The encyclopedia · Strategy & Leadership · Strategic decision · 2006–2011
Manhattan was Germany's makeup brand — sold twice in five years, then broken up
Dr. Scheller made the Manhattan makeup line — €79.9M of sales and 387 staff at its peak. By 2011 the family firm was dissolved and its brands split up.
Dr. Scheller Cosmetics · Coty · 2010-11-12
What happened
Dr. Scheller Cosmetics AG was a German cosmetics maker founded in 1944 by Karl-Heinz Scheller, best known for Manhattan, one of the country's leading color-cosmetics brands, sold in drugstores alongside its anti-acne line Manhattan Clearface. At its 2007 peak the company had 387 employees and revenue of €79.9 million.
The family lost its grip on the business in the 2000s. In 2006 the Kalina group, a Russian cosmetics company operating through Lausanne, took a stake of more than 75 percent. Management was upheaved — the founder's son Ulrich Scheller left the board, and the company ran through leaders. In March 2010 the remaining shareholders were squeezed out and the stock-market listing ended.
On 12 November 2010 Coty agreed to buy Dr. Scheller Cosmetics from Kalina to get its hands on Manhattan. The deal made Coty the second-largest player in German decorative cosmetics, lifting its market share from 7 to 17 percent. Kalina kept the Dr. Scheller natural-skincare line. The company was dissolved on 30 June 2011; the Manhattan brand went to Coty, other brands to a successor called BCG, and production was outsourced to Weckerle. An independent German makeup maker had ceased to exist.
Why it happened
- Manhattan was a mid-tier drugstore makeup brand that lacked the scale of global players like Coty, which already owned Rimmel and Astor in Germany
- The sale of a controlling stake to Kalina in 2006 put the brand in the hands of an owner that treated it as a tradable asset, not a franchise to build
- Repeated changes of ownership and management in a few years left no consistent strategy for the brand
- Once Coty had bought the market share it wanted, there was no reason to keep the German maker whole — it was split up
The lesson
A mid-market brand that competes on shelf space against global giants needs either scale of its own or a niche they cannot reach. Sold as an asset between owners, it ends up dismantled for parts.
Aftermath
Coty ran Manhattan within its German color-cosmetics portfolio alongside Rimmel and Astor. The Dr. Scheller natural-skincare line continued separately under a successor company, BCG, and production of the cosmetics moved to the contract manufacturer Weckerle in Eislingen. The Dr. Scheller Cosmetics AG that had employed 387 people was dissolved in 2011.
Sources
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