Indian consumer goods giant Godrej Consumer Products, whose offering includes soap, hair colourants and toiletries, has tightened its grip on Chilean hair colour and cosmetics company Cosmetica Nacional, snapping up 100% control with a new 40% additional stake.
Godrej did not respond to a Cosmetics Business’ request for comment, however India-based Deepanshu Mandlekar, a retail analyst from Planet Retail, confirmed the Godrej Chilean move was significant. With India’s hair care market increasingly aggressive thanks to penetration by local players not to mention big international blue chip names such as L’Oréal, Schwarzkopf and Wella, Mandlekar said “it is a wise move by Godrej to strengthen its presence in emerging economies”. He added: “Godrej’s FMCG business has witnessed a threefold increase in international revenues from 15% of total sales in FY2009-10 to 47% in FY2014-15.”
Godrej’s international expansion is driven by a ‘three-by-three’ strategy added Mandlekar; in other words, presence in three business categories, personal care, hair care and home care, and in three markets, Asia, Africa and Latin America. Earlier this year Godrej picked up a 100% stake in South African hair extensions operator Frika Hair. Godrej’s forward-looking strategy has been made clear – to drive more growth in Latin America’s hair colour market and consolidate its business in Latin America, which is itself a result of multiple acquisitions. Mandlekar added: “In the past, Godrej has been aggressively acquiring companies in these regions and increasing its presence. The latest acquisition of remaining 40% stake in Chile’s Cosmetica Nacional is another move to strengthen its presence in the market.”
Euromonitor Analyst Oru Mohiuddin told Cosmetics Business that the primary plus for Godrej from the deal comes from the fact that both Godrej and Cosmetica Nacional share hair colourant and market expertise. “Godrej is building up its portfolio for ethnic hair care, including consumers in Africa and other Latin American countries, namely Argentina. Hair care for multicultural consumers is a lucrative field, but a segment which is still offers white space.” She added that the move enables Godrej to reinforce its exposure to one of the most prospective markets in Latin America. “Chile is expected to record $75m in absolute growth in the next five years,” she said. “Cosmetica Nacional also has presence in colour cosmetics, thus enabling Godrej to move beyond its existing categories in beauty, most of which is hair care.”
While Godrej will be able to expand its exposure to Chile, brands from Cosmetica Nacional are likely to find a market in India she speculated. “Both India and Chile are important markets in hair care and combining two key hair care players in these two markets could be expected to a lead to a relatively strong force in the category.”
