Coty and Henkel place billion dollar-plus bids for P&G brands, Thai luxury group acquires majority stake in top German department stores, global survey says Australians rank third as critics of their Looks, and IFF makes binding offer for Lucas Meyer Cosmetics.
Coty and Henkel place billion dollar-plus bids for P&G brands
Currently boasting 34 principal brands, P&G's beauty and personal care portfolio was the only one of the multinational's four major divisions to suffer a decline in sales in the last quarter. But its shares rose last week on the news that Coty and Henkel, the owner of Schwarzkopf, emerged as two of the main bidders for separate parts of P&G's haircare, fragrance and cosmetics business.
Reuters reports that Henkel has made a major bid for P&G's haircare stable, including the Wella and Clairol brands, with a valuation of US$5 to US$7 billion. There's another hat in the ring, though. KKR & Co, the giant US private equity firm which pioneered leveraged buy-outs, has also placed a bid for the same brands.
Coty is also facing competition from two private equity firms with a vast global reach - Warburg Pincus and Clayton, Dubilier & Rice - in its submitted bid for P&G's fragrance unit and leading cosmetic brands.
According to Euromonitor, Wella and are two of the biggest names that would be most beneficial for P&G to sell. Premium fragrances such as Dolce & Gabbana and Hugo Boss are also rumoured to be part of the bids-on-the-table says the researcher because the category is more competitive than its mass and lifestyle counterpart. "They will attract a high premium because they are strong brands" says analyst Oru Mohiuddin. "Max Factor and Covergirl are also two major cosmetics brands linked to last week's bids and will help P&G by selling at attractive prices".
Thai luxury group acquires majority stake in top German department stores
Key buyers from the world's largest retailers travel the world looking for trends and inspiration and many Australian executives have followed the lead of Berlin's KaDeWe for years. More formally known as Kaufhaus des Westens, the huge department store's food hall inspired the gourmet makeover at David Jones and cosmetics buyers from both major Australian department store chains have come back gushing over its beauty floor and in-store promotions.
The Thai luxury retailer and hotel operator, Central Group, has acquired a majority stake of 50.1 per cent in KaDeWe and its ritzy sister stores - Alsterhaus in Hamburg and Oberpillinger in Munich - to continue its retail expansion in Europe. Austrian property developer SIGNA will own the remaining 49.9 per cent under the terms of the new deal.
In 2011, Central bought the iconic Italian department store chain, La Rinascente, where Giorgio Armani began his career as a window dresser, for US$230 million. The Thai powerhouse, which owns 4,700 stores worldwide and has an annual turnover of US$8 billion, repositioned La Rinascente's 11 stores in Italy and is opening a new branch in Rome in 2017.
Central also bought Illum, Denmark's oldest department store, in 2013. There's more to come after the latest German acquisition says CEO Tos Chirathivat. Central has a war chest of over US$1 billion this year to make additional department store investments in leading European cities.
Global survey says Australians rank third as critics of their looks
First the good news. According to a major survey of 22 leading countries by beauty researcher GfK, 43 per cent of those surveyed said they were "fairly" satisfied with their looks. A further 12 per cent said they were "completely" satisfied with the image they see in the mirror. The biggest surprise was that men and women registered almost equal results, in spite of the popular wisdom that women judge their appearance more critically.
No wonder the Japanese beauty industry posts the highest revenues in Asia. Over 38 per cent of Japanese people surveyed said they were "not too satisfied"or "not at all satisfied"with their looks. There was a three way tie for second ranking in the survey with 20 per cent of the British, Russians and South Koreans expressing disappointment in the image they present to the world. Australia tied with Sweden in third place with 19 per cent critical of the way they look.
It hardly needs to be pointed out by GfK that such findings are key for businesses in the beauty and personal grooming sectors. The question is how to approach the issue most successfully. The researcher advises that consumers in all the countries in the top rankings respond best to marketing strategies inviting them to "improve or change their look", rather than harsh criticism.
IFF makes binding offer for Lucas Meyer Cosmetics
IFF ( International Flavors & Fragrances) is one of the world's top four creators of prestige and mass fragrances with a presence in 29 countries. With the high growth of skincare sales worldwide accelerating, the multinational has made a binding offer of $412 million for Lucas Meyer Cosmetics.
Headquartered in Canada. Lucas Meyer also runs major operations in Australia and France. The company has a booming business in active ingredients, delivery systems and high-performance peptides. Southern Cross Botanicals, which concentrates on the R&D of Australian native ingredients, is also a leading part of Lucas Meyer's Australian business.
"The addition of Lucas Meyer Cosmetics to the IFF portfolio aligns well with our strategic growth initiative to strengthen and expand our portfolio"says IFF Chairman and CEO Andreas Fibig. "The company has a successful track record of delivering double-digit compounded annual sales growth since 2011 in a very atractive industry. We believe they will be an excellent complement to our existing portfolio and will strengthen our ability to achieve our Vision 2020 goals of accelerated growth and increased differentiation".
Snippets from the wires
- The rumour that Gwyneth Paltrow's lifestyle website, Goop, is poised to launch its own skincare line was confirmed last week. CEO Lisa Gershon revealed that the new range will launch in January and will be sold directly to consumers - not through retailers.
- UK multinational PZ Cussons posted another positive result for the year ended in May. Nigeria, the conglomerate's largest market, appears to be enjoying more stable currency conditions. But the real sweetspot is Europe and Asia, fuelled by the latest launch from St Tropez - a first-to-market, in-shower gradual tanner.
- The popularity of rollerball fragrances ebbs and flows. But with sales of smaller, 30ml bottles of prestige fragrances spiking worldwide, reports NPD, Penhaligon's has launched rollerball versions of three popular scents - Vaara, Artemisia and Orange Blossom.
- Walgreens, the largest US drugstore chain, has been shedding customers for close to five years. Rival drugstore chain CVS came a cropper when it tried to introduce high-end cosmetics from 2008 to 2012 and Walgreens doesn't want to make the same mistake. Cosmetics and skincare is a profitable sector for the drugstore chain, with 20 per cent of regular customers claiming to be interested in beauty. Alex Gourlay, a veteran of Boots in the UK is now President of Walgreens, and has identified masstige products such as the iconic Boots No 7 lineup as the major focus of the plan to grow beauty sales across Walgreens US store network.
- The popularity of mass market candles is on the wane in the US reports Kline & Co. But luxury, prestige candles from brands such as Nest and Diptyque are enjoying strong double-digit growth. Diffusers are also experiencing an impressive growth rate of 5 per cent in the US home scent market.
