June 4, 2018: Elisabeth King reports on this week's business news

Topix Pharmaceuticals acquires Derma E; BrandZ taps World's Top 15 Most Valuable Personal Care Brands; sales surge 47 per cent for The Hut Group; and Australia's online spend hits $21.3 billion.

Topix Pharmaceuticals acquires Derma E
From its humble start in the mid-1980s with one product – Vitamin E 12,000 IU Cream – sold through a small health food store in California, Derma E has become one of the largest natural facial brands in the US. The range has expanded to 80 products, including face, body and hair care, which are 100 per cent vegan and cruelty-free and boast clinically-proven benefits. Derma E has its own Australian website – www.dermae.com.au –  and is also sold through Priceline and other leading websites. 

Topix Pharmaceuticals, one of the largest producers of innovative, clinically validated professional skincare to the dermatologist and doctor market in the US, has acquired Derma E for an undisclosed sum. Leading equity firm New Mountain Capital, which manages assets in excess of US$20 billion, invested in Topix in 2016 to expand its pre-eminence in the professional skincare market through the key brands Replenix, Citrix, Glycolix and ReBrightalyze and to finance strategic acquisitions. 

The buyout of Derma E not only boosts the eco-ethical and natural cred of Topix. It also allows both companies to pursue longterm growth and innovation in two of the fastest-growing sectors of the skincare market – professional and natural. 

BrandZ taps World's Top 15 Most Valuable Personal Care Brands
The annual BrandZ Top 100 Most Valuable Brands list, compiled by Kantar Millward Brown, is eagerly awaited across many industries. Personal care multinationals are nowhere near the top of the rankings, which are dominated by the likes of Google, Apple, Microsoft, Amazon and Facebook.

But the Top 15 brands in the category have all enjoyed double-digit growth over the past 12 months with the exception of Gillette. The most interesting takeaways of this year's lineup is that prestige brands make up nearly 25 per cent of the total and L'Oréal Paris has snagged the top spot for the sixth year in a row. 

  1. L'Oréal Paris - Brand Value: US$26.1 billion; up 9 per cent
  2. Colgate - Brand Value US$18.51 billion; up 4 per cent
  3. Gillette - Brand Value: US$15.35 billion - down 6 per cent
  4. Lancôme - Brand Value: US$11.27 billion; up 20 per cent
  5. Nivea - Brand Value: US$7.39 billion; up 9 per cent
  6. Clinique - Brand Value: US$7.17 billion; up 20 per cent
  7. Garnier - Brand Value: US$6.758 billion; up 5 per cent
  8. Dove - Brand Value: US$6.02 billion; up 4 per cent
  9. Estée Lauder - Brand Value: US$5.43 billion; up 29 per cent
  10. Pantene Pro-V - Brand value: US$4.218 billion; up 13 per cent
  11. Olay - Brand Value: US$4.04 billion; up 8 per cent
  12. Shiseido - Brand Value: US$3.827 billion; up 42 per cent
  13. Crest - Brand Value: US$3.368 billion; up 1 per cent
  14. Oral-B- Brand Value: US$2.68 billion; up 1 per cent
  15. Head & Shoulders - Brand Value: US$2.49 billion; up 3 per cent

Sales surge 47 per cent for The Hut Group
UK-based The Hut Group (THG) snapped up AUD$288.3 million worth of key beauty brands and websites in 2017 and 2018, including Illamasqua, ESPA, RY.com.au and Eyeko. The corporate shopping spree has paid off handsomely. The company enjoyed sales of AUD$1.294 billion in 2017, a huge jump of 47 per cent over 2016. More importantly, international sales accounted for 70 per cent of total revenues at AUD$900.3 million.

THG created 1884 new jobs around the world in 2017 and expect to add a further 2000 positions by the end of this year. According to CEO, Matthew Moulding: "2017 was a year of significant development and growth for The Hut Group, as we invested in our infrastructure, our technology, our people and our brands. THG is now firmly a global company and 58 per cent of total sales being our own brands". 

Australia's online spend hits $21.3 billion
Over the next 12 months global online goods purchases are expected to reach AUD$2.86 trillion, says Ben Franzi, Australia Post general manager for parcels and express services. Aussies are certainly making their presence felt, reveals the annual Inside Australian Online Shopping Report from Australia Post. In 2017, Australian e-commerce fans spent a record $21.3 billion – an increase of 18.7 per cent over the previous year. 

In spite of the fact that giant marketplaces such as Amazon and eBay enjoyed growth of 74.8 per cent during the period, local retailers accounted for 80 per cent of the national online spend. Fashion was again the top-selling category with sales increasing 27.2 per cent. Health and beauty sales enjoyed double-digit growth of 13.2 per cent. Homewares and appliances were also high on many shopping lists and revenues increased by 10.9 per cent. End-of-financial year discounting in May/June 2017 propelled the strongest uptick of the year with online purchases jumping 32.2 per cent over the period. 

The giant Chinese marketplaces – Alibaba's Tmall and JD.com – have also made it easier for Australian brands to expand their online export sales, says the report. Fashion, cosmetics, health supplements and well-being products have become some of Australia's most sought-after international e-commerce purchases, adds Franzi. "Marketplaces make it easier in our key export markets – China, the US and India – to find Australian products and offer a more convenient way for local businesses to start selling overseas". 

Snippets from the wires

  • China slashed import tariffs on 200 consumer products, including health supplements and pharmaceuticals, last December. The Chinese government has announced that tariffs on cosmetics, skincare and haircare will be reduced from 8.4 per cent to 2.9 per cent from July 1st.
  • Another week, another accolade for Fabrizio Freda. The President and CEO of The Estée Lauder Companies has been named on Barron's list of the World's Best CEOs for 2018. This year's 30-strong rankings also include LVMH's Bernard Arnaud and Amazon's Jeff Bezos. There's no hierarchy and CEOs are judged by revenue and earnings growth and other key performance markers.
  • Fragrances account for 14 per cent of Shiseido's total prestige sales, but the Japanese giant is expecting annual growth of at least 9 per cent over the next three years. Isabelle Gex, a veteran of LVMH and Chanel, has been appointed President of Global Fragrances for Shiseido and will oversee its luxury stable of scents, including Dolce & Gabbana, Narciso Rodriguez, Issey Miyake, Elie Saab, Zadig & Voltaire, Azzedine Alaia and Serge Lutens. Skincare makes up 58 per cent of Shiseido's prestige sales, followed by makeup at 28 per cent.
  • Ulta Beauty made the Fortune 500 list for the first time last year and CEO Mary Dillon was named in the financial publication's Most Powerful Women rankings. The largest specialist beauty chain in the US opened 34 new stores during Q1 of its fiscal year, lifting its network to 1107 stores. The company has reported a sales jump of 17.4 per cent over the period to US$1.543 billion.