Helene Curtis Industries, Inc. Business Information, Profile, and History

History of Helene Curtis Industries, Inc.

Helene Curtis Industries, Inc. manufactures and markets personal care products, primarily shampoo and conditioners, hand and body lotions, and deodorants and antiperspirants. Shampoo constitutes Helene Curtis's primary strength--Suave is one of the top shampoo brands in the United States. Helene Curtis was run by the original founding family from its founding until Unilever, an Anglo-Dutch conglomerate, acquired the company in 1996.

Origins on Eve of Great Depression

Helene Curtis was founded in Chicago in 1927 as the National Mineral Company by Gerald Gidwitz and Louis Stein. The company started out manufacturing just one product, the Peach Bloom Facial Mask. Made of special clay mined in the hills of Arkansas, the facial mudpacks were packaged and sold to beauty salons nationwide. At a time when personal care products were becoming increasingly sophisticated, Gidwitz and Stein recognized that their sole product could not sustain the company with its limited market. The partners soon shifted the company's emphasis to haircare products, beginning a long history of producing successful, innovative personal care products.

The Great Depression years, ironically, turned out to be among the company's most successful. As the straight hairstyles of the 1920s gave way to a rage for waves, Gidwitz sensed opportunity in haircare. At the time cumbersome electric waving machines took hours to wave hair and were extremely expensive for beauticians to purchase. Thus, such haircare was usually only available to the well-off. This changed when researchers at the National Mineral Company developed "machineless" waving pads and designed a machine that could mass produce them. The pads created a revolution in the haircare industry, drastically simplifying the permanent wave process, and consequently allowing people to have professional beauty care at an affordable price.

Gidwitz determined that there was another aspect of haircare that could provide an opportunity for the company. Until that time most people washed their hair with laundry or plain soap, since the products available specifically for use on hair were harsh and overpriced. The company developed Lanolin Creme Shampoo, one of the nation's first detergent-based shampoos, introduced in the mid-1930s. The popularity of the shampoo, available only in beauty salons, prompted National Mineral Company to follow it up with Suave Hairdressing in 1937. The demand for the hair tonic became so great, the company began manufacturing small retail sizes for salon resale.

Turning its attention to wartime production during World War II, the company's name changed to National Industries, Inc., and factories were converted to manufacture aircraft gun turrets, electric motors, radar equipment, and motion picture sound projectors for the military. The company also maintained its presence in the haircare industry with the introduction of Empress, a further innovation for permanent waves. A revolutionary nontoxic chemical perm, Empress utilized a cream oil solution wrapped on wooden rods. National Industries also branched off into the manufacture of hair dryers and other professional beauty supplies. Gerald Gidwitz, in the meantime, became president and CEO during the war years.

The Helene Curtis Name Following World War II

After the war National Industries shifted its focus back to the manufacture of personal care products. The renewed emphasis on this industry prompted a name change, and the company became Helene Curtis after Louis Stein's wife and son. It was at this time that Suave Hairdressing and Lanolin Creme Shampoo were introduced for retail sale in department and drugstores, and quickly began outselling the competition. In 1948, reflecting the company's growth, Helene Curtis moved to a new corporate headquarters and manufacturing facility.

In 1950 Helene Curtis developed the generic term hairspray for its new aerosol product, Spray Net. Other successful, and effective, products introduced during the 1950s included the spray-on deodorant Stopette and a nonprescription dandruff shampoo called Enden. These two products were advertised on television during such shows as "What's My Line?" and "Oh! Susanna," helping to make Stopette the bestselling deodorant on the market, a position it maintained for several years.

In addition, the company expanded its product line with several acquisitions, including Kings Men male toiletries, Lentheric fragrances, and Studio Girl cosmetics. By the mid-1950s Helene Curtis products were being manufactured and sold in 25 countries. Another milestone occurred in 1956 when Helene Curtis went public after 32 years of private ownership, selling 375,000 shares of Class A stock for $10 per share.

Helene Curtis further broadened its line of personal care products in 1960, when Tender Touch, the first popularly priced bath oil, was marketed. In addition the company began to build on the success of its Suave brand, introducing shampoos, creme rinses, and wave sets. Other innovative products launched during the 1960s were Quik-Care hair conditioner, the synthetic hair oil First Time, and Secure, a pressed, powder-dry deodorant with a patented formula.

In 1961 Helene Curtis's stock was accepted on the New York Stock Exchange, and by the middle of the decade the company had licensed its products in 81 countries. Capitalizing on a consumer hair trend, the Professional Division of Helene Curtis launched the Wigette line of small hairpieces made of human hair, as well as synthetic versions under the Nature Blend brand name.

The 1970s saw Helene Curtis making further advances in permanents. UniPerm became the first compact machine to give perfect permanent waves, while the Professional Division introduced Moisture Quotient and the One Better permanent--the first perm to combine the advantages of alkaline waving and conditioning. In addition, a shampoo called Everynight, designed for frequent use and targeted at teens, was exclusively advertised by tennis star Chris Evert. In the meantime the Suave brand, which had sold its billionth bottle, expanded its selection of fragrances and formulas, and in 1977 Suave became the highest-selling shampoo in the United States. A Suave brand roll-on antiperspirant/deodorant was launched, marking the company's first entry in that category. By the end of the decade Helene Curtis was represented in more than 110 countries.

Helene Curtis joined the Fortune 500 group of companies in the 1980s, and established itself as the growth leader in the personal care industry. During a time when many of the company's competitors were growing through acquisition, Helene Curtis instead kept to its longstanding strategy of fueling growth through continued innovation and further brand extensions. Also, the company was making significant strides in its international markets, especially Japan, one of the first international markets in which Helene Curtis established a presence during the 1950s. By the mid-1990s the Japanese market accounted for more than 20 percent of the company's annual sales.

Introducing New Products in the 1980s

Building on Suave's name and reputation--the brand held fast to its position as the top daily haircare brand in the United States--Helene Curtis entered the skincare lotion sector with several different formulas. In addition, a new line of Suave antiperspirant/deodorants strengthened the company's presence in that category. A new brand was launched in 1982, however, with a $35 million investment and the introduction of Finesse conditioner. The product, with its patented, time-activated formula designed to give both light and deep conditioning as necessary, proved so popular that the premium-priced brand was expanded to include shampoo and hairspray, as well as the Finesse Nutricare line of haircare items.

Helene Curtis followed up on the success of Finesse with the $40 million launch of the Salon Selectives brand of shampoos, conditioners, and hairsprays. By offering customized products that combined the company's salon heritage with a mid-range price, first-year sales reached $40 million, recouping Helene Curtis's initial investment. By 1988 both Salon Selectives and Finesse had joined Suave as leaders in their market segments, and the brands' success in the United States was matched by their popularity in international markets. Meanwhile the Professional Division strengthened its lead position in the salon category with the introduction of such products as Post Impressions, a waving system that eliminated post-perm odor and dryness, and the Attractions line of haircare products with collagen. The Quantum brand was also launched with the Quantum Acid Perm that quickly became, as it continues to be, the bestselling permanent wave brand.

The company's product lines were not alone in their expansion during the 1980s&mdash business had boomed, so had the need for additional manufacturing capacity. In 1982 Helene Curtis completed construction of a plant in City of Industry, California. This was followed in 1989 by a $32 million, state-of-the-art distribution center that, at 376,000 square feet, had double the capacity of the former facilities. In addition, the company's corporate headquarters had been relocated in 1984. Ronald J. Gidwitz, son of Gerald Gidwitz, took over as CEO in 1985.

New Products and Parentage in the 1990s

In 1990 Helene Curtis introduced Degree antiperspirant/deodorant, at that time the company's most successful new product launch. With a formula activated as body heat rises--and aided by a $50 million advertising campaign--Degree quickly garnered a large share of the market, achieving the company's market share goal for the brand's first year in only eight months. This success was followed by yet another entry into the haircare market with the introduction of the Vibrance brand; Vibrance was priced higher than other Helene Curtis shampoos and sales were slow, leading to its repositioning as an organic brand. By the end of fiscal 1992 Helene Curtis had attained the billion dollar mark with total sales of $1.02 billion.

However, as the 1990s continued it became increasingly clear that Helene Curtis's smaller size in comparison with its competitors put it at a significant disadvantage. As more and more emerging markets were opening up and the personal care industry was becoming increasingly global, Helene Curtis simply did not have the resources to compete on an international scale with such giants as the Procter & Gamble Company and Unilever. The company began seeking a partner, finding one in Unilever, and announcing in February 1996 that it had agreed to be acquired by Unilever for about $770 million. Helene Curtis thus joined a company that derived about 20 percent of its revenues from personal care products, including such brands as Elizabeth Arden and Calvin Klein cosmetics, Vaseline, Pond's facial cleansers, Q-tips, Cutex nail-polish remover, and Pepsodent toothpaste.

Following the acquisition, Unilever made a number of moves to strengthen Helene Curtis. In November 1996 Unilever sold the North American side of Helene Curtis's professional haircare line to Shiseido Company Limited of Japan. Unilever then in 1997 sold Helene Curtis's Japanese professional haircare business, also to Shiseido. Helene Curtis's workforce was cut nearly in half, its operations were consolidated, and a product streamlining initiative cut the company's line of products by about 20 percent by mid-1997. In October 1997 Unilever merged three U.S. personal care businesses--Helene Curtis, Chesebrough-Pond's, and Lever Brothers--into a new Home & Personal Care North America unit. The three businesses continued to operate independently, however. Ronald Gidwitz remained president and CEO of Helene Curtis in the immediate aftermath of the acquisition but resigned in 1998 to concentrate his attention on his venture capital company.

In February 1998 Helene Curtis made its first major product introduction as a Unilever subsidiary. That month marked the debut of ThermaSilk shampoos, conditioners, and styling aids, which were backed by an $85 million advertising campaign, one of the largest in company history. The new line was based on heat-activated technology that was designed to improve the condition of hair with the use of a blow dryer. The company predicted that ThermaSilk would generate $120 million in sales during its first year, and that figure was exceeded. In 1999, therefore, the brand was pushed through a $100 million marketing effort and the line was extended through the debut of three more products. This successful launch provided solid evidence of the renewed strength of Helene Curtis thanks to the deep pockets of its new parent.

Principal Subsidiaries: Helene Curtis Australia Pty. Ltd.; Helene Curtis Europa B.V. (Netherlands); Helene Curtis International Italia S.p.A. (Italy); Helene Curtis Japan Inc.; Helene Curtis, Ltd./Ltee. (Canada); Helene Curtis New Zealand Ltd.; Helene Curtis Scandinavia AB (Sweden); Helene Curtis UK, Inc.

Principal Operating Units: Helene Curtis International; Helene Curtis North America; Helene Curtis U.S.A.; Helene Curtis U.S.A. Professional.