The Personal Care Industry – the business of helping people stay and look younger – is showing classic signs of a maturing industry.  The industry landscape is causing companies of all sizes to adapt and develop their strategies.  Successful companies are focusing on the highest value components of the business and partnering with other companies to support the lower value components.  The new industry has the potential for fabulous new partners, but also new conflicts.
 
The signs of an aging and maturing industry are classic ones.  First, the industry is consolidating.  Larger players are purchasing smaller players.  Venture capital companies are picking up the leftover pieces to form specialized, agile and efficient smaller companies.  Proctor and Gamble, for example, purchased Vidal Sasson, Clairol, Wella, Aussie Brands and Gillette.  Gillette had, in turn, purchased Oral-B and Rembrandt.  L’Oreal also purchased Redkin, Matrix Essentials and an assortment of other brands.  Johnson and Johnson purchased Neutrogena, Aveeno and others.

The consolidation, however, occurs along industry lines and often in specific industry segments.  L’Oreal is a classic example.  By purchasing Redkin and Matrix, L'Oreal is specializing in the salon market.  On the other hand, P&G and Unilever are specializing in the mass market.  In fact, Unilever has exited the salon market.  Playtex did the same by selling the Woolite Brand to Rickett Benckiser for garment products and to Bissell Homecare for carpet and household cleaning products.

Venture capitalists are quickly becoming one of the more interesting market participants.  These companies typically start with zero assets and grow at a mind-boggling rate.  Take, for example, the success of Prestige Brands, which grew from orphan products dropped by major companies.  The majors contended that the brands could not achieve global reach, so they dropped the brands from their lines and focused on more promising ones in their global portfolio.  In turn, Prestige Brands has picked up well known brands like Commet, Spic and Span, Chlorasceptic, Compound W, Cinch, Denorex, Murine, Prell and many others. The result is a brand company with more than $300 million in sales revenue in a flash.  Companies like Prestige Brands, who are not saddled with manufacturing assets, become tremendously nimble and efficient.

Quickly following the industry consolidation, new mega-companies are rethinking their manufacturing and logistics operations.  Inevitably, manufacturers are closing plants.  From 2000 to 2006, the industry has seen a trend: brand companies closing their manufacturing assets.  Previously, brand companies partnered with the contracting community as “co-packers,” not trusting the contractor with the full product line.  Now, the most successful brand companies trust the contracting community to produce entire product lines.  The larger product lines are filled regionally and the lower volume product lines are produced at one location nationally and subsequently shipped around North America. 

The U.S. contract community has recently added high-quality capacity to the industry, allowing brand companies to scale-up new products quickly or outsource existing products efficiently.  The new capacity is marked by high-quality water systems meeting USP 29, high-efficiency stainless steel fillers, a range of high-speed labelers, and other secondary applications, clean room capacity HVAC systems, epoxy-coated floors and other bells and whistles. The facilities are fully validated from the computer systems to the laboratories. The industry has also adopted..

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