Beauty Firms Tap Black Startups -- WSJ

By Aisha Al-Muslim 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (March 12, 2019).

For years, Procter & Gamble Co. has been adding more blades to its Gillette razors. But in December P&G bought a startup that sells a single-blade razor.

The reason? The small firm's shaving products are designed for men with coarse or curly hair, like many people of color. It is a market that P&G and other consumer-products conglomerates are pursuing by acquiring black-owned brands, many of which have loyal followings for their niche products.

Walker & Co. Brands, the startup P&G acquired, was founded by 34-year-old entrepreneur Tristan Walker to make its Bevel shaving products in 2013. The company also has hair-care products for women of color with curly or textured hair.

"I started the business...to serve a community that I felt deserved to be spoken to authentically and deserved products that worked," Mr. Walker said. He will continue to lead the business, which will operate out of Atlanta as a subsidiary of P&G.

African-American shoppers accounted for $507 million of the $4.5 billion spent on hair care in the U.S. last year, according to Nielsen research. Black consumers also accounted for $489 million of the $3.6 billion spent on skin-care products, Nielsen found. The spending is largely in line with demographics, as blacks represent 14% of the U.S. population, according to Nielsen.

"Insurgent brands have very close-knit consumers," said Monisha De La Rocha, a Bain & Co. partner who focuses on private equity, retail and consumer products. "A lot of brands have founder-led storytelling that is the secret sauce."

Several black-owned consumer brands were created in the 1990s to market to black women at the same time many women stopped chemically relaxing, or straightening, their hair and started to wear their hair naturally, but had a hard time finding styling creams and deep-conditioning treatments. While corporate buyers can expand a brand's distribution, they also can turn away customers looking to support a minority-owned business.

"I would hate for some company to take over and not care about the customer like we do," said Wendi Levy, who co-founded Mixed Chicks, a hair-care company launched in 2004. She said she has been approached about selling the Canoga Park, Calif.-based firm but would feel uneasy about "selling to the wrong person," which is why she would want a role in the new company.

To address such concerns, P&G and other conglomerates have largely kept founders in place. "We realized the importance with this consumer that the connection comes first," said Lela Coffey, P&G's director of multicultural brand building. "They want to understand that these are products that are made for them by people who truly understand their needs."

Unilever PLC left a co-founder in charge of Sundial Brands -- maker of the SheaMoisture and Nubian Heritage beauty products, aimed predominantly at African-Americans -- when it acquired the company in 2017. Richelieu Dennis, who started the business in 1992, serves as chief executive of the stand-alone unit.

"We structured a new kind of deal in which our purpose -- to provide opportunities for economic sustainability and reinvestment in our communities -- was put at the core of the agreement," Mr. Dennis said. The companies created a $100 million fund to back women-of-color entrepreneurs and promised to expand Sundial's supply chain in Africa.

Months before it was bought by Unilever, Sundial faced social-media backlash over ads in 2017 that showed SheaMoisture hair-care products being used by mostly white women. The company, then partly owned by private-equity firm Bain Capital, had been trying to be more inclusive in an effort to expand its business.

"We are happy for the company that wants to go mainstream and wants to grow, but we feel you can't besmirch us as your original customer base," said branding expert Karen Taylor Bass, who began to wear her hair naturally in 1989.

Mr. Dennis said he is grateful his customers have "not allowed one moment to redefine who we are and who they know us to be -- and neither will we."

Tasha Bramwell, a 33-year-old accountant, said she largely avoids SheaMoisture products after finding out that the brand was owned by Unilever. "I love their products, but part of the reason why I loved it is because it was a black-owned business," said Ms. Bramwell, who lives in Brockton, Mass.

Cosmetics giant L'Oréal SA's 2014 purchase of Carol's Daughter, a brand of natural hair and skin products, raised similar concerns from some customers. Executives at L'Oréal said founder Lisa Price is still involved in key decisions of the brand, which expanded from 2,000 locations to more than 30,000 in two years.

"It's important for consumers to understand this is not a notion of selling out," said Erica Culpepper, general manager of L'Oréal's multicultural beauty division. "It's about having additional resources to help grow and expand the brand."

Some shoppers said as long as the product quality doesn't change, they aren't concerned when a brand changes ownership.

"It used to matter that my hair products were black-owned," said social worker Thea Flowers, 37, of the Bronx, N.Y., who uses SheaMoisture and Carol's Daughter. "So many of them start off black-owned and then get sold. It doesn't stop me from using their product. I use what works for my hair."

Write to Aisha Al-Muslim at [e-mail]

(END) Dow Jones Newswires

March 12, 2019 02:47 ET (06:47 GMT)

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