As part of the $12 billion deal earlier this year, Coty acquired P&G’s India unit, which includes the Wella Professional, System Professional, Sebastian Professional and Nioxin brands.
At the time, the Wella and Clairol brands were also gathering interest from German manufacturer Henkel, as it is a market that already has a strong presence.
However, P&G was looking to also divest its colour cosmetics and fragrance business in one transaction and this may well have put Henkel off as it has no presence in the latter markets.
Months after acquiring the portfolio, some industry analysts fear that Coty may have taken on too much.
“The worry for Coty is that it has taken on too much, and there are doubts over whether it can sustain the initial growth that it will inevitable see at the start. For Coty to take on colour cosmetics and fragrance makes sense, hair not so much,” says Euromonitor analyst, Oru Mohiuddin.
Hindustan Unilever is also rumored to be eyeing up Keralan hair care brand Indulekha, and local players Godrej Consumer Products, Bajaj and Emami.
According to livemint.com, if the deal goes ahead, Unilever will buy all products under the Indulekha brand, which could gel with its current Ayush services business, which is relatively small compared to the size of its other big brands.
Hair care success in India
The Indian professional hair care market is valued at an estimated Rs 700 to 800 crore and is growing at a rate of 18 to 20 per cent annually.
The segment, which comprises of hair oil, shampoos, hair colorants, conditioners, and styling agents, has shown strong growth over the past few years, and is set to continue to shine.
However, analysts reckon that companies looking to succeed in the sector must already have significant market presence.
As with many other cosmetics markets across the globe, conscious consumers are concerned about how they look is one of the driving trends in the market.
“Various factors, such as a shift in consumer behavior, growing purchasing power, gradually changing lifestyle, and product awareness continue to fuel growth in this market,” says market researcher, RNCOS.