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Concern voiced over buyout of black-owned businesses

Published Oct. 9, 2005

Does the sale of Johnson Products Inc. signal the beginning of oblivion for black-owned personal products companies and the end of training, employment and supplier opportunities for blacks in that industry?

Questions about the future of black-owned cosmetics and hair care companies have been raised by this week's sale of Johnson Products to Ivax Corp., a white-owned conglomerate. Ivax is paying an estimated $67-million in the deal, which was announced Monday.

The purchase gives Ivax, which already owns the Flori Roberts line of black cosmetics, a stronger presence in a burgeoning industry. Retail sales of ethnic hair care, skin care and cosmetics products grew 6 percent in 1992, creating a $547-million market, according to Packaged Facts Inc., a New York-based research firm.

"Growth in the market is inevitable . . . " said Facts president David A. Weiss. "It's all in the census data."

Twenty years ago, corporate America pretty much ignored this niche. Now, Weiss warned, "black companies may lose out" if white-owned firms swallow them up and try to knock out smaller rivals.

Lafayette Jones, president of Segmented Marketing Services Inc. of Winston-Salem, N.C., says the Johnson Products deal could be a harbinger of more sales of black-owned personal products firms.

Thomas P. Polke, Johnson Products' chief financial officer, disagrees that the consolidation and demise of black-owned cosmetic care companies had begun.

"This is something that is going to benefit our customers, our community," Polke said. "This is really viewed as a milestone.

"I think to try to resurrect some black-white issue is unfair."

J. Lance Clarke, senior vice president and general manager of Fashion Fair Cosmetics, called the Johnson Products sale "sad, because you've got black businesses out there and you want them to succeed."

Fashion Fair was created by John H. Johnson, owner of Johnson Publishing Co., parent of Ebony and Jet magazines, who had tried to get major cosmetic companies to advertise in his magazines 20 years ago.

But Earl Graves, owner of Black Enterprise magazine, said the Johnson Products sale is positive for black business.

"That means we're going to acquire as well as be acquired," he said. "It's a healthy part of being in mainstream America."

Jones found another negative aspect to black firms being acquired by white owners. Top black talent, reaching concrete and glass ceilings in corporate America, had a chance to flourish within black-owned companies. They may lose that opportunity, he said.