April 9, 2018: Elisabeth King reports on this week's business news

Australians spend $7.1 billion a year on beauty and $13.4 billion on personal care; Inter Parfums inks fragrance deal with Graff Diamonds; China's online market to reach $US1.1 trillion by year's end; and Gwyneth Paltrow's Goop secures $US50 million in funding.

Australians spend $7.1 billion a year on beauty and $13.4 billion on personal care
The latest household expenditure survey from the Australian Bureau of Statistics (ABS) is a real eye-opener. In 2016, Aussie households spent $666 billion on general living costs – an average of $74,301 per year. Apart from housing, the top three big ticket items in 2016 were: recreation ($80.3 billion), cars ($65.8 billion) and education ($20.5 billion). 

The ABS rightly separates the personal care figures, which include deodorants, oral care, soaps and shaving products, from the national beauty bill. Australia's personal care outlay reached $13.4 billion in 2016 and the national beauty spend climbed to $7.1 billion. A combined total of $20.5 billion which just pipped the $20.4 billion spent on fashion, clothing and accessories. 

We're a fragrant lot, too, revealed the report. Canberrans have the highest weekly spend on perfume ($1.56), followed by Victoria ($1.27), NSW ($1.01), Queensland (92 cents), SA (82 cents), Tasmania (75 cents, NT (59 cents) and WA (52 cents). 

Inter Parfums inks fragrance deal with Graff Diamonds
The world's most glamorous jewellers have been stalwarts of the luxury fragrance category for decades – Cartier, Van Cleef & Arpels, Boucheron, Bvlgari, Chopard and Tiffany & Co. But London-based Graff Diamonds is in a league of its own. Famed as the "King of Diamonds", the company specialises in buying unique stones such as last year's much-publicised acquisition of the 109 carat La Rona, the largest gem-quality rough diamond discovered in over a century. The company also loans its eye-popping bracelets and necklaces at A-list events like the Oscars.

Graff has signed an exclusive global license with Inter Parfums to create, develop and distribute fragrances. The eight year agreement includes three automatic renewal options which extends the deal to 2035. The first multi-scent collection is expected to debut in late 2019 through a global network of 50 Graff stores, including the Melbourne boutique in Crown Casino, prestige travel retail and high-end department stores.

According to Jean Madar, Chairman and CEO of Inter Parfums – "With this agreement, Graff, has become one of the most exclusive and aspirational brands in our fragrance portfolio". The landmark partnership also marks the first time Graff has entered into a license of any kind. 

China's online market to reach $US1.1 trillion by year's end
China represents 12 per cent of global beauty sales and 30 per cent of worldwide beauty e-commerce revenues. But as mobile shopping and spending on fashion, beauty and health continues to sky-rocket, China's overall online retail market is expected to reach $US1.1 trillion by the end of the year, according to US market researcher Forrester. A year ahead of estimates. 

The colossal figure makes China the runaway leader in the APAC regional e-commerce market, representing 83 per cent of total online sales. Japan ranks second with online sales of $US97 billion, followed by South Korea at $US69 billion and Australia at $US31 billion. India clinched the fifth highest spot with online sales of $US27 billion, but is expected to vault past Australia next year. Forrester predicts that by 2022, 25 per cent of all retail sales in the APAC region will take place online. 

Gwyneth Paltrow's Goop secures $US50 million in funding
For a brand that's yet to be profitable, Gwyneth Paltrow's Goop continues to attract investor interest. In two previous Series A and B funding rounds in 2015 and 2016, Goop received a total cash injection  of $US25 million. But it's latest Series C funding is the biggest so far with investors including NEA, Felix Capital and Light Speed stumping up $US50 million. When your godfather is Steven Spielberg, a call-out to family and friends also delivers a handy $US7 million to push outsider interest in the brand to $US82 million. 

Sources estimate that Goop's revenues have reached between $US15 and $US20 million. The company claims to have tripled sales over the past two years and is on track to more than double last year's revenues. The continued upswing will be fueled by new product lines, including a fourth fragrance, skincare products and a home goods collection. The latest funding will be earmarked for international expansion, centering on a European launch later this year. A star performer has been the Wellness vitamin and supplements lineup which pulled in $US100,000 on its launch day in 2017. 

Snippets from the wires

  • Beauty consumers love a bargain and targeted attention. Priceline's Sister Club is one of the top 10 loyalty programs in Australia across all industries. The Perfume Shop in the UK launched its Rewards Club in 2011, offering members discounts, personalised offers and member pricing. Now owned by Hong Kong-based A.S Watson, the world's largest health and beauty retail group, the fragrance retailer has just passed the 3 million member milestone.
  • Vegan beauty has been sucking up a lot of media oxygen. But the trend has a long way to go before hitting the mainstream. The NPD Group reports that sales of vegan beauty products in the UK increased by 38 per cent over the past year but from a small base. Even after the upsurge, says the market research firm, vegan beauty products account for only 1 per cent of the women's face skincare market in the UK.
  • In most markets, long-established fragrances still top the bestseller lists. But the top five new fragrance launches in the US in 2017 were: Gabrielle Chanel ($US30.9 million), Gucci Bloom ($US22 million), Y by Yves St Laurent (a men's fragrance; $US15.4 million) and Woman by Ralph Lauren ($US15 million).
  • Reaching out to new consumers has become a lot more creative than it used to be. Earlier this year, Estée Lauder partnered with Expedia, the leading online travel site, for a US-based promotion. A strategy that's tailor-made for Australia where the annual travel spend is twice the global average. The three top travel websites, reports Roy Morgan Research, are: Tripadvisor (15.7%), Booking.com (13.6%) and Qantas (9%). But 42.5 per cent of Australians still used travel agents over the past 12 months, especially for multi-destination itineraries.