Business: Black Beauty

Johnson tries a comeback

In 1954 George E. Johnson started his own business in a South Side Chicago storefront by borrowing $250 and mixing, with wooden poles, a hair straightener for blacks. Twenty-two years later his company’s health and beauty products had $39 million in annual sales, and Johnson Products became the first black-owned firm to be listed on the American Stock Exchange. But now Johnson’s empire is tottering after conflicts with federal bureaucrats and tough competition from cosmetic giants like Revlon. Company sales fell last year to $31 million, and earnings have slumped from $1.40 a share in 1975 to a minuscule 2¢.

Johnson, grandson of a Mississippi sharecropper, has long been a leading example of black capitalism at its bootstrap best. His Chicago-based firm held about 60% of the black hair-care market. His Ultra Sheen No-Base hair relaxer was the first product to contain a protective cream that shielded the scalp against powerful acids. Advised that patenting the new product could take two years, Johnson decided to put it directly on the shelf in 1965, without that legal protection.

Though competitors quickly copied his formula, Johnson Products continued to dominate the sales of all hair relaxers, substances that straighten curly hair. But in 1975 the Federal Trade Commission required the company to warn consumers that Ultra Sheen contained lye, which could burn the scalp and cause eye damage. Johnson claims that FTC officials assured him at the time that the other straighteners would also have to print a warning about lye on their packages. Yet for almost two years, while Ultra Sheen’s label carried the notice, competitors like Revlon continued to market their “safe,” “gentle” and “natural” products. Says Johnson bitterly: “The Revlon representatives said to customers, ‘Look, the Government made Ultra Sheen put this warning on their jars because it’s dangerous. Our product isn’t dangerous.’ And yet it was the same product.”

Johnson’s market share has fallen from 60% to about 40% since 1975. Revlon meanwhile began aggressively going after black consumers with its Revlon Realistic hair straightener, in addition to marketing cosmetics for black women under the Polished Ambers brand. In 1979 sales of those beauty products were up by more than 70%. Revlon has also launched Dermanesse, a line of skin-care products aimed especially at blacks, during a cocktail reception for leading New York black women and a tea for the wives of U.N. diplomats.

But Johnson has been doing more than complaining about unfair Government regulators. Early this year he launched Precise, a product that both straightens and conditions hair. He is also starting an expanded line of cosmetics for blacks under the name Moisture Formula, to compete with Revlon.

The company’s most promising new prospect, though, is the lucrative African market. In Nigeria, Ultra Sheen has become the generic name for all hair-conditioning products. In a joint venture with the Nigerian government, Johnson last month opened a $2 million manufacturing plant in Lagos. He optimistically predicts that the Nigerian factory will clear the way to the sale of a whole range of black health and beauty products in Africa and a return to the company’s high road to profits. ∎