Appeared In
Special Issue
WWDStyle issue 01/21/2011

Procter & Gamble is ready to unleash Wella Professionals hair care and styling products onto North American consumers, with the thinking that launching a complete retail assortment is the first step in becoming number one in the market. Establishing flagship salons, nurturing relationships with stylists and rolling out a consumer ad campaign that could potentially include TV spots — an anomaly in the pro business — is all part of the plan to create the “House of Wella.”

This story first appeared in the January 21, 2011 issue of WWD. Subscribe Today.

But it’s not going to be easy.

Seven years after Procter & Gamble acquired the German hair care company for nearly $7 billion, the Wella brand still has a way to go in building relationships with U.S. consumers, since here, unlike in other markets, Wella’s core business is professional hair color.

“The first couple of years after the acquisition, not a whole lot happened [here], because six months later the company acquired Gillette, and the choice was made to prioritize the integration of Gillette. And rightly so, because of the size of the business,” said Robert Jongstra, president of P&G Global Salon Professional, referring to the $57 billion buy. To grow Wella globally, it also had to transform from a country-focused business model to a global one.

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But, despite the lack of a Wella retail line, Wella, one of P&G’s 23 brands that do at least $1 billion each, did contribute some growth here. There was the introduction of Magma, the first bleach-and-color-in-one, in 2003, as well as restages on Koleston Perfect in 2008 and ColorTouch in 2009. Last year, Blondor Blonde was launched. P&G’s Salon Professional business has been profitable in North America with help from other brands, including fashion-forward, tech-advanced Sebastian, the first Wella business to benefit from the mother company’s innovation, which resulted in a brand restage in 2009.

“Our North American business is a model for us in terms of results and how they are delivered. For a market that has been in decline 3 to 5 percentage points [annually] over the past two to three years, [our] business has been very strong and has grown 7 to 8 points over the past three years. Those results are a true turnaround — they had been declining. And these results are sustainable.”

In professional color, industry sources said Wella has an 18.8 percent market share (not including Clairol) in North America. But when hair care is factored in, that number drops to 7 percent. Wella’s total share on a global basis is about 17 percent, the company said. Globally, salon-industry growth has been fairly small, with 2 percent for salon professional and 3 to 4 percent for retail.

Founded in 1880 by a German hairdresser, one of Wella’s most significant milestones is the invention of cream hair color in the Fifties. Hair care has been a strong business for the brand outside of the U.S., and now it looks to play a major role in getting Wella to a leading position.

The new hair care line, which enters salons in May, consists of items within four families: Brilliance (for color-treated hair), Enrich (for dry hair), Age Restore (for mature hair) and Balance (for the scalp). Both Brilliance and Enrich have items formulated for fine-normal hair and thick hair, as well as leave-in treatments. P&G added the Brilliance line was formulated to work in harmony with Wella’s different Color to protect hair from fading and to enhance color. Styling items were formulated for the wet, dry and finishing stages of styling, and have varying hold levels. There are about 46 items in total, with the heroes in hair care being items in the Brilliance line and in styling, with the Pearl Styler Styling Gel, Jongstra said. Items will retail from $12 to $17.

Armed with products, Reuben Carranza, chief executive officer of P&G North America Salon Professional, said Wella’s global growth is on track for success.

“Now, it’s about going to market as a portfolio of brands. With the fashion-forward, there is Sebastian; Wella will play the broadest role for the woman who is the indulger, and for the thinning category, there is Nioxin,” he said, adding that Wella’s training center remains at 30 Rockefeller Center in New York, along with its research and development labs.

Jongstra is realistic about the challenges that face Wella in becoming number one, especially in terms of beating out the L’Oréal Professional Products Division.

“We are number two [behind L’Oréal] and will not be [number one] tomorrow. But we are the only two, really, on a global basis. I am creating a portfolio where we can win through both divestitures and acquisitions. We are also restructuring the cost structure so we can spend more to drive the top line,” Jongstra said, explaining that, by leveraging scale in manufacturing processes and innovation, more money will be available to invest in the hairdresser and consumer.

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