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NEW YORK — Retailers greeted last week’s announcement that Markwins International Corporation inked a deal to purchase brands from AM Cosmetics with enthusiasm.
This story first appeared in the March 14, 2003 issue of WWD. Subscribe Today.
Last Thursday, Markwins completed the transaction for an undisclosed price that gave it instant access to the leading budget brand in mass cosmetics, Wet ‘n’ Wild.
Markwins, based in City of Industry, Calif., is a manufacturer, marketer and distributor of cosmetics and beauty products under names such as ACT, The Color Workshop and The Color Institute. Along with Wet ‘n’ Wild, AM owned Black Radiance, Tropez, Jonel and Artmatic.
Sources at leading mass-market chains said the deal injects new life into the beleaguered AM brands, while giving Markwins an avenue for further growth.
“It is great to see AM brands get the support they need,” said Valerie Cheyney, buyer for Happy Harry’s, who added that Markwins has been a great supplier. Another buyer at a major chain said that without a company the caliber of Markwins stepping up to own AM, she was ready to eliminate or cut Wet ‘n’ Wild from her planograms. Markwins programs of train cases and color kits have been especially popular at holiday seasons and one of the few growth areas for many chains.
Long the dominate budget brand, Wet ‘n’ Wild’s popularity started to decrease after AM Cosmetics encountered growing pains created by buying up too many niche brands. Not only did AM own Wet ‘n’ Wild, it also owned the main budget competitor — Artmatic.
AM had to bring its portfolio of brands under one corporate umbrella. The physical stress of pulling disparate inventory and marketing systems under one company damaged AM’s operations.
Although Wet ‘n’ Wild maintained its distribution ,which exceeds 30,000 doors, its grasp on the market was threatened with new brands such as Del Laboratories’ NYC New York Color. Wet ‘n’ Wild, however, still squeaks into top-10 selling lists. According to Information Resources Inc., Wet ‘n’ Wild held the 10th fastest-selling position in dollars in food stores with sales of almost $3 million of the 52-week period ended January 27, 2003 — an impressive feat considering it is one-third the price of most nail colors. Still, Wet ‘n’ Wild has lost valuable market share. According to IRI, its total sales fell 6.3 percent to 69 million, excluding Wal-Mart.
Markwins is already working to burnish AM’s image. “Although most AM programs for the second half are already in place, we were able to create some items for the holidays,” said Shawn Haynes, vice president of marketing and sales for Markwins. “For example, we have some of our typical quality Markwins sets with AM-branded items.” One item he described is a transparent paint can full of nail care items under the Wet ‘n’ Wild logo.
Haynes is based at AM’s former headquarters in North Arlington, N.J., where he hopes to oversee a “seamless” transition. Markwins tapped Haynes, the founder of the trendy Girl cosmetics, to help the company launch its own line of open-stock cosmetics. “As we were working on that, this deal came along and was perfect for me,” said Haynes who sold Girl to a private company prior to joining Markwins.
Markwins hopes to avoid the obstacles AM encountered in owning the top two budget brands, as well as two major players in ethnic cosmetics, Black Radiance and Tropez.
Plans call to continue to distinguish Wet ‘n’ Wild and Artmatic by distribution with Artmatic being expanded in international doors and value-oriented stores. Black Radiance will continue to be marketed to African-American women, with Tropez appealing to women of Hispanic or Asian descent.
Not included in the deal is Lord & Berry, a salon-inspired line acquired from Grant Berry. Lord & Berry is owned by a third-party investor who maintains the distribution rights.
Although Markwins has a stellar reputation for its kits and promotions, acquiring AM is crucial for its future growth since the company needed an avenue to get onto the peg wall. Under the ACT label, a color cosmetics peg collection introduced last year has been slow to take off, according to company officials. With AM, Markwins has instant access to thousands of retail walls.