Nextera acquires Ellin LaVar hair care brand
Textures hair care product line and brand name from LaVar Holdings,
allowing it to tap into a fast developing niche product category.
The deal, which was carried out through Nextera's wholly-owned subsidiary, Woodridge Labs, was closed on May 23, for $200,000 and means that the company has the right to develop and launch new products under the Ellin LaVar Textures name.
It also means that Woodridge will pay Lavar a royalty based upon future sales of products that already exist in the Ellin LaVar Textures portfolio. Partial 2005 sales for the brand added up to approximately $0.4m.
Although the deal is only small by industry standards, it highlights a key trend within the mature hair care segment - its microsegmentation.
Currently growth opportunities are limited for regular hair care products. However, where manufacturers have managed to tap into growth opportunities is in highly functional, niche products.
This has led to a barrage of products being launched on the market, tackling specific hair issues. Products for hair colors, hair types and textures, treated hair and UV hair protection have started to clamber for retail shelf space and have been well received by consumers.
Euromonitor's Claire Briney has referred to this phenomenom as the 'microsegmentation' of the industry and believes it has become a key force to bring renewed growth to a mature market that once showed limited prospects of development.
In 2004 the North American daily hair care sector was valued at $6.7bn and had annual growth of 4 per cent over the past five years, driven mainly by the development of niche brands.
The Ellin LaVar product range taps into exactly this kind of market. Introduced in March 2005, the products are sold on the internet and through the retailer Ulta. It is aimed at individuals who have course, frizzy or extra-dry and unmanageable hair.
Falling in line with products such as Frizz-ease, the range taps in on the trend for smooth, healthy-looking hair. It also benefits from appealing to a broad spectrum of hair types, including Afro-Caribbean, Hispanic, or Caucasian.
In its marketing materials the company simply refers to the product as being developed for women and children with textured hair.
Joe Millin, president of Nextera Enterprises and Woodridge Labs said of the transaction, "We believe that it presents an excellent opportunity for the company to expand into the hair care segment of the personal care market."He added that the company would be leveraging its existing customer base in an effort to further broaden the distribution of the Ellin LaVar Texture products.
Nextera Enterprises acquired niche cosmetics producer Woodridge Labs in March of this year for $23.5m in cash, as part of the company's plans to expand its presence into key areas of the fragmented personal care market.
