USA. Global consumer products multinational Colgate-Palmolive has bought Laboratoires Filorga Cosmétiques for an equity price of €1,495.5 million, subject to the usual regulatory checks.
The acquisition is part of a general strategy to focus on higher-margin business across the company’s core sectors of oral care, personal care and pet nutrition businesses, and also a specific attempt to expand into premium beauty.
The French skincare business has made major in-roads into travel retail in recent years– another attraction for Colgate-Palmolive. Global Travel Retail Director Nicolas Rimeau heads Laboratoires Filorga’s efforts in the channel, which has seen particularly strong growth in China-related markets, including South Korean duty free and offshore duty free in Hainan. Another well-known beauty and travel retail executive, Jean-Charles Seite, became International Director in January.
Toothpaste-to-pet food group Colgate generated annual revenue of US$15.5 billion in 2018, almost flat on the year before while both its gross profit margin and operating profit margin declined.
Colgate President and CEO Noel Wallace commented: “Filorga is a strong, premium-priced brand with distinctive positioning that fits well within our long-term personal care growth strategy. This acquisition will add a high-growth, profitable, global skincare asset to the Colgate portfolio. This acquisition also provides Colgate entry into the fast-growing and sizeable travel retail channel, particularly in Asia.”
Filorga’s strong in-roads in travel retail
Filorga’s multi-channel distribution strategy has incorporated travel retail in recent years as well as established channels such as pharmacy, speciality stores and online.
The brand has developed strongly in Asian markets and for the week ending 24 May 2019, Filorga products ranked 9th and 10th respectively at The Shilla Duty Free and Lotte Duty Free.
In December 2017, Colgate-Palmolive made its first foray into skincare with the separate PCA Skin and EltaMD acquisitions whose combined sales then were approximate US$100 million. Both brands were only sold in professional, not consumer, segments. Ian Cook, Colgate’s Chairman, President and CEO at the time (and now Executive Chairman), stressed that these were high-growth, high-margin brands that “would advance Colgate’s presence in the premium global skincare category”.
The €1,495.5 million Filorga transaction will add to this growing portfolio. It will be financed with a combination of debt and cash and is currently expected to close in the third quarter of 2019. The deal is subject to regulatory approvals in certain countries.
Filorga, originally founded in 1978, is an anti-ageing skincare brand primarily focused on facial care. The brand is sold in more than 60 countries with its largest markets being France, Italy, Spain and Greater China.
Among the internationally-recognised laundry, cleaning, hygiene and oral care brands in the Colgate-Palmolive portfolio are Ajax, Colgate, Fabuloso, Palmolive, Sanex, Softsoap and Speed Stick.
