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CREATING A HAIR CARE BUSINESS THE UPS AND DOWNS
Category: GENERAL

Money flowing into the natural hair industry is a blessing and curse for those who built it up

It was a major discovery — well worth the early morning wake-up call — because in 2003 there were very few hair products for black women with kinky, curly or wavy hair.

“There was nothing like [Curly Pudding] in the early 2000s,” Miko Branch said. “It was really transformative.”

The product line they would go on to develop, Miss Jessie’s, was one of the pioneering brands in the natural hair industry, a once-grass-roots segment of the beauty world that’s now a hotbed for investment.

In the 1990s and early 2000s, these companies catered to and were largely run by a small community of black women embracing their natural hair. But with 71% of black adults in the U.S. wearing their hair naturally at least once in 2016, according to research firm Mintel, natural hair has now hit the mainstream. And with black consumers spending an estimated $2.56 billion on hair care products in 2016, it’s no surprise others are eager to edge into the market.

Investment from beauty industry giants has helped natural hair products move from specialty stores to the shelves of major retailers such as Target, Wal-Mart and CVS — making it easier for customers to get their hands on what were once niche products.

But it’s also forcing independent black-owned companies to compete with corporations that long ignored the natural hair market, resulting in sometimes uncomfortable changes for customers and business owners alike.


For black women, hair is more than a style — it’s something tangled up in history, politics and race.

Discrimination against black hair can be traced to slavery, when slave owners gave preferential treatment to those with “good hair” — a term still used today to describe black hair that more closely resembles European hair textures. To better assimilate and achieve a higher status in society, black people developed techniques to straighten their hair.

It wasn’t until the civil rights movement that black people began to reclaim their natural hair in droves. However, by the 1990s product offerings for those sporting natural hair remained sparse.

“Back then retailers weren’t bringing in natural brands,” said Richelieu Dennis, chief executive of Sundial Brands, best known for its SheaMoisture line. “They were focused on serving only women with relaxed hair.”

Black hair, which can grow out instead of down, can range from loose waves to tightly packed coils. Because of the hairs’ curl pattern, natural hair products must address unique needs, such as inherent dryness, to promote healthy hair.

With few offerings from major beauty brands, those who wanted to care for natural hair took matters into their own hands, creating products for black customers and an avenue for black entrepreneurship.

Liberian-born Dennis partnered with his college roommate and mother to make hair and skin products inspired by family recipes in 1991. A decade after opening her first salon, Jane Carter launched the Jane Carter Solution product line in 1992. Carol’s Daughter was born out of a Brooklyn kitchen in 1993. Curls, founded in Elk Grove, Calif., and Kinky-Curly, of Los Angeles debuted in 2002 and 2003, respectively. The Branch sisters started Miss Jessie’s in 2004.

Generations of being told in school, work, media and even inside the black community that natural hair was unacceptable had lasting effects. But for black women going against the grain in the 1990s and early 2000s, online forums such as NaturallyCurly.com and Nappturality.com helped foster a sense of pride while spreading the word about nascent businesses, said Shelley Davis, founder of Kinky-Curly. Seeing other black women embrace their hair on YouTube, Facebook and Instagram inspired many to take the plunge.

“It’s always been a community — people sharing and complaining and consoling — that has evolved with different technologies,” Davis said.

Bianca Alexa.
Bianca Alexa. (Christina House / For the Times)

As more women went natural, homegrown natural hair operations reaped the benefits. Sales increased and operations expanded. Sundial Brands, which started as a street-vending operation, moved to mass retailers in 2007 and is now worth an estimated $700 million.

“For so long we haven’t had a lot of options, we’ve been sold misinformation and now the tide has changed,” Davis said.

Meanwhile, multinational corporations were left catering to a dying trend: relaxers. According to Mintel, black spending on relaxers fell 30.8% between 2011 and 2016. By 2020, it’s estimated that relaxers will plummet to the smallest segment of the market.

The hair care industry is saturated, said Toya Mitchell, a multicultural analyst at Mintel, with shampoos and conditioners experiencing soft sales. “Companies looking for growth are looking for consumers that are the low hanging fruit,” she said.

Adding natural hair products is an obvious way for big beauty corporations to tap into the more than 24 million black women in the U.S — a market many had previously overlooked.

This has led some multinational beauty brands to build their own natural hair lines. Cantu, developed by AB Brands in 2004, was sold to PDC Brands in 2015. L’Oréal unveiled Au Naturale in 2013. Pantene launched a natural hair line in January developed by a team of black scientists.

Major beauty companies also began investing in and acquiring black-owned natural hair brands.

Carol’s Daughter was sold to L’Oréal in 2014. Namaste Laboratories, known for its Organic Root Stimulator line, was sold to Indian wellness company Dabur for $100 million in 2010. Bain Capital, an investment firm co-founded by onetime presidential candidate Mitt Romney, has a minority stake in Sundial. (Dennis declined to discuss the size of Bain’s stake).

This funding has helped natural hair companies expand. With L’Oréal’s acquisition, Carol’s Daughter reached more than 30,000 stores nationwide. Mitchell estimates that Carol’s Daughter and SheaMoisture are aiming for 45,000 retail outlets.

Despite their increasing influence in the market, major beauty brands acknowledge it will be an uphill battle to win over black customers who feel the industry has neglected their needs.

“We understand that many have the perception that Pantene is not a brand for women with natural hair,” Jodi Allen, vice president of hair care for North America at Procter & Gamble, said in an email.

Such sentiment hasn’t stopped Pantene, Dove and Garnier Fructis from launching “very overt campaigns to black women trying to bring them into the fold,” Mitchell said.

Natural hair has hit the mainstream and companies are eager to cash in. Pictured is a sampling of natural hair products including Cantu, Curls, Miss Jessie's, Au Naturale and SheaMoisture.
Natural hair has hit the mainstream and companies are eager to cash in. Pictured is a sampling of natural hair products including Cantu, Curls, Miss Jessie's, Au Naturale and SheaMoisture. (Jerome Adamstein / Los Angeles Times)

The interest and capital from big beauty has upsides and downsides, said Kashmir Thompson, founder of Delish Condish, a small natural hair product line. “I have mixed feelings because it almost seems kind of culture-vulturish,” she said. But “a part of me feels like it’s about time. I don’t really want to shun it because we should’ve been part of these bigger brands.”

Yet the changing industry has some customers fearing they’re the ones who are being shunned.


The influx of money — and competition — has led some in the natural hair industry to prioritize the most traditional of business goals: growth. With black women making up about 7.5% of the U.S. population, one way to grow sales in the increasingly crowded natural hair sector is to reach new demographics of shoppers.

Some natural hair firms have started targeting a broader audience of multicultural buyers to better compete with corporate giants. But in doing so, they risk alienating their original customer base.

Before its acquisition, Carol’s Daughter signaled a transition with a 2011 ad featuring singer Solange and multiracial models Cassie and Selita Ebanks. “What we’re doing now is moving into a polyethnic space," investor Steve Stoute told Women’s Wear Daily when the campaign was launched.

For some, the ad marked a step away from a movement for black women. "It seems like Carol’s Daughter did what many companies tend to do — feature only lighter-skinned women of color, because they’re considered more palatable to mainstream society," wrote blog Brown Sugar Beauti.

Founder Lisa Price says she knew Carol’s Daughter had the potential to reach a larger demographic than its original largely black and female customer base when she realized the products work for a wide range of hair and skin types.

“We will continue addressing diverse beauty needs and featuring African American women, and all types of women in our advertising — as our Carol’s Daughter family has grown to include real women from around the world,” Price said in an email.

SheaMoisture faced similar backlash for an ad in April. The ad, part of a campaign with dozens of short videos, featured several white women talking about the hair-related struggles they’ve faced — like having red hair. Critics said it minimized the lifetime of discrimination black women face over their hair, affecting their employment prospects, media representations and self-esteem, among other factors.

The blowback was swift and fierce.

“The reason people felt upset is because you feel so close to this brand that you’ve seen grow and you’ve helped build and you’ve spread the word about,” said Patrice Grell Yursik, creator of black beauty website Afrobella. “To see them making decisions that make you feel excluded and that they’re intentionally trying to move on from you as a consumer is hurtful.”

Dennis said the ad did not go through Sundial’s typical process. “We understand that we as a brand have transcended a brand and we are part of our cultural identity and there’s a responsibility that comes with that.”

When asked if they are shifting to a multicultural audience, some brands point to hair type instead of race. “From the beginning, my sister and I were staying focused on texture,” Branch said. “It’s not uncommon for a Jewish woman to have the same afro-texture as a woman with African descent.”

“I’m black,” Davis said. “I made [Kinky-Curly] for my hair type and as time went on, other ethnicities and other demographics have started to use the product which is fine.”

Some customers are denouncing the shifts by brands such as SheaMoisture and Carol’s Daughter — companies that helped kick-start the natural hair movement — and pledging their support to small, independent black-owned companies.

“A lot of these brands ... say they’re listening and in the same breath they try to defend what they do,” said Erin McLaughlin, a 20-year-old from Philadelphia who went natural two years ago.

There’s a reason those with natural hair are concerned, Yursik said. After all, the movement emerged because big beauty companies were ignoring their wants and needs. Who’s to say that won’t happen again?

“I want to see our black brands grow in a way that doesn’t result in alienating us as a consumer base,” she said. “It’s something we’ve seen before.”


Do you have natural hair? We want to hear from you. How do you feel about the natural hair industry? And what do you think about companies shifting toward a more multicultural audience? Tell me your thoughts:

Ethnic Hair and Beauty Market Multi Millions of Dollars
Category: GENERAL

BLACK IMPACT: CONSUMER CATEGORIES WHERE AFRICAN AMERICANS MOVE MARKETS

Black consumers are speaking directly to brands in unprecedented ways and achieving headline-making results. Throughout 2017, popular brands witnessed the power of Black Twitter and the brand impact of socially conscious Black consumers. Through social media, Black consumers have brokered a seat at the table and are demanding that brands and marketers speak to them in ways that resonate culturally and experientially—if these brands want their business. And with African Americans spending $1.2 trillion annually, brands have a lot to lose.

DIVING INTO THE DOLLARS SPENT

Black consumers and consumers of color alike are making considerable contributions to the overall market—in some cases representing more than 50% of the overall spending in key product categories. For example, half of the total spend ($941 million) on dry grains and vegetables in the U.S. in 2017 came from consumers of color. And Black consumers represented $147 million of the total spend in this category, which has recently made advances in product creation to meet the demands of their diverse buyers.

Spending Power of People of Color

Mainstream manufacturers across other industries are also seizing the opportunity to create specific products that appeal to diverse consumers. Not so surprisingly, African Americans have cornered the ethnic hair and beauty market, ringing up $54 million of the $63 million total industry spend in 2017. But marketers should find it interesting that Black consumers aren’t just spending on products created specifically to appeal to them. In fact, in terms of sheer dollars, African Americans spent considerably more money in the general beauty marketplace last year. Black shoppers spent $473 million in total hair care (a $4.2 billion industry) and made other significant investments in personal appearance products, such as grooming aids ($127 million out of $889 million) and skin care preparations ($465 million out of $3 billion).

African Americans make up 14% of the U.S. population but have outsized influence over spending on essential items such as personal soap and bath needs ($573 million), feminine hygiene products ($54 million) and men’s toiletries ($61 million). Nielsen research also shows Black consumers spent $810 million on bottled water (15% of overall spending) and $587 million on refrigerated drinks (17% of overall spending). Luxury, non-essential products such as women’s fragrances ($151 million of a $679 million industry total), watches and timepieces ($60 million of $385 million in overall spending) and even children’s cologne ($4 million out of $27 million) also play well to an audience that’s keen on image and self care.

“Our research shows that Black consumer choices have a ‘cool factor’ that has created a halo effect, influencing not just consumers of color but the mainstream as well,” said Cheryl Grace, Senior Vice President of U.S. Strategic Community Alliances and Consumer Engagement, Nielsen. “These figures show that investment by multinational conglomerates in R&D to develop products and marketing that appeal to diverse consumers is, indeed, paying off handsomely.”

The Power of Black Dollars

Companies should take notice of even the subtle shifts in spending, because black consumer brand loyalty is contingent upon a brand’s perception as authentic, culturally relevant, socially conscious and responsible. In fact, 38% of African Americans between the ages of 18 and 34 and 41% of those aged 35 or older say they expect the brands they buy to support social causes, 4% and 15% more than their total population counterparts, respectively. Moreover, Black consumers’ brand preferences are increasingly becoming mainstream choices, which illustrates that the investment in connecting with Black consumers can often yield sizeable general market returns. For instance, sizable Black spend in health and beauty categories has contributed to a diversification of product offerings that appeal not only to Black consumers, but to the general market as well.

WHAT’S AT STAKE?

Black consumers account for a disproportionate amount of product sales in a number of fast-moving consumer goods categories. Again, with $1.2 trillion in spending power, African-American consumers are an important population for smart brands that want to grow market share and brand preference. More importantly, the data suggests that Black consumer spending already significantly affects the bottom line in many categories and industries, and brands can't afford to lose favor or traction with this segment without potential negative impact.

The enormous buying potential of Black consumers has put a spotlight on many popular brands' ability to navigate the nuances of culturally relevant and socially conscious marketing. African Americans are more likely than non-Hispanic white peers to interact with brands on social media or to use social networks to support companies and brands (44% more likely). As the almost nuclear power of social media collides with an increasingly educated, affluent, tech-savvy black consumer base, there's never been a more critical time for companies to build and sustain deeper, more meaningful connections with black consumers—not only to grow their relationships, but to protect them.

“When it comes to African-American consumer spend, there are millions, sometimes billions of dollars in revenue at stake,” said Andrew McCaskill, Senior Vice President, Global Communications and Multicultural Marketing, Nielsen. “With 43% of the 75 million Millennials in the U.S. identifying as African American, Hispanic or Asian, if a brand doesn’t have a multicultural strategy, it doesn’t have a growth strategy. The business case for multicultural outreach is clear. African-American consumers, and all diverse consumers, want to see themselves authentically represented in marketing, and they want brands to recognize their value to the bottomline.”

METHODOLOGY

Insights in this article were derived from Nielsen Homescan, Total U.S., for the 52 weeks ending Dec. 30, 2017.

 

source http://www.nielsen.com/us/en/insights/news/2018/black-impact-consumer-categories-where-african-americans-move-markets.html

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