Key Korean producer for Lauder and L'Oréal buys US rival; Melbourne Airport raises its beauty game; Sydney's Pitt Street Mall 7th most expensive shopping street in the world; and Asia/Pacific reaches 51 per cent of global beauty sales.
Key Korean producer for Lauder and L'Oréal buys US rival
Rumours first surfaced in early October that Cosmax, Korea's leading cosmetics original development manufacturer (ODM), was in talks to buy US rival, NuWorld, for $US100 million. Based in New Jersey, NuWorld is the third largest manufacturer of cosmetic products in the US, with reported sales of $US105 million in 2016. Cosmax, a major producer for global multinationals such as Estée Lauder and L'Oréal, made its first foray into the US market in 2013, acquiring a major cosmetics factory in Ohio.
The final $US50 million deal price for the buyout of NuWorld may be only half the original talked-about figure, but the strategic move is very ambitious. The combined clout of Cosmax and NuWorld is part of a plan to gain a competitive edge in the US and global export markets to become the world's top cosmetics ODM player with revenues of $US2.7 billion by 2020.
Melbourne Airport raises its beauty game
Melbourne has been challenging Sydney as a rival gateway airport in recent years. In the month of September alone, international passenger numbers hit 870,000 – a lift of 8.8 per cent over the same period last year. The top five outbound international routes from Victoria's capital are Auckland, Singapore, Kuala Lumpur, Hong Kong and Los Angeles. Chinese tourists are very much a bullseye target and in early October the airport signed up for WeChat, the colossal Chinese messaging "app for everything" with 980 million active monthly users. A new Japan Airlines service to Tokyo and the upcoming direct link to Vancouver by Air Canada are also sure to push overseas PAX numbers higher next year.
To boost Melbourne's travel retail chops, a new 2,743 square metre duty-free store officially opened in Terminal 2 last week. The high-tech space is only the second "New Generation" concept store in the world launched by global duty-free giant Dufry. Billed as a fully immersive shopping experience showcasing Melbourne's position as the retail capital of Australia, the new personalised beauty section boasts new releases such as Coty's new Tiffany & Co fragrance and welcomes new brands such as Tom Ford Cosmetics, Urban Decay, Jo Malone and Australian organic and cosmeceutical skincare brand, Rosien.
Sydney's Pitt Street Mall 7th most expensive shopping street in the world
Close to one-third of the world's ritziest shopping strips ranked in Cushman & Wakefield's 2017 Main Streets Across the World report raised their rents over the past year. The global commercial real estate broker says that the growth of online retailing has had little effect on demand for an address with global name recognition.
But there's a big gap in rates among the top 10 placegetters and Sydney's Pitt Street Mall is the only Southern Hemisphere location. The following figures are per square foot because Cushman & Wakefield are based in the US.
- Upper Fifth Avenue, New York - $US3000
- Causeway Bay, Hong Kong - $US2725
- New Bond Street, London - $US1719
- Via Montenapoleone, Milan - $US1443
- Champs-Elysees, Paris - $US1407
- Ginza, Tokyo - $US1200
- Pitt Street Mall, Sydney - $US1000
- Myeongdong, Seoul - $US914
- Bahnhofstrasse, Zurich - $US880
- Kohlmarkt, Vienna - $US490
Asia/Pacific reaches 51 per cent of global beauty sales
Napoleon's famous quote – "China is a sleeping giant. Let her sleep, for when she wakes, she will move the world" – has resounding resonance in the global beauty industry. According to Euromonitor International, the Asia/Pacific (APAC) beauty market has enjoyed compound growth of 6 per cent over the past couple of years and now accounts for 51 per cent of global sales.
Facial moisturisers are the biggest segment in the APAC beauty market with total sales of $US19 billion. But double digit growth in face masks – up 13 per cent from 2012 to 2017 – has pushed annual sales to $US5 billion. APAC is also the largest regional market for colour cosmetics, rising to a value of $US15 billion in 2016. Foundations and concealers account for a third of the total makeup market with sales of $US5 billion. By contrast, following the explosion of worldwide publicity and number of new launches, the BB and CC Cream category has only risen to a "modest" $US1 billion in sales, says the researcher.
APAC is also having a huge impact on beauty sales to the over-50s, says Euromonitor. Japan has the oldest median age in the world and there are more Chinese people aged 60 and over than the entire population of the US. There's no question of Asian women throwing in the towel where enhancing their attractiveness is concerned. Over 50 per cent of women aged 60 or over use foundation at least once a week, 59 per cent use lipstick and 52 per cent slap on eye makeup with the same frequency, notes the researcher.
Another major takeaway from the report is the growing popularity of Asian-produced masstige skincare. According to Sunny Um, Beauty and Fashion Analyst at Euromonitor International, South Korean brands such as The Face Shop (owned by LG), Etude House and Innisfree (both owned by AmorePacific) have eroded the market share of premium skincare. "They have fuelled the mass cosmetics boom by fulfilling Asian consumers' need for self-indulgence and affordability through creative brand storytelling, eye-catching packaging, diverse product ranges and low-price points".
Snippets from the wires
- The two major fragrance-buying demographics worldwide are Millennials and women in their 40s and 50s. German designer Jil Sander has taken a tilt at the older, more sophisticated market. Licensee Coty will release the brand's new fragrance in the European Spring with Susan Sarandon as its new face.
- The Australian and US beauty markets have many touchpoints in common. According to the latest Cosmetics Shopping Consumer Insights report from the International Council of Shopping Centers, discounts are still the main driver of US beauty sales. Nearly three-quarters of American beauty buyers shop at discount department stores like Walmart and Target, 65 per cent at drugstores such as Walgreens and 50 per cent at mid-priced department stores such as Macy's. Why the high percentages across the board? The average beauty lover cherry-picks her purchases across about five retailers.
- There's no stopping the massive consumer shift to natural beauty and personal care products. P&G is catching the wave with the acquisition of Native, a natural deodorant brand based in San Francisco. Seasonal aromas such as the Autumnal pumpkin spice latte and the Spring-like lavender and rose are a major point-of-difference.
