Kuba investments to rescue Napoleon Perdis; Church & Dwight acquire leading hair removal brands for US$900 million; over 1.5 million Australians use Buy-Now-Pay-Later digital payments; and Bain Capital buys majority stake in global beauty brand incubator.
Kuba investments to rescue Napoleon Perdis
The beauty industry and media were saddened earlier this year when Napoleon Perdis, one of Australia's most renowned makeup brands, called in the administrators. Few people have done more in the past 25 years to promote the local industry than the man who is easily the country's most famous makeup artist and entrepreneur. The Napoleon Perdis brand debuted in Priceline last year and, together with Terry White Chemmart, has supported the business through its recent trials. An approach that has been vindicated.
Insolvency firm Worrells took over as administrators in January and are backing a rescue plan, instead of liquidating the company. We received a lot of interest in the business but ultimately have negotiated terms that will enable the business to continue with Kuba Investments, said Simon Cathro of Worrells in a statement. Napoleon and his wife, Soula-Marie Perdis, have agreed to the proposal to transfer their shares to Kuba through a deed of company arrangement to be tabled at a creditors' meeting next week. Better yet, they will both remain with the business to build the brand here and overseas.
The future could be very bright. Kuba Investments is a private equity firm run by Livia Wang, the managing director of Access Brand Management, which has a strong track record in facilitating cross-border retailing into China for Australian businesses through daigou and established channels. Wang and her business partner, Henry Lee, will take control of the Napoleon Perdis brand following creditor approval. In a statement, Ms Wang reassured the industry – “Kuba's investment will ensure loyal customers can continue to purchase Napoleon Perdis in over 700 storets and keeps more than 250 existing staff in employment".
Church & Dwight acquire leading hair removal brands for US$900 million
Hair removal is a multi-billion dollar global industry and growing fast. Over the next five years, the hair removal devices sector is expected to surge to US$3.4 billion predicts Grand View Research. The worldwide hair wax category is predicted to grow to 5000 million units over the same timeframe, adds Transparency Market Research, as the APAC region continues its high-paced expansion.
Church & Dwight, the makers of Nair, already have a big international footprint in the category. The US consumer goods leader has signed an agreement to acquire the Flawless and Finishing Touch hair removal brands for up to US$900 million – US$475 million in cash and an earn-out payment of up to US$425 million. Flawless is the market leader in electric hair removal products in the US with annual sales of US$180 million in the 2018 calendar year.
The Flawless Facial Hair Remover has become a cult hit in Australia, selling through leading retailers such as Priceline, The Good Guys and Shaver Shop, and is also sold in 29 other countries. The brand's major point-of-difference is a focus on brows and face, in addition to legs, which appeals to the always selfie-ready crowd. The buyout will boost Church & Dwight's hair care stable, including Batiste Dry Shampoo, Viviscal hair thinning supplements and Nair. Flawless will become Church & Dwight’s 12th power brand and contribute significantly to the multinational's US$3.5 billion annual revenues.
Over 1.5 million Australians use Buy-Now-Pay-Later digital payments
More and more retailers, specialist websites like Adore Beauty and salon stalwarts such as Ella Baché are offering Buy-Now-Pay-Later (BNPL) digital payments. According to Roy Morgan Research, approximately 1.59 million Australians used BNPL payment methods in the 12 months to January 2019. The market leader is Afterpay, with 39.9 per cent and 6.6 per cent awareness and user ratings, respectively, followed by zipPay (19% awareness; 1.6% user) and zipMoney (14.4% awareness; 0.7% user).
The user numbers for BNPL payments methods are significant, but represent only 7.7 per cent of the population, says Roy Morgan. Millennials are the biggest demographic – 40.6 per cent of BNPL users (644,000) – followed by Gen Zers at 35.1 per cent (559,000). As we reported recently, younger generations have pulled back from credit card usage, but represent over 75.7 per cent of BNPL users. Gen Xers are the next major demographic – 19.1 per cent (304,000) and numbers fall off sharply among Baby Boomers to 4.9 per cent (78,000).
BNPL usage is of particular interest to the beauty industry because one in 10 premium cosmetic and skincare purchases are made through Afterpay, zipMoney and zipPay. According to Norman Morris, Industry Communications Director for Roy Morgan: “Buy-Now-Pay-Later companies are likely to pose a threat to traditional payment types such as credit cards as well as traditional financial institutions, as consumers can access a small amount of credit instantly with no documentation".
Bain Capital buys majority stake in global beauty brand incubator
Founded just over 20 years ago, Maesa is a major global beauty brand incubator for big box retailers and beauty companies. Speed to market and exclusivity are trump cards and brands nurtured from startup to shelf include Circa from Eva Mendes, Drew Barrymore's Flower Beauty and Kristin Ess Haircare. With 300 employees operating from seven offices worldwide, Maesa works across haircare, makeup, personal care and fragrance and has teamed with some of the biggest names in retailing, including Walmart, Target, Sephora, H&M, Ulta and A.S Watson, the world's largest health and beauty retailer.
Bain Capital Private Equity, one of the world's heavyweight private investment firms, has taken a majority stake in Maesa for an undisclosed sum. With US$230 million in global annual sales, Maesa now has the financial muscle to springboard its business to the next level. According to Julien Saada and Gregory Mager, the co-founders of Maesa: ”Bain Capital Private Equity has a unique understanding and confidence in our longterm global strategy, culture and people, bringing valuable global reach and expertise which will support us in our future growth plans".
Snippets from the Wires
- Minority investments and backing beauty startups has become a mega-trend in the beauty and cosmetic industry. TSG Consumer Partners, who recently bought CorePower Yoga, the fastest-growing yoga fitness chain in the US, has opened an office in London. The US private firm has set up a new US$4 billion fund to seek out European consumer startups, including health and beauty. TSG's past and current investments include IT Cosmetics, e.l.f Cosmetics and Revolution, the cult makeup brand set to debut in Priceline.
- Many launches don't deliver the expected results, especially in highly competitive markets. NYX Cosmetics launched in Brazil in early 2017, but has failed to fire in the world's fourth largest beauty market. The L'Oréal-owned brand is shuttering its Brazilian operations at the end of April and all products will be sold at half price.
- Galeries Lafayette, the iconic French department store, isn't buying the line that the department store is dead. Its legendary store on the Boulevard Haussmann is the second most visited tourist attraction in Paris after the Eiffel Tower. A new 6500 metre flagship has opened on the Champs Elysées and Galeries Lafayette has also announced it will open 10 new stores in China over the next five years to achieve annual sales of US$1.13 billion. The company already has two stores in China in Beijing and Shanghai.
- Lotte, the world's second largest travel retailer, bought JR/Duty Free's Australian and New Zealand business last year. The South Korean giant has a turnover target of achieving US$200 million a year through its ANZ operations by 2023, a major milestone in its plan to become the world's number one travel retailer. Lotte opened its new Brisbane Airport stores last week and believes Australia's significant growth in Chinese tourists is the key to achieving both goals.
