LG buys Avon Japan for AUD$127 million and cuts ribbon on AUD$4.95 billion research centre; increased sales in the US and China lift L'Occitane's bottom line to AUD$2.11 billion; Trilogy Launches in Ulta Beauty; Kmart posts double digit growth in Q3 as sales at Target dip.
LG buys Avon Japan for AUD$127 million and cuts ribbon on AUD$4.95 billion research centre
LG is best known in Australia for consumer electronics and household appliances. But the multinational's beauty and healthcare division is one of the Big Two cosmetic companies in South Korea alongside AmorePacific. LG Household & Healthcare has acquired full ownership of Avon Japan for AUD$127 million through its local affiliate, Ginza Stefany. Avon enjoys a number 21 ranking among international beauty brands in Japan, ahead of Lancôme (at 27) and Estée Lauder (at 41).
Japan, the world's second largest cosmetic market after the US, has always been a difficult market for foreign beauty players to penetrate. LG's buyout of Avon Japan gives the Korean giant a strong foothold for expansion as the brand has been available in the Japanese market for over 50 years and has built up strong relationships with other major companies.
LG has also officially opened South Korea's largest research centre – the LG Science Park. Located in Western Seoul and due for completion in 2020 at a cost of AUD$4.95 billion, researchers from the beauty and health care division were among the first to move in to new offices on the site.
Increased sales in the US and China lift L'Occitane's bottom line to AUD$2.11 billion
L'Occitane has been pushing boundaries over the past year with the launches of its new Sunshine store concept and the Aqua Reotier skincare range aimed at Millennials. The French prestige brand has reported a 4.6 per cent increase in global sales to AUD$2.11 billion for the fiscal year ending on March 31.
China was the fastest growing market, delivering double digit growth of 20.5 per cent over the 12 month period to become L’Occitane's second largest international market. The US was also on a roll, with sales lifting 8.3 per cent. According to Reinold Geiger, Chairman and CEO - " We concluded FY2018 with a strong final quarter, particularly in Asia, where we are continuing to introduce more and more consumers to our world of all-natural products with proven ingredients and recipes".
Trilogy Launches in Ulta Beauty
Civic Capital, the Chinese private equity firm who recently acquired Trilogy for NZ$250 million, had made earlier overtures to the natural skincare brand because of its growth in Asia, the UK and the US. At the time the agreement was announced last December, Trilogy had just signed deals to launch in Ulta Beauty in the US and Marks & Spencer in the UK. Another sweetener was the fact that the brand had opened an e-commerce flagship store on Alibaba's Tmall last July.
Last week, a curated range of Trilogy products hit the shelves in 1080 Ulta Beauty stores across the US and are also available on its website. Ulta is the largest beauty specialist retailer in the US, ahead of Sephora, and offers more than 20,000 products from more than 500 established and indie cosmetic brands. Broadening our consumer reach with such an omni-channel beauty retailer has been a key objective for US growth and we are excited to have joined forces with a progressive retailer such as Ulta Beauty, noted Trilogy International CEO, Angela Buglass.
Kmart posts double digit growth in Q3 as sales at Target dip
Kmart and Target, both operated by Wesfarmers, are Australia's largest discount department store players, with 214 and 303 stores nationwide, respectively. But Kmart has achieved cult status in recent years as Australians of all income levels not only spend up big, the Facebook page Kmart Hacks has attracted 227,000 likes.
The gap between Kmart and Target has widened further in the latest Q3 financial results from Wesfarmers. Kmart enjoyed a 10.2 per cent spike in revenues to $1.24 billion, by contrast to a 2 percent dip for Target to $544 million. According to Ian Bailey, Managing Director of Kmart Australia – " Sales performances through the third quarter were driven by a increase in customer transactions with all categories, except family entertainment, achieving double digit unit growth"
Kmart has a significant beauty business and stocks leading international brands such as Rimmel, e.l.f and Maybelline, Aussie stalwarts Australis and BYS and own brand, OXX.
Snippets from the Wires
- As we reported recently, Chinese online giant JD.com has announced a strategy of opening 1000 stores in China every day through to the end of the year. Alibaba, the big cheese of Chinese e-commerce, has also moved away from saying the future of retail is online only. Last week, the Alibaba Group opened two pop-up stores in Sydney and Melbourne to inform consumers that legacy retail and e-commerce can co-exist just fine.
- The 23rd edition of China Beauty Expo runs from May 22nd to 24th this year. More than 1200 brands from 26 countries, including Australia, Germany, Canada, France, the UK, the US and South Korea, will set up their stands in Shanghai to welcome an estimated 450,000 visitors. But the spotlight will be on Japan as this year's "country of honour".
- The latest report from Mintel reveals that the global colour cosmetics market is expected to reach US$48 billion by the end of the year – an increase of 6 per cent over 2017. The five biggest markets are – The US (US$12.1 billion), Japan (US$6.4 billion), China (US$5.1 billion), the UK (US$2.7 billion) and South Korea (US$2.2 billion).
- Unilever-owned REN, stocked by Mecca in Australia, has teamed up with TerraCycle to create hybrid packaging composed of recycled plastic and reclaimed ocean plastic. The no-waste solution will be rolled out across the brand's entire range by early 2019.
- L’Orèal Paris is debuting The Worth It Show, a live talk format, at this year's Cannes Film Festival, running from May 8th to 14th. Some of the brand's most famous celebrity ambassadors will be on hand and the L'Orèal Beauty Bar with creative workshops, one-on-one consultations and product testers will welcome festival goers and the general public. A brilliant execution which will be amplified across all media from TV, through print, consumers themselves, the millions-strong Instagram account of L'Orèal Paris itself and more.
