauty aids companies will want a piece of the business," notes beauty industry consultant Allan Mottus.

That interest means greater shelf-space competition for the remaining black-owned haircare and cosmetics companies. It also adds pressure on them to increase modest advertising budgets to try and keep pace with the likes of Procter & Gamble, Maybelline and Revlon, which are "mainstreaming" the segment.

P&G has added cosmetics for dark skin tones to its Cover Girl and Max

Factor lines; Revlon has extended its shade selections rather than

developing a separate brand identity; L'Oreal has mixed a number of new

tones and shades into its Mattique and Colour Riche offerings.

Maybelline was the first of the major marketers to roll out a separate

brand identity for its ethnic products, five years ago. It's Shades of You

liquid makeup, pressed power, blush, lipstick and nail color, was "a big

step toward the mainstreaming of ethnic beauty care," says David Cullen,

senior partner, at new-products consultantcy Hudson Partners.

"There was a recognition .*.*. that this was a market that was

underserved," Mr. Cullen says.

Maybelline currently is updating the shades in the Shades of You line,

with new advertising in August issues of Ebony, Essence, Heart 'n Soul and

YSB under the theme, "What Good Is Color If It's Not Your Color."

Gotham, New York, handles the estimated $2 million Shades of You budget.

"There are more choices today, because more companies have come into

this category," says Bridget Chisholm, marketing manager. "And women of

color are more likely ....to look for specific lines."

Bringing together top brands for more clout, spending power and shelf

space was the motivation behind Ivax's acquisition of Johnson Products and

Posner.

"It's all about meeting the needs of the consumer," says Michael

Pietrangelo, president of the company's personal care products group.

Posner in May introduced the Patti LaBelle Lip and Nail collection, under

its Flori Roberts signature, with advertising handled by Mingo Group, New

York, as well as a full line of dermatologist-tested Posner cosmetics

backed with a TV, radio and print campaign from Equinox, Chicago, themed:

"Posner. It's You."

Such a stategy to boost brand recognition with a well-known celebrity

name helps Posner to compete with the giants. But

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