African-American hair product manufacturing will continue to enjoy growth, thanks to a rebounding economy and an expanding Black population with rising disposable income, according to an industry report from IBISWorld, a leading publisher of U.S. industry research. IBISWorld anticipates industry revenue to grow at an average annual rate of 2.8 percent in the next five years, totaling $212.9 million in 2017. In the five years to 2012, industry revenue is expected to grow at an average annual rate of 1.7 percent to $185.1 million.
The March 2012 IBIS report titled “African-American Hair Product Manufacturing in the U.S.” only covers figures for major hair manufacturers such as Alberto Culver Co. (now part of the Unilever Group) and L’Oréal USA, and is limited to shampoo, conditioner, styling products (oil moisturizers, pomades, polishers, and shining agents), moisturizing products and hair color. It excludes wigs, hairpieces, hair extensions, weaves and hairstyling appliances, as well as sales by independent Black manufacturers, such as Bronner Bros. Inc., Dudley Beauty Corp. L.L.C., Carol’s Daughter and Black Earth Products. The report concedes, however, that increasing demand and opportunities for African-American hair product manufacturers — as the size and per capita disposable income of the Black community increase and as consumer preferences change — will bring new operators and products into the industry.
According to the most recent census data (2010), the country’s Black population grew by more than 4.2 million people in the past decade. IBISWorld notes that in the past five years, many African-American consumers have shifted toward natural hairstyles in which their hair is not chemically altered. In the past, consumers heavily demanded chemical-based hair products to help relax their hair. Mintel International Group, a consumer spending and market research firm that tracks the Black hair-care industry, says the number of Black women who do not use products to chemically relax or straighten their hair jumped to 36.0 percent in 2011, up from 26.0 percent in 2010. In the same report, Mintel states that sales of relaxer kits dropped 17.0 percent between 2006 and 2011.
As consumers changed their preferences, less revenue has been derived from sales of chemical relaxers and the demand for other products has increased. Industry operators promptly swung into action. For example, L’Oréal launched a line specifically for Black women with natural hair called True Textures under its Mizani brand. Smaller manufacturers have introduced more hair products with organic ingredients or vegan-friendly items. IBISWorld expects the trend of natural hairstyles to continue in the next five years, resulting in more companies investing in research and development to create items that fall in line. In addition to making more hair products for natural hairstyles, the industry is projected to create more environmentally friendly goods in keeping with the overall trend in the beauty products sector whereby consumers are demanding more goods that have ingredients that are organic or are not derived from animals.
All this paves the way for new entrants into the Black hair product manufacturing industry. Still, IBISWorld says, the growth of company numbers will not be as rapid as in previous years because larger companies will acquire smaller firms that prove successful in the African-American hair market. In addition, competition increased so much throughout the past five years because of more entrants that other firms will be discouraged from entering the industry.
Income will be a key driver in the industry’s revenue expansion. The economy has been slowly recovering from the 2007 – 2009 recession, bringing an uptick in per capita disposable income. A joint report published in 2011 by The Nielsen Co. and the National Newspaper Publishers Association shows Black buying power in the United States grew from $316.3 billion in 1990 to $957.3 billion in 2010 and is projected to climb to $1.1 trillion by 2015.