Some of the most notable activity has involved the biggest names in the business, including L’Oreal, Shiseido, Avon and Clarins, who have all made moves to buy up smaller niche brands in an effort to expand portfolios and business footprints.
The activity comes in stark contrast to the reduced consumer spend and falling sales that was a virtually universal picture for the big industry players last year.
This situation ultimately caused a total lack of financial visibility, forcing companies to put M&A activity temporarily on hold.
The wait appears to be over
As a result, the approach taken by virtually all companies was ‘wait and see’. But as the first green shoots tentatively appear, companies are coming back round to the idea of growing their businesses again, rather than just trying to get through the tough economic conditions.
During the past couple of months the two biggest players in the European personal care business – L’Oreal and Unilever – both acknowledged that they have big plans for future business growth, a stark contrast to the outlook given at the same time last year.
In February Jean-Paul Agon, CEO of L’Oreal, unveiled a three-pronged strategy which he said would help cultivate its plans to expand its consumer base to over 1 billion customers worldwide.
L'Oreal eyeing men's grooming and developing markets
The company has already outlined that it views the male grooming market and the developing markets as being two key areas that would help to trigger this growth, so further acquisitions in either of these areas may be expected in the near future.
Likewise, Unilever CEO Paul Polman also unveiled ambitious plans to double the size of the company’s business while reducing its carbon footprint, during a sustainable summit in London, back in February.
Although Polman did not specifically mention future acquisitions, he did say that the company wanted to persuade consumers’ to switch to greener and more sustainable products, hinting at expansion in the fast-growing natural and organic segment.
Natural and organic segment should see significant activity
Expansion in the naturals and organic field is expected to be one of the big trends in 2010, a factor that has already been underlined by a flurry of activity in the first few months of 2010 and one that has been flagged up by industry experts at market research company Organic Monitor.
Already there have been three major acquisitions in this category so far this year involving global players : Shiseido’s acquisition of US-based mineral make-up provider Bare Escentuals, Avon’s acquisition of UK-based natural skin care brand Liz Earle and Clarin’s acquisition of the remaining shares in France-based organic skin care brand Kibio.
However, although the naturals category is likely to be key to future growth for the big players, strategies are also likely to focus on other expanding categories, including specific categories in developing markets, particularly in Asia, as well as the men’s grooming category worldwide.