L'Oréal buys US hair colour brand Pulp Riot; Designer Parfums acquires two fragrance licenses from Coty; Asia-Pacific, not just China, set to fuel global beauty sales; and online shopping as much a leisure as a sales activity.
L'Oréal buys US hair colour brand Pulp Riot
L'Oréal has long been a serial buyer of US professional hair brands such as Redken, Matrix and Pureology. The multinational has beefed up its American portfolio with the acquisition of Pulp Riot for an undisclosed sum. Founded in 2016 by David and Alexis Thurston of Butterfly Circus, a travelling group of leading hair stylists who tour the US teaching cutting, colouring and social media classes, the industry disruptor offers stylists the chance to be artists with its semi-permanent graphic colour range including Absinthe (bright green) and Cupid (pastel pink).
Instagram has been vital to the success of Pulp Riot, which has 675,000 followers, because of the artistry aspect of using hair as a "canvas", and sales reached US$11 million in 2017. Pulp Riot was owned by Luxury Brand Partners (LBP), whose stable includes R+Co, Smith & Cult, IGK and men's grooming brand V76 by Vaughan. All of the brands are available in Australia, including Pulp Riot, and this is the second major deal for LBP in six months.
The company sold Oribe, the luxury haircare brand, to Kao Corporation in December last year for an estimated US$400 million. At the time, Oribe had sales of between US$85 million and US$100 million. Both Oribe and Pulp Riot have been earmarked for international expansion by their new owners.
Designer Parfums acquires two fragrance licenses from Coty
UK-based Designer Parfums, founded in 2002, has built up a strong portfolio of fragrance brands. A star-studded lineup that includes the celebrity scents of Ariana Grande, Naomi Campbell and Jennifer Lopez, designer names such as Aigner, Parfums Scherrer, Ghost and Worth and lifestyle juices from Frederic Fekkai and Porsche Design. With a global network extending to 130 countries, the company is permanently on the scout for new acquisitions.
Two leading fragrance licenses have made the move from Coty. The first acquistion in mid-May was Cerruti 1881, linked to the prestige fashion brand launched by Italian designer, Nino Cerruti, in 1967. Coty acquired the fragrance license for the Playboy brand in 2008 and it also made the shift to Designer Parfums last week. Playboy-branded products still rack up US$1.5 billion in annual sales and the men's fragrance sprays have been nice little earners in Australia. There are women's scents bearing the iconic bunny logo as well, and many have been made by some of the world's leading perfume noses, including Nathalie Lorson, Alienor Massenet and Fabrice Pellegrin.
Asia-Pacific, not just China, set to fuel global beauty sales
Global beauty sales increased by 7 per cent in 2017, reports Euromonitor International – the biggest surge in 10 years. The premium sector has been growing worldwide but in China the prestige makeup sector soared by 50 per cent last year, driven largely by lip products. Over the next four years, says the data tracker, China will overtake Japan as the world's second largest colour cosmetic market after the US.
But India and Indonesia are finally fulfilling their potential, adds Irina Barbalova, Global Lead, Beauty and Personal Care at Euromonitor. "With the steady pace of strong year-on-year expansion, the markets of India and Indonesia will be among the top 10 absolute growth contributors in the years to 2022". India is set to surpass Germany, the UK and France to become the world's fifth largest beauty market over the same period. Indonesia will only lag behind the US and China as one of the top three engines of growth in the skincare category.
Japan's strong comeback in the face of competition from South Korea will continue, says Euromonitor. Total beauty sales in South Korea almost flatlined in 2017, increasing by only 0.9 per cent. But domestic sales in Japan rose strongly, partially fuelled by a huge increase in the number of Chinese and other Asian tourists in the lead up to the Tokyo Olympics in 2020. Japan's leading beauty players, particularly Shiseido and Kao, are also aggressively pursuing international expansion.
Online shopping as much a leisure as a sales activity
The first phrase many people learn in a foreign language is – Just looking. According to PayPal's mCommerce Index: Trends Report, the same browsing-only MO is as much of a phenomenon when it comes to shopping online as it is in bricks-and-mortar stores. More than 67 per cent of Australian smartphone owners say they "shop" just for fun without any intention of buying anything. When they do make a purchase, 77 per cent revealed they are impulse buys.
This retailtainment trend is most pronounced among Gen Zers. A hefty 69 per cent of those aged 22 and under rank trawling e-commerce sites as a leisure activity on a par with watching television (also 69%) and ahead of watching or playing sport – 31 per cent and 27 per cent, respectively.
According to Elaine Herlihy, PayPal Australia's director of consumer engagement – "Reading and writing reviews, product research and sharing images of visual try-ons is an enjoyable pastime for many Australians, particularly with younger shoppers. Australian retailers can no longer view their mobile offering as a transactional storefront, but as a platform to deliver enjoyment, entertainment and social sharing".
A lot of barriers remain on the path-to-purchase, reveals the report. In spite of the growth in online shopping, 88 per cent of consumers revealed that they were still worried about being able to identify the right size of an item, and 82 per cent said that even if a size was correct they are still concerned if it will look good on them. One of the major takeaways for the beauty industry is that only 5 per cent of Australians said they had used augmented reality.
Snippets from the wires
- Kao Corporation has long shaken off its Japan-only identity. The multinational owns Biore, Jergens, John Frieda and Molton Brown and recently announced a new global strategy. The plan is to accelerate growth in Europe and Asia with 11 selected power brands to reach a sales target of AUD$3.62 billion a year by 2020.
- Balenciaga, the 101 year old prestige fashion brand, has struck a major chord with Millennials. The fastest-growing brand in the Kering portfolio behind Gucci, the heritage label made the move to streetwear with the appointment of creative director, Demna Gvasalia, in 2015. Millennials now account for 60 per cent of Balenciaga's accessories, clothing and footwear, notably its must-have Triple S sneakers.
- In the Reputation Institute's first-ever CEO RepTrak rankings, the fashion and beauty industries have done well with two CEOs in the global top 10. Giorgio Armani and Fabrizio Freda, CEO of the Estée Lauder Companies, both made the cut.
- AfterPay, the Aussie buy now, pay later platform, has been a big hit with Millennials and Gen Zers. Launched in 2015, the four interest-free instalments player has expanded to 14,000 retailers and has been used by 1.8 million Australians. AfterPay is now moving overseas to launch in the US through Urban Outfitters online store and will roll out across the company's other major brands, Anthropologie and Free People.
