The Jatania family manufactures products ranging from baking powder to table wine using a distribution network which spans 60 countries. Last week the family acquired the Harmony haircare brand for 25m from Unilever as the first step in a drive to build one of the world’s biggest personal care businesses.
The family plans more brand acquisitions, which it will then build though its international distribution network. Mike Jatania, chief executive of EMVI, the company set up to house the acquired brands, is ambitious: “Our goal is to be a significant player in the personal care market. We like the market, we understand it, and certainly we aim to be among the top 20 companies worldwide within personal care. It will take many more years and a lot of hard work.”
The Jatania family originally came from India. The business is run by four brothers, the youngest of which is Dulwich College-educated Mike, aged 33. Their father, an entrepreneur, emigrated to East Africa in the Thirties, moving the family to Britain in the Sixties.
The family’s collection of companies – The Lornamead Group – was set up by the eldest of the brothers, George, as a trading company. It represented brands such as Colgate, Heinz and Martini & Rossi in Nigeria and other African countries. Since 1985 its focus has been on launching and manufacturing its own brands.
Their success indicates that the brothers work well together and their family motto is “Let dynasty not become Dallas”. Mike, somewhat arrogantly, says: “The fact that I am the youngest and I run the group says a lot about my brothers and their judgment.”
The Lornamead Group has focused on personal care products since the early Nineties, investing less in its alcohol and foods businesses. It owns brands including Similar, a range of scents which smell like designer brands; Tura, an Afro-Caribbean range; and Celsius, a men’s deodorant-based range.
Lornamead is a global business: its biggest markets include Saudi Arabia, Egypt, Russia, Argentina and Ghana. Similar is popular in Eastern Europe and the Middle East, and according to Jatania it is worth 15m at retail value. Tura’s biggest market is West Africa and its worldwide retail sales value is 30m, claims Jatania. The company is putting together a global relaunch programme for Celsius.
The Tura, Celsius and Similar brands are run from Lornamead’s Dubai headquarters. But EMVI will be run from the UK.
EMVI is looking to acquire personal care brands which fit within certain strict criteria: they must have an established brand name; they must have scope for distribution expansion; and they must be profitable – Harmony’s retail sales value is 15m, according to Jatania.
He says: “The idea is to follow the acquisition of Harmony with others. We want to buy significant brands, we don’t want to get involved in buying very small brands.”
The acquisition of Harmony was financed by the Jatanias along with venture capitalists Alchemy Partners, ABN Amro Bank and Royal Bank of Scotland.
Jatania hopes Alchemy will continue to back future acquisitions: “The idea is that there will be an involvement from Alchemy in most acquisitions we look at. The funding is coming from the Jatania family and Alchemy and then other forms of structural finance will be chosen on a deal-by-deal basis. But both ABN Amro and Royal Bank of Scotland are looking at a long-term relationship. They feel our strategy does stand up to commercial logic.”
Jatania believes that companies such as Procter & Gamble and Unilever are focusing all their attention on developing a handful of brands globally. In Unilever’s case, he cites Organics and Salon Selectives. He believes that this leaves products such as Harmony underperforming in the shadows and feels there are many such brands available for acquisition.
It seems Jatania has a lot of faith in the brand values of Harmony, but his interest lies not in its hairspray, which he says is a “mature business” but rather in its colorants range.
More than that, hairspray is a declining sector: Datamonitor figures show the value of the UK hairspray market fell from 156m in 1993 to 121m in 1997.
Emma Fric, managing director of branding agency Cato Consulting, says: “Hairspray has an image of blue rinse grannies in little curlers or with a less natural look.” She says companies have invested heavily updating the formulas and packaging of shampoos and conditioners, “but with hairspray nothing has changed for 20 years”.
Jatania claims: “The colorant market is growing at about 19 per cent a year – over the past five years it has doubled. Harmony only has a semi-permanent colour, so we are looking to expand into permanent colours, tone-on-tones, and also hair mascaras.”
The hair colorant market is growing, but not quite at the rate Jatania apparently believes. Mintel research puts the growth at 18 per cent between 1992 and 1997 and today the market is worth about 800m. Competition in the market is steep, with well-established brands from Clairol, L’Oreal, Wella and Schwartzkopf.
Jatania says: “The use of colorant is highest with women aged between 35 and 40. They will remember Harmony because it was advertised during their teens.”
He is talking to Young & Rubicam about developing an advertising campaign, which he says will have a “seven-digit” budget. The relaunch of Harmony is scheduled for next summer and Jatania is considering using the Seventies heritage of Harmony – the famous “Is she or isn’t she” campaign created by J Walter Thompson.
Reviving the brand in the UK will not be easy. Harmony’s association with hairspray and with the Seventies runs deep. Jatania and Y&R will have to come up with a convincing campaign that can shift the Harmony values away from hairspray onto hair colorants, and at the same time capitalise on its Seventies heritage but interpret it in a modern way.
The success of the brand for EMVI is likely, however, to have less to do with its performance in the UK than with its take-up in foreign markets such as Russia and South America. EMVI, though Lornamead, has a clear-cut global distribution network which can take brands such as Harmony painlessly into huge, hitherto untapped, markets.