L Catterton invests US$200 million in Jessica Alba's Honest Company; Global vegan cosmetics market expected to reach US$20.8 billion; A.S Watson to open 1300 new stores worldwide; and the top 5 beauty exporting nations to the European Union.
L Catterton invests US$200 million in Jessica Alba's Honest Company
Jessica Alba's The Honest Company has had some rocky moments over the past few years, including allegations that its sunscreens and household cleaning products didn't live up to their promises. In 2016, rumours also swirled that Unilever was looking to buy the company. A turning point arrived when Nick Vlahos, a heavy hitter in the global expansion of Burt's Bees and other CPG brands, became CEO in March 2017.
Over the past year, the company has established an in-house beauty product lab, steamlined and updated its product offerings in beauty and babycare and doubled distribution to 17,000 outlets in the US, notably through mega retailers Target and Amazon.
L Catterton has taken a minority stake in The Honest Company for US$200 million. Other beauty investments by the private equity arm of luxury goods giant LVMH include Il Makiage, Cover FX, Kopari and Tula. One of the first strategic moves is to expand into Europe in the Northern Hemisphere Spring next year through Douglas, the largest European perfumery and beauty chain. The core market for The Honest Company is Millennials aged 25 to 35, many of whom like the star herself are juggling work and family responsibilities. Germany, France, Italy, Spain, Poland, the Netherlands and Austria will be the entry European markets for the brand.
Global vegan cosmetics market expected to reach US$20.8 billion
Cruelty-free has become as big a selling point as the absence of parabens and pthlates in natural beauty. According to a new report from Grand View Research, Millennials are driving the shift to vegan cosmetics and not only because animal testing is regarded as unethical. Growing concerns about health and safety and sustainability moving to the fore in purchasing decisions are also fuelling demand.
Skincare dominates the global vegan beauty market, says the business consulting firm, accounting for 30.7 per cent of global sales in 2017. As more and more brands concentrate on vegan beauty claims, the worldwide market is expected to reach US$20.8 billion by 2025. The US is leading the way as sales are expected to grow by a CAGR of 6.3 per cent over the next seven years, with revenues in the American market expected to lift to US$3.6 billion. From being a niche within a niche category, says Grand View Research, vegan beauty has expanded rapidly over the past few years as new and existing brands launch new ranges or offer 100 per cent vegan products.
A.S Watson to open 1300 new stores worldwide
Online sales are growing fast but they are still a very, very long way behind bricks-and-mortar revenues. Online retail only accounted for 5.4 per cent of total Australian retail turnover in the month of April, reports the Australian Bureau of Statistics. Even in China, the biggest e-commerce market in the world, traditional stores and malls responsible for the bulk of the country's US$4.8 trillion a year retail market have maintained annual sales growth of 10 per cent.
Hong Kong-based A.S Watson is the largest international health and beauty retailer in the world with 14,300 locations in 24 countries. The multinational owns 12 retail brands including the UK's Superdrug (800 stores), Dutch conglomerate Kruidvat (1900 stores), ParkNShop, the second largest supermarket chain in Hong Kong, and Watsons, its largest retail chain with 6600 stores. Over 28 million customers a week walk through the doors of an A.S Watson store and the company has announced it will open 1300 new stores around the world by next year – approximately one every 7 hours.
A.S Watson is also planning to invest US$70 million over the next three years to meet changing consumer expectations and enhance the customer experience. AI functions and updated e-commerce capabilities will lead the way. Growth in terms of store numbers is just part of the picture, says Malina Ngai, Group Chief Operating Officer. "We are well aware that offering the best customer services and enhancing customer satisfaction is key to our continued success".
Top 5 beauty exporting nations to the European Union
Europe remains the largest regional beauty and personal care market in the world and many Australian brands are focused on extending their export reach to the EU, including Lanolips, KORA Organics and Trilogy. But Australia still has a significant way to go to match the top five countries exporting beauty and personal care products to Europe, says the International Trade Administration
Not surprisingly, given the number of beauty and personal care multinationals headquartered in the US such as P&G and Estée Lauder, the US took out the top spot in 2017 with US$1.41 billion worth of cosmetics exports to the EU. But even with all the talk of growth to the Chinese domestic beauty market for Western brands, China ranked second with shipments of US$741.4 million. Switzerland came in third with US$675.5 million, followed by Canada at US$161.2 million. South Korea surpassed Japan for the first time last year to rank fifth with sales of US$158.8 million. The highest year-on-year growth among the top five of 46.8 per cent.
Snippets from the wires
- L'Oréal bought Baxter of California, the prestige men's grooming brand, in 2013. Over the past four years, the digital-first player has become the fastest-growing male grooming brand in the US. The French multinational plans to triple the size of the Baxter business by 2020 and is launching the brand into the entire European regional market through a hub based in London from July.
- The Myer Market, launched last December, has reported 30 per cent growth in the last quarter. The online marketplace has extended to organic skincare, books, activewear and luxury experiences and now ranges 30,000 products.
- Australian retail sales lifted 0.4 per cent in April, reports the Australian Bureau of Statistics. The "Indian summer" weather conditions prompted more consumers to be out-and-about. The biggest spending lifts were enjoyed by cafes and restaurants (+1.3 %), followed by other retailing (+0.9%) and household goods (+0.7%). Clothing, footwear, accessory and department store sales dipped slightly. But the National Retail Association expects Australians will spend US$26 billion in June because of end of financial year discounting.
