Alberto Culver (US)


Family-run Alberto Culver managed to hold onto its share of the haircare sector for several years, despite fierce competition between global giants Procter & Gamble, L'Oreal and Unilever. In fact, against the odds, the group continued to thrive as an independent while the big guns slugged it out among themselves. At the same time, the company assembled a strong portfolio of other brands to support its main product. The most significant of these was the upscale Tresemmé haircare range. There was support from skin cleanser St Ives and a collection of ethnic brands including Soft & Beautiful.

The group spun off its international chain of Sally Beauty specialty stores in 2006, heightening speculation that the remaining consumer products group could itself become a takeover target. For a while, Culver looked more likely to be the buyer than the bought. It acquired Noxzema from P&G in 2008, followed by British skincare manufacturer Simple at the end of 2009. That streak couldn't last for long, though, and Alberto-Culver was itself finally snapped up by Unilever in 2010.

Alberto Culver's best-known and longest-established product was probably VO5, a haircare brand encompassing an extensive range of shampoos, conditioners, hair oils, sprays and styling products. Despite heavy hitting launches from its bigger competitors, VO5 retained a sizeable share of the market as a value-priced brand, but was replaced as Alberto Culver's biggest product by premium haircare brand Tresemmé, which accounted for more than a third of group sales by 2010. Although most consumers only became aware of that brand in the 2000s, it was by then more than 60 years old. Acquired by Alberto-Culver in 1959, it had only minimal sales before being repositioned in the early 2000s as a "professional affordable" salon-quality product for sale to ordinary consumers. Performance was strengthened considerably by successful sponsorships of TV shows including Project Runway and The Fashion Show. In 2009 it became the top-selling styling brand in the US, and also developed a growing international footprint, mainly in Europe. In 2005 the group strengthened its portfolio with specialist haircare products marketer Nexxus, previously a niche range which Alberto relaunched as a mass-market super-premium brand above Tresemmé. In the mass-market segment, Rave was another styling product aimed at a a youth audience. 

The St Ives brand covered a broad range of skin care products, including facial cleanser St Ives Apricot Scrub, as well as various lotions and bodywashes. It too diversified into haircare, with a small range of shampoos and conditioners. In 2008, the group acquired rights to mass-market skincare brand Noxzema from Procter & Gamble for the US, Canada and parts of Latin America. P&G retains ownership in Europe. At the end of 2009, it agreed to pay £240m for Simple, the British skincare manufacturer, that had become the UK's top-selling facial skincare brand by volume, and ranked #3 by value. However, it had virtually no presence in other markets, offering strong opportunities for further growth.

The acquisition by Unilever transferred ownership of Tresemme, Nexxus, Noxzema, Simple and other brands. That deal completed in May 2011. However, the purchase of VO5 and Rave was blocked by regulators because of the strength of existing Unilever's haircare portfolio. North American rights to VO5 were sold to private equity company Brynwood Partners, along with global ownership of the Rave brand. The group had also owned a mixed bag of other brands and businesses including US food seasonings Mrs Dash and Molly McButter, sweetener Sugar Twin and household anti-static spray Static Guard. These were sold on by Unilever to specialist supplier B&G Foods for $325m.

Despite the profile of its consumer goods arm, Alberto-Culver's biggest and most profitable business was until 2006 distribution of beauty care products, through two networks: Sally Beauty and Beauty Systems Group. Sally Beauty is the world's largest distributor of beauty care products, now with a chain of around 4,830 stores globally. The bulk of these are in North America, but the company has a growing footprint in Latin America and Europe, selling its own and competitors' branded goods to consumers and professionals. Beauty Systems Group is a network of professional-only stores and sales consultants selling higher value beauty care brands such as Matrix, Redken, Paul Mitchell, Graham Webb and Sebastian to salon professionals. The chain has expanded its coverage considerably with a string of acquisitions including West Coast Beauty Supply in 2003 and CosmoProf in 2004. In January 2006, Alberto Culver's board agreed to sell the entire beauty distribution business to rival salon network Regis Corp for around $2.6bn. Three months later, however, the deal collapsed as a result of financial problems at Regis. Mid-year Alberto Culver made a second attempt to demerge the business, successfully spinning off the division to shareholders and private equity investors as Sally Beauty Holdings Inc. That process was completed in November 2006. Sally Beauty's combined sales for 2014 were $3.8bn. 

Scandinavian household and personal care group Cederroth, with products including Samarin antacids, Seltin salt substitute, Salvequick Bandages and Latacyd skin soaps and shampoos, was sold to private equity investors in 2008. It was acquired by Orkla in 2015.

Alberto Culver's group revenues for the year ending September 2009 were $1.4bn, unchanged on the year before. Around 36% of revenues were generated outside the US in 2009, with the UK as the biggest international market. Walmart is Alberto Culver's single biggest customer, accounting for a quarter of revenues. Net earnings were $119m, up 11% on a comparable basis. The previous year's reported net income of $228m was flattered by an exceptional $110m gain on the sale of Cederroth.

Alberto Culver remained a family affair until its sale. Founders Leonard and Bernice Lavin retired from day-to-day management in 2004, but Leonard Lavin retained the title of chairman emeritus and director. Their daughter Carol Lavin Bernick was executive chairman. Between them the Lavin-Bernick family owned a third of the group's equity and 44% of the votes. At the time of the sale, non-family member Jim Marino was CEO, supported by Gina Boswell (president, global brands), Casey Keller (president, US), Richard Hynes (president, international) and Ralph Nicoletti (CFO). 

Background

Alberto VO5 Conditioning Hairdressing gel was originally developed in Los Angeles in the 1940s. Blame Culver owned a small beauty supply business in the city, and commissioned his in-house chemist to develop a hair treatment for movie actors to protect them against the drying effect of harsh studio lighting. The chemist's name was Alberto, and the product was supposedly created from five vital oils; thus the Alberto VO5 name. 

Alberto VO5 was a modest success with Culver's professional clients, but in 1955 he took the decision to sell the business to entrepreneurial husband and wife team Leonard and Bernice Lavin. Leonard Lavin had previously run a sales agency which had experienced considerable success marketing household products on the fast-developing new medium of television. Convinced that VO5 had enormous potential as a consumer product, he moved the business to Chicago, renamed it Alberto Culver, and disposed of everything except the main hair treatment.

Launched nationally with an aggressive television marketing campaign, sales of VO5 grew rapidly and the business expanded into other products, such as shampoo and hairspray, and later conditioner. The company acquired hair styling brand TRESemmé in 1959. Alberto Culver went public in 1961, and launched the VO5 brand into the UK the same year. In 1969 the Lavins acquired Sally Beauty, then a small chain of franchised stores in and around New Orleans. They discontinued the franchises and began expanding wholly owned outlets across the country. A string of other products followed, including Consort hair spray for men, FDS deodorant spray for women, Kleen Guard furniture polish, the TCB haircare range for African-Americans and Mrs Dash food seasonings.

Keeping TV advertising as its main selling tool, the company changed the nature of that medium in the early 1970s when it began splitting what was then the standard 60-second commercial slot into two separate ads for different products. Although the networks initially complained about the tactics, other advertisers soon followed suit and the 30 second commercial was gradually accepted as the new standard.

In a significant departure from its main operations, Alberto Culver acquired Swedish household care company Cederroth in 1991 and bolted on the toiletries division of local personal care manufacturer Molnlycke four years later. In 1996 the group acquired St Ives skincare products, followed by Pro-Line in 2000.

Last full revision 11th July 2016


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