Henkel accelerates Russian expansion
Personal care giant acquires Vellhim
Henkel is accelerating expansion into the Russian cosmetics market, through the acquisition of Vellhim, one of the country’s leading producers of aerosols and cosmetics. The deal has already been approved by Russia’s Federal Antimonopoly Service, while its closure is scheduled for the third quarter of the current year, when its financial details will be announced.
Vellhim will be acquired by Henkel from its previous owner, Austrian Wellchem Holding GmbH, owned by Russian billionaire Megdet Rakhimkulov. Russian analysts believe that Henkel will not continue the development of Vellhim, but will probably use its production sites and distribution network for the establishment of production of its own brands, rather than Vellhim brands.
According to Sergey Vanin, Director of the Association of Perfumery, Cosmetics, Household Chemicals and Hygiene Products, sales of Henkel in Russia are steadily growing due to the ever rising demand in the segments of cosmetics and household chemicals, which forced the company to expand its production capacities.
Last year, the company’s sales in Russia exceeded €1bn, the company said. According to Euromonitor, Henkel holds a 5.3% stake of the Russian cosmetics market and 16.1% of the market for household chemicals. In Russia, the company has six plants and has plans for the construction of two more. According to Sergei Bykovskyh, President of Henkel Russia, the local cosmetics market remains one of the world’s most promising for the company’s further growth, while its total value is estimated at €10bn. Currently Russia remains the third biggest sale market for Henkel after the US and Germany, while since 2008 total investments of the company in its Russian development have reached €120m.
Sergei Bykovskyh has also added that acceleration of expansion in Russia is part of global strategy of Henkel, which involves the increase of the share of emerging markets in total sales structure of the company up to 50% by 2016. The company expects that the market will continue to grow during the next several years, with the biggest growth rates are expected to be in the segment of cosmetics products for hair care.
Bykovskyh commented: “One of the main features of the Russian cosmetics market is its in-between position between the emerging and developed global markets. It also remains very aggressive as the volume of spending on the promotion and advertising cosmetics by leading market players is one of the biggest among the all segments of Russian business”.
