Sunday, November 28, 2010

Coty/OPI Deal Could Be Announced Tomorrow

The Wall Street Journal is reporting that the Coty acquisition of OPI could be announced as early as tomorrow, although the article cautions that "negotiations could still fall apart", according to their source. It's an interesting article to read, particularly the part about how nail polish has surged (up over 11% last year) well above other beauty products during the recession. It's nice to hear that others are enjoying nail polish as much as we always have! Check out the paragraph I highlighted in red--I wouldn't have guessed that OPI had that small of the market share, nor that Coty/Sally Hansen/NYC Color Line had such a large share of the market.

Coty Inc., one of the world's largest fragrance companies, is close to an agreement to acquire nail-polish maker OPI Products Inc. for about $1 billion, people familiar with the matter said.
Talks were continuing Sunday, and a deal could be announced as early as Monday, these people said. But the negotiations could still fall apart, they added.

Closely held Coty has been on the acquisition trail recently, announcing last week that it had agreed to purchase beauty company Philosophy from private-equity firm Carlyle Group. Terms of the purchase weren't disclosed, but people familiar with the matter valued the deal at around $1 billion.

Two weeks ago, Coty, which has annual sales of $3.6 billion, said it was buying Dr. Scheller Cosmetics AG of Germany.

Though the beauty industry suffered sluggish sales during the recession, demand for nail polish has surged in recent years as women embraced it as an inexpensive way to accessorize their apparel. In 2009, U.S. sales of nail polish rose 11% from the previous year to $462.9 million, according to market-research firm Euromonitor International Inc.

OPI was founded in 1981 by George Schaeffer, who is president and chief executive. The company began as a dental-supply business. Based in North Hollywood, Calif., OPI now sells nail polish and other nail-related products in salons, using fanciful names for its colors like "Overexposed in South Beach" and "I'm Not Really a Waitress." Its products also are sold in retail stores.

OPI, which is considered a premium brand, held about 6% of the U.S. nail-polish market last year, according to Euromonitor. Coty, which owns the market-leading Sally Hansen brand and the NYC New York Color line, held 48%.

New York-based Coty makes fragrances for brands including Calvin Klein, Vera Wang and Stetson, and calls itself the world's largest fragrance company.

*Source

7 comments:

  1. very interesting and I agree that it was a shock to see how little OPI had of the market.

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  2. This makes sense considering that L'Oreal acquired Essie earlier this year.

    Question is who is considering Zoya or Orly?!

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  3. Well of course it was 48%, they're cheaper! People will always pick cheaper! You don't have to be a brainiac to figure that out. Especially people that aren't in love or obsessed with polish! They're going to buy a color they like (Chances are that you can find a cheaper dupe of it). The question is, since nail polish sales are up, why would OPI want to be bought ? It'll mean less glitz and glam and more for the masses. I don't know..

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  4. So who is getting all the market shares? Personally I'd rather buy one OPI, China Glaze, or similar quality polish than two cheaper polishes. Quality over quantity.

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  5. I just saw on Facebook that they have been acquired. OPI posted it. I hope none of the quality suffers.

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  6. I guess if they keep their focus on Salon customers, they will follow the sage advice of the founders of OPI, but I wonder if they will do what L'oreal did with Essie: re-release older, more desirable colors?
    Of course they may spin Nicole off into a much more commonly available brand to compete w/Sally Hansen and WetnWild, too.

    Many possibilities!!!

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  7. Polish Pauper~yes, I thought with as many salons out there that carry OPI, they'd have a larger share. Not to mention how many of us buy them from various eTailers.

    applepark~agreed, from a business standpoint it makes perfect sense. Coty is becoming a giant. Let's hope others don't get acquired, but anything's possible.

    my leetle nails~people as a whole definitely will go for the less expensive, no doubt. I guess the numbers tell the truth, but I honestly would have thought OPI would have a higher percentage than they did, given their salon sector of the market share. As to why OPI would want to sell out--money talks is the only answer I can come up with!

    Anonymous~I would love to see a complete breakdown on how much of the market share each company has, but I couldn't find anything by doing a quick search. Evidently, drug stores are huge markets, but I guess I kind of knew that already :)

    Lucy~I have no clue as to how they'll change their organization, staff, testing, development, etc. Time will tell.

    Paillette~I haven't really noticed any change in Essie as yet, but my guess is that all of the collections we've seen since the buy-out earlier this year, were already basically ready to market. Makes me wonder if/when we'll see a difference with them. As far as OPI/Coty, I find it hard to believe that they still will want to focus primarily on the salon customers with their new acquisition, especially given the reported low market share that they held. All makes for interesting reading and even more interesting speculation.

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