Luxury leads for Estée Lauder, best-Selling Chinese brand targets US market, Ulta3 debuts in Europe, and luxury brands flock to Auckland.
Luxury leads for Estée Lauder
The US$11 billion annual sales target is tantalisingly close for but the strong US dollar saw the company's net sales for the year dip 2 per cent to US$10.78 billion. Fourth quarter sales declined to US$2.52 billion, in contrast to US$2.73 billion for the same period last year.
Yet Lauder remains bullish and is forecasting a net sales increase of 6 to 8 per cent for 2016 and double digit earnings for share growth. Over the next year the company plans to target Millennials, not only with brands such as , Smashbox and newly-acquired GlamGlow but also with its core signature brands of Estée Lauder and . Partnerships with major social media influencers such as Tavi Gevinson and Margaret Zhang in Australia and younger brand faces such as Kendall Jenner will help to unlock the multi-billion dollar global spending power of Millennials says CEO Fabrizio Freda.
Major factors boosting the multinational's confidence are online sales, luxury brands, speciality-multi and freestanding stores. Continued growth in the UK and emerging markets were also major winners overall. Skincare sales declined 6 per cent over the past year to US$4.47 billion. But luxury products such as the Re-Nutriv Ultimate Diamond range and Clinique Smart Custom-Repair Serum and brands such as enjoyed significant uplifts.
Makeup sales increased 2 per cent over the year to US4.3 billion, principally due to fashion-forward and luxury brands such as Smashbox and as demand for prestige makeup soared in Asia. Lipsticks and foundations led the pack in travel retail, department stores and multi-brand speciality stores.
Haircare sales jumped 3 per cent to US$530.6 million, propelled by expanded distribution worldwide in salons, department stores and travel retail. Major global hits included the Smooth Infusion range from and the extension of Bumble & bumble's Hairdresser's Invisible Oil collection.
In spite of celebrity hirings and a raft of new men's and women's releases from Michael Kors, Zegna and the company's heritage brands, fragrance sales dropped 1 per cent to US$1.416 billion for the year. bucked the trend and continued to punch above its weight.
Best-Selling Chinese brand targets US market
Shanghai Jawah, with sales of US$1.2 billion, was the first Chinese cosmetics company to list on the Shanghai stock exchange in 2001. Founded in 1898, the company's prospects were stymied by a 39 per cent Chinese government investment stake until 2011. But even before it was privatised, Shanghai Jawah launched its premium skincare brand - Herborist - in France in 2008.
Based on traditional Chinese herbs and medicines, Herborist is the number one prestige natural skincare brand in China reports China Market Monitor. Its Taoist roots and yin/yang message also played well with the French and Herborist has become a cult brand spoken of in the same breath as L'Occitane, Biotherm and Jurlique. According to Subrina Liu, Head of Marketing: "France is famous for its skincare. If we are accepted there, it's easier to be accepted globally. I've dreamed of making a Chinese brand international and Herborist is ready".
The brand is also available in Douglas and Sephora stores in Germany, Italy, Spain and Poland and will launch in the US and the UK next year. With a definite dermo-cosmetic pitch, Herborist also offers products to treat psoriasis, acne and other widespread skin problems.
Ulta3 debuts in Europe
Australian women love ulta3. The number one nail polish brand in pharmacy, over 1.5 million bottles of its 100 shade lineup are sold every year. The term - highly competitive - falls a long way short in describing ulta3's scarcely credible price tags of $2 to $10 for top-performing lipsticks, foundations, pressed powders and bronzers and eye products.
The Aussie brand, owned by The Heat Group, has debuted in Primark, the fast fashion British retailer which is poised to open its first store in the US on September 10th. The chain is enjoying 12 per cent growth annually and has 287 stores across Europe. Ulta3 is now available in 40 stores in the UK, the Netherlands, Austria and Germany in key city stores, including London, Liverpool, Birmingham, Manchester, Rotterdam, Frankfurt, Cologne, Dusseldorf and Vienna. The brand is already selling at four times the rate in Australia and is confident it will secure a permanent place in Primark by year's end.
Luxury brands flock to Auckland
Australia is the third largest destination in the world for wealthy Chinese tourists after France and the US. But Tourism New Zealand has also been targeting the mega-wealthy. Or, to be more precise, high net worth individuals with liquid assets of at least US$5 million.
The strategy is paying off. In the first three months of the years, New Zealand was the third top-selling destination for Virtuoso, one of the world's top luxury travel networks. Boasting an annual turnover of US$14 billion, Virtuoso sales to New Zealand have skyrocketed 95 per cent over the past year to NZ$100 million.
Wealthy tourists from China, Europe and the US have kickstarted a boom in private jet charters and companies such as Asia Pacific Super Yachts NZ had their busiest summer for 12 years. Natural beauty, safety and one of the most welcoming people in the world are the major lures but those with deep pockets also need to shop wherever they land.
Auckland Airport is undergoing a 30 year expansion plan to triple passenger numbers. At the end of June, two of the world's major international duty-free companies, Aer Rianta International and LS Travel Retail Pacific took over as Auckland Airport's duty-free concession operators to introduce a wider range of upmarket brands and stores.
With the highest per capita boat ownership in the world, Auckland has already attracted Louis Vuitton, Prada, Christan Dior and Gucci. But next year sees the arrival of Tiffany & Co and Chanel. Mayor Len Brown has already held discussions with a number of other big luxury players keen to set up shop in the City of Sails. Over the past few years, Auckland has been working collectively to attract a new wave of international brands, he adds.
Snippets from the wires
- Supermarkets have been flexing their muscles as beauty destinations worldwide. French giant Carrefour, the fourth largest retail group in the world after Walmart, Tesco and Costco, is on track to acquire Rue du Commerce, a French online retailer which specialises in beauty, health, homewares and technology. The buyout will significantly strengthen Carrefour's non-food e-commerce sales. Rue du Commerce has more than five million unique visitors per month and stocks fragrance and beauty brands such as Calvin Klein, Kerastase, L'Oreal Paris, Markwins and Paco Rabanne.
- Founded in 2006, Korean beauty brand Tonymoly received a major leg-up in the US market as part of the Scouted by Sephora program. The company is now in talks with Walmart, Walgreens and QVC and has opened two flagship stores in San Francisco and New York.
- Counterfeit products are badly denting the bottom lines of luxury brands and the beauty industry. So much so, says Allied Market Research, that the global market for anti-counterfeit packaging reached US$35.7 billion in 2014 and is enjoying galloping growth of 15.7 per cent.
- Over the past 10 years, Australian grocery sales have risen by $10.2 billion. Sales of fresh fruit, vegetables and meat have also risen sharply - up $1.9 billion. Three fresh foods top the shopping list in every major supermarket chain says Nielsen - bananas, chicken breast fillets and beef mince. The researcher also notes that Australians now buy more vitamins than tea and coffee in supermarkets.
- NPD reports that men in the US spent US$4.1 billion on personal care products in 2014. The US men's grooming market is dominated by two multinationals - Unilever with a 33 per cent market share, courtesy of Dove Men+ and Axe (Lynx) and P&G, driven by Gillette and Old Spice.
- Now starring in Bravo's Don't Be Tardy, Kim Zolciak-Biermann, ex Real Housewives of Atlanta, is as productive as an entrepreneur as she is in giving birth. The mother-of-six has launched her own wine label and is working on the launch of a new line of wigs. In spite of allegations that she makes regular trips to the cosmetic surgeon, the reality star has announced that she is launching her own skincare range.
