SPREE CONTINTUES: AM BUYS LORD & BERRY
Byline: Faye Brookman
NEW YORK — Just two weeks after Estee Lauder Cos. rocked the industry with the acquisition of Sassaby and its Jane Cosmetics line, another niche player in the mass market makeup business has been snapped up.
AM Cosmetics, based here, has added another name to its growing portfolio with the purchase of Lord & Berry Ltd. of White Plains, N.Y., in a cash and stock transaction. Terms were not disclosed.
The combined company will have annual revenues of about $175 million. Industry observers estimate Lord & Berry will have retail sales of about $35 million this year, Lord & Berry founder Grant Lloyd Berry will continue as president and will also become executive vice president of marketing development for AM.
The deal provides an opportunity “to take the Lord & Berry enterprise to the next level from a retail distribution and product-development perspective,” said Berry in a statement.
J. Max Lewis, AM’s executive vice president and chief operating officer, added: “The Lord & Berry acquisition rounds out our growing portfolio of value-priced, globally positioned brands.”
This is the fifth acquisition for AM’s owner, Morningside Capital Group of Westport, Conn., in 15 months. AM was created last year when Morningside purchased the Arthur Matney Co. and its Artmatic, Tropez and Emerge brands.
The portfolio was expanded in December with the purchase of RH Cosmetics, which distributes Sweet Georgia Brown and Ultra Glaze. AM then snared the Cutex label from Jean Philippe Fragrances.
The most recent purchase was of Pavion and its Wet ‘n’ Wild, Solo Para Ti and Black Radiance brands. That acquisition raised a few eyebrows because of the overlap of these budget-priced and ethnic brands with Artmatic and Tropez.
The same concern has arisen for some retailers regarding Lord & Berry, because AM is in the midst of rolling out its own specialty brand — Madison NY — that some buyers think duplicates the Lord & Berry approach.
“I think you have some similar pricing and packaging issues with these two lines,” said one buyer, who wondered how retailers will find space to expand Lord & Berry and install Madison.
Lewis, however, thinks the two lines will help each other: “We can help expand distribution of Lord & Berry and Grant Berry [will] help us with product development.”
Lord & Berry products are sold in mass market stores under the Lipstique and Dramateyes logos. The company is credited with being the first to launch makeup pencils in the mass market. Earlier this year, Lord & Berry also launched a salon-only brand called Couture.
Whatever the end result of Lord & Berry’s new situation, retailers and suppliers believe the acquisitions of niche players will continue as drugstore and discount chains get bigger.
Although small firms provide innovative products, they often don’t have the capital and manpower to supply merchandise to the new retail behemoths. And often, in order to grow to a workable size, fledgling firms need to sell out to larger companies.
Last year, for example, Renaissance Cosmetics acquired another niche marketer, Nat Robbins.
Just last month at WWD’s CEO Summit in Arizona, Grant Berry admitted that a company has to be “well capitalized to entertain distribution in mass market giants.”
He didn’t rule out a purchase to help Lord & Berry reach the next level, saying, “The only thing is that I’d like to very much be a part of it.”
Based on AM’s track record with the other firms it has acquired, according to industry sources, Berry should continue to be a viable part of the team.
Lord & Berry will also pave the way for AM’s further penetration into the European market. Lord & Berry recently opened a European subsidiary in Milan, and the products are available in the U.K., Germany, Greece, Egypt, Saudi Arabia, Jordan, Israel and Lebanon.
The company projects sales of $850,000 for the last eight months of 1997 in its European distribution.
The deal also thrusts AM into the thriving salon makeup business with Lord & Berry’s Couture line. The Couture assortment consists of lipstick pencils, lip definers and eye definers and is arranged on two displays: one for beauty supply stores and one for salons.
Plans called for a wholesale volume of $1 million for Couture’s first year.