L'Oreal expands its cosmeceutical operations

French cosmetics giant L'Oréal has signed an agreement to acquire
SkinCeuticals, a cosmeceuticals skin care company based in the US,
a move that will see the business expanded into the international
market, reports Simon Pitman.

Founded in 1994 and headquartered in Dallas, Texas, SkinCeuticals, is a privately held company and is one of the largest and fastest growing brands in the professional premium skin care market in North America. The company has developed a specialised distribution network, that sells to dermatologists, plastic surgeons, and high end spas throughout the region.

"The acquisition of SkinCeuticals allows L'Oréal to strengthen its position in high-performance professional skin care," said Lindsay Owen-Jones, chairman and CEO of L'Oréal. "This market, in which SkinCeuticals is a leading player, is a particularly promising one with high international potential."

Currently the company is focused on the North American markets, but Owen-Jones' comments suggest that L'Oreal has bigger plans for the SkinCeuticals' product lines, which are likely to primarily include the European market.

But further plans are also in place to expand the brand in the North American market.

"SkinCeuticals has already acquired an excellent reputation in the U. dermatological world," commented Jean-Paul Agon, president and CEO of L'Oréal USA. "This acquisition will also allow L'Oréal to enter the strong and growing market of high end spas in the US."

In 2004 SkinCeuticals amounted to $35 million for a range of cosmetic and personal care products that are fortified with vitamins and minerals. The company carries a line of natural-based products aimed at restoring skin health as well as preventing future damage.

The company's range includes moisturisers, skin scrubs, soaps and sunscreens for both the body and face.SkinCeuticals will be part of the Active Cosmetics Division of L'Oréal, which has recently experienced strong growth. This acquisition aims to enhances a portfolio of brands of American origin, such as Ralph Lauren, Redken, Maybelline, SoftSheen-Carson, Matrix and Kiehl's.

L'Oreal said that the transaction will become final upon the customary closing conditions, including antitrust clearance.

Euromonitor estimated growth last year at around 20-30 per cent albeit from a small base. The sector is being helped by the demand for products with specific benefits as well as the strong trend in anti-ageing.

In France cosmeceuticals were estimated to be worth €300 million in 2002 by cosmetic trade show Cosmeeting. Germany's market was worth €216 million but both fall far short of the €710 million in the US and €1.2 billion in Japan, which suggests there is plenty of room for further expansion in the European market.