Natural and organic consolidation One of the largest acquisitions of the year occurred in the natural and organic segment of the cosmetics industry with the takeover of Burt's Bees.
Bleach manufacturer Clorox paid $925m for the natural personal care company, which is currently on a double-digit growth path and expects to reach sales of $170m in 2007.
Large companies are picking off small natural and organic personal care firms and are willing to pay high prices in order to capitalize on the growth of the niche market and ultimately boost their top-line growth.
The takeover of Burt's Bees follows two major acquisitions of natural personal care players last year, namely L'Oreal's acquisition of Body Shop and Colgate-Palmolive buy-out of Tom's of Maine.
Organic Monitor director Amarjit Sahota said the current level of investment activity in the natural and organic cosmetics market is likely to rise, resulting in a two-tier market.
Sahota said a small number of players are likely to experience high growth and expand their distribution networks thanks to capital injections, often as a result of M&A activity.
Meanwhile, a second tier is likely to emerge, comprising of small companies growing at slower rates and selling through small traditional retail channels that are more closely associated with natural and organic products.
Furthermore, the market researcher expressed concern that multinationals with strong established retail channels are marginalizing smaller brands and selling diluted natural and organic products.
The big get bigger As for the largest companies in the cosmetics industry such as L'Oreal and Beiersdorf, acquisitions and mergers in growing markets continue to feature highly in their growth plans.
While L'Oreal did not complete any acquisitions on the scale of Sanolflore and the Body Shop, the world's largest cosmetics company continued to dig into the war chest during 2007.
In the past six months, the company has bought Maly's West, the third largest beauty salon distributor in the US, in a bid to increase its foothold in the US salon hair care market after adding the professional hair care supplier Beauty Alliance to its portfolio last April.
In addition, L'Oreal acquired the hair care specialist Canan in an attempt to tap into the growing cosmetics market in Turkey.
Beiersdorf is also targeting hair care in the emerging markets after paying €269.45m in October for an 85 per cent stake in China-based C-Bons Hair Care.
The investment in C-Bons Hair Care will allow Beiersdorf to complement its position in the Chinese skin care market with a strong presence in the country's hair care market.
Last month, the global personal care giant also announced it will completely take over its Swiss distribution business by buying up the 50 per cent outstanding shares in the business.
Luxury rumors At the luxury end of the market, press reports have been focusing in recent months on rumors concerning the financial future of two of the largest family owned businesses in the cosmetics industry.
The France-based luxury cosmetics company Clarins has been the subject of feverous speculation since Jacques Courtin-Clarins died in March this year.
Rumors have linked Clarins to potential take-over bids by L'Oreal, PPR, Procter & Gamble, as well as luxury goods group LVMH although the company vowed to stay independent at the end of November.
Clarins CEO Christain Courtin-Clarins said in an interview with French newspaper Le Figaro : "All the competition is interested in Clarins, they have made offers, but freedom does not have a price.
We will remain our own governors."
Meanwhile, Procter & Gamble executive Fabrizio Freda has become Estee Lauder's chief operating officer with a view to taking the top job within the next two years.
Undoubtedly the appointment will also fuel further speculation over a potential take-over by P&G, a move which would allow the troubled Estee Lauder to benefit from a much needed cash injection.