Can Sassoon afford Henkel's high-end hairdressing dream?

P&G's "abandoned" Sassoon happens to be an important "fulcrum" for Henkel's strategic development. On May 6, Henkel announced the completion of the acquisition of Sassoon's Greater China business. "Expanding the territory of the hairdressing field" and "filling the gap in the high-end field" are Henkel's comments on the acquisition of Sassoon. Just like when it became P&G's high-end shampoo and hair care weight, Henkel hopes that the addition of Sassoon will make its high-end hairdressing layout more perfect, but now that the market environment and consumer demand have changed, for Henkel, how much effect Sassoon's addition can bring needs to be a question mark.

On May 6, Henkel China announced on its website that it had completed the acquisition of Sassoon's Greater China business. "This acquisition is in line with Henkel's strategic focus to expand the company's footprint in the hairdressing sector beyond the existing brands. The addition of Sassoon will complement Henkel's consumer brand's portfolio in the home market and fill a gap in the premium hair care segment. Henkel China said.

It is understood that after the completion of Henkel's acquisition, a lineup of hair care brands based on Schwarzkopf, Shiseido Professional Hairdressing, Sassoon and other brands will be formed in the Greater China hair care market.

"The acquisition of Sassoon marks a major strategic expansion of the Henkel Consumer brand in the hairdressing industry and expands our existing brands and products. "We are excited to offer a greater diversity of hair products and experiences to consumers in Greater China and further strengthen our leading position in the beauty industry." ”

In the past two years, Henkel has been accelerating the layout of the hairdressing business, especially in the Asia-Pacific market, which is dominated by the Chinese market.

In February 2022, Henkel announced the acquisition of the Shiseido Group's professional hairdressing business in the Asia-Pacific region. The acquisition includes core brands such as Sublimic and Primience, which are owned by licensed brands Shiseido Professional.

In fact, as early as 2017, Henkel acquired Shiseido's North American professional hairdressing company Zotos for 485 million US dollars (about 3.225 billion yuan). "Further strengthening the professional hairdressing business and expanding the brand lineup" has always been the main reason for Henkel's "buy, buy, buy".

According to Jiang Han, a senior researcher at the Pangu Think Tank Research Institute, the acquisition of Sassoon has many benefits for Henkel. "As a brand with a long history and wide recognition, Sassoon will further strengthen Henkel's position in the Chinese market, bring more market share and brand influence, and enhance Henkel's competitiveness in the hairdressing market. At the same time, Sassoon complements Henkel's existing brands and products, thus helping Henkel to consolidate its authority in the high-end hairdressing segment. Jiang Han said.

When it comes to Henkel, the first thing that comes to mind for most consumers is Schwarzkopf hair dye. Henkel's Schwarzkopf hair dyes have been successful in the Chinese market. According to data from Oteo International Consulting, in July 2023 MAT (August 2022-July 2023), Schwarzkopf ranked first in the retail sales of beauty salon and styling brands on the whole network with retail sales of 868 million yuan and sales of 14.43 million pieces.

Founded in 1876, Henkel currently has three main businesses worldwide: Adhesive Technology, Cosmetics/Beauty Products, Laundry and Home Care, of which Cosmetics/Beauty Products account for 19.28%. In 2022, the Henkel Group merged its Beauty Care, Laundry and Home Care businesses to form the Consumer Brands business unit, which also included the Hair business. In addition to Schwarzkopff, Henkel's hair business includes a number of care, styling, coloring and perm brands such as Polyflor, Ace and Authentic Beauty Concept.

Regarding the acquisition-related issues, a reporter from Beijing Business Daily called Henkel China for an interview, but the phone was not answered as of press time.

Driving growth was an important reason for the acquisition of Sassoon by the Henkel Group. In the acquisition announcement, Henkel China did not shy away from mentioning: "Enhancing the hairdressing business and accelerating the growth of performance." ”

According to the financial report data, in 2023, Henkel Group's sales will decline by 3.9% to 21.514 billion euros, of which the sales of the consumer brands business unit will be 10.565 billion euros, a year-on-year decrease of 3.3%. In 2022, Henkel's sales amounted to 22.397 billion euros, up 11.6 percent year-on-year

In a sense, Sassoon may be carrying the hope of driving the growth of the Henkel Group.

Sassoon was born in 1954, was taken over by Procter & Gamble in 1985, and entered the Chinese market in 1997, focusing on first- and second-tier cities with high-end positioning. Under the operation of Procter & Gamble, around 2010, cutting saxon hair and using sassoon shampoo became the standard for many fashionable women. Procter & Gamble has become the hottest presence in China's cleaning and care market with the layout of low-end Head & Shoulders, Rejoice, and high-end Sassoon. Nielsen data shows that in the domestic shampoo market in 2014, Procter & Gamble's market share was 50.4%, firmly occupying the top spot in the shampoo market.

Time has passed, and now it may be a bit "unworthy of the name" to say that the high-end of the Sha Announcer Bureau. Judging from the current selling price of Sassoon, the price of a single product is basically below 200 yuan. In the eyes of many "post-95" and "post-00" consumers, Sassoon has become a mass brand.

In fact, the high-end care market has long changed. According to the "2022 Personal Washing and Care Trend Report" released by JD.com, the domestic shampoo and hair care industry has shown two major development trends: high-end and functional, among which the sales of high-end shampoo and hair care products have increased by more than 90% year-on-year.

Among them, L'Oreal's high-end brands such as Kérastase and Fresh Deya have become new favorites. In the two online cleaning and care lists of Sunglasses Insight in 2022 and 2023, Kérastase won a market share of 5.5% and 6.3% respectively, ranking first. In 2023, the high-end positioning of Fresh Deya will reach a cooperation with Tangduo on the business in China to accelerate the layout of the Chinese market. The unit price of products such as Kérastase and Fresh Deya is basically between 300 and 500 yuan, and the price of a few products is higher. Sassoon's positioning no longer seems to be satisfied with the current high-end positioning.

When classified as a mass cleaning brand, Sassoon's influence and sales are not as good as "rivals". According to public data, Sassoon is far inferior to sister brands such as Head & Shoulders and Pantene. According to Euro data, in the first half of 2023, in the online market, Sassoon's market share will be 2.2%, and although the sales volume will increase by 5.28% year-on-year, the sales volume will decrease by 8.7% year-on-year, while the market shares of Pantene and Head & Shoulders are higher than Sassoon, 4.83% and 4.45% respectively.

Over time, Sassoon has gradually become relatively affordable, which puts it at a disadvantage in competition with high-end hair and wash brands. If Henkel continues to position itself at the premium end after the acquisition, it needs to enhance Sassoon's competitiveness in the high-end hairdressing segment through repositioning, product innovation and marketing. Jiang Han said.

However, in the view of Wu Daiqi, CEO of Shenzhen Siqisheng Company, Henkel Group's acquisition of Sassoon is not that Sassoon can make up for the high-end hairdressing product line. On the contrary, compared to the Schwarzkopf price range, Sassoon is a mid-range brand, which complements the mass market area of the Henkel Group. On the other hand, Sassoon was previously a brand of Procter & Gamble, and after the merger, its original customer resources can be transformed into the resources of Henkel Group, which has increased its own channel resources for Henkel Group.

Beijing Business Daily reporter | Guo Xiujuan Zhang Junhua

Edited by Topol