cosmetic clash

Henkel to Make Waves in America

Rorsted Henkel dpa
Cleaning up in the United States.
  • Why it matters

    Why it matters

    Consumer-goods giants like Procter & Gamble and Unilever are hogging the U.S. market, a trend Henkel wants to break with new managers and European products.

  • Facts

    Facts

    • Sales of Henkel products in Canada and the United States have fallen by almost 3 percent to €2.9 billion.
    • In December 2014,  Jens-Martin Schärzler replaced Norbert Koll as head of North America at Henkel.
    • Chief Executive Kasper Rorsted wants to launch premium brands Persil and Schwarzkopf in U.S. stores.
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  • Audio

    Audio

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Chief executive Kasper Rorsted is running out of patience.

While business is thriving in Germany, Henkel, a family-owned company and maker of chemicals and cosmetics including brands like Loctite glue and Dial soap, is struggling in the North American market.

Now, armed with a new plan involving new people and old brands, Mr. Rorsted is ready for the United States.

With some of Germany’s biggest household names – from Schwarzkopf shampoo to Persil laundry detergent – he plans to take on Tide and Pantene, high-end brands from the United States made by competitor Procter & Gamble.

So far, only hairdressing salons in the United States and Canada have sold Schwarzkopf, a shampoo which has generated €2 billion in sales worldwide.

Now, regular retailers will also sell the shampoos along with new products, like Schwarzkopf Essence Ultime. An ad campaign featuring model Claudia Schiffer will help.

Model Claudia Schiffer is advertising for Henkel’s Schwarzkopf shampoo. Source: Schwarzkopf

 

Her help is needed. In 2014, Henkel sales in Canada and the United States fell by almost 3 percent to €2.9 billion, excluding one-time effects for acquisition and exchange rates. Henkel’s operating profits shrank by 15 percent. The company’s profit margin fell to 14.6 percent from 17 percent.

North America, which contributes 18 percent to overall sales at the company, was the only region in the 75 countries where Henkel operates to lose money.

In the United States, Henkel faces stiff competition and a former manager said problems were developing in the business. In 2013, profits fell by 3.2 percent compared to the previous year.

Henkel’s biggest challenges are price, plus products such as P&G’s Mr. Proper and Head & Shoulders, or Unilever’s Dove soap. Reckitt Benickser, a British company and maker of consumer goods, raised the pressure on price with promotional sales and coupon deals.

There is tough competition among laundry detergents too: P&G has a market share of almost 60 percent with Tide, Gain and Dreft.

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