PMA says…The South Korean LG probably is buying Elizabeth Arden. I think the acquisition will be great for Elizabeth Arden because LG has wonderful high end cosmetic brands in South Korea, like SUM:37, Beyond, O Hui, The History of Whoo etc. Their cosmetics have not only great formulas, but stunning packages as well. So, I think LG can revitalize Elizabeth Arden. And you? Thoughts? Opinions? On the other hand, some consumers don’t like seeing their favorite brand being bought by another…
The Beauty Brains respond:
When a company is acquired the first thing people complain about is “they changed my favorite product.” Sometimes this is true, sometimes not but here are some of the primary reasons companies change formulas after an acquisition.
Mislabeled products
Often smaller companies do not follow the proper labeling rules so the new, bigger company has to go through all the old labels/formulas and fix them to be compliant. They may not even actually change the formula but to consumers the label looks different so they think the product has changed.
Unstable formulas
Sometimes the acquired formulas do not meet the stability requirements of the bigger company. Therefore the formulas have to be redone to meet quality standards.
Manufacturing efficiencies
A big reason that formulas are changed is because the big company can achieve a significant cost savings by switching out certain raw materials for ones that the big company gets at a good price. They believe they can make the same quality product at lower cost.
Regulatory reasons
One company may use ingredients that are not allowed in another. Therefore, acquisitions may trigger reformulation to remove a chemical not allowed by the new owner.
There are some other reasons like manufacturing capabilities, raw material supplier contracts, etc. but those three are the main ones. Whether the reformulated products are better or not, well that depends on who you ask.