The Hut Group buys Turnkey Skincare Manufacturer; Christmas casual positions up 40 per cent; Chinese market fuels new boom in candles and home fragrances; and Unilever reveals 10 to one ratio in beauty buyout strategy.
The Hut Group buys Turnkey Skincare Manufacturer
Exact details are hazy. But The Hut Group (THG), the fast-growing UK online beauty and well-being retailer, has signed a deal worth between US$64.5 million and US$129.07 million to acquire leading British skincare products maker, Acheson & Acheson. The goal, however, is clear. THG plans to expand the in-house production of own-brand products and will also commit an additional US$64.5 million to expand the reach of its latest acquisition in Europe and the US.
Based in England's picturesque West Country, Acheson & Acheson was founded in 1992 by Fiona and Keith Acheson. The company is a leading contract manufacturer of skincare and haircare products. It also owns Ameliorate, a targeted treatment for Keratosis Pilaris, the condition commonly known as "chicken skin", sold in prestige retailers such as Harvey Nichols, Selfridges and Marks & Spencer. Over 50 of Acheson & Acheson 380-strong workforce focus solely on pioneering product development and innovation and the business is a one-stop shop for clients from product formulation through to packaging and distribution.
In addition to its 29,000 square metre production facility, Acheson & Acheson's headquarters and packaging centre will be added to THG's facilities in the UK, the US and Poland. Acheson & Acheson is a truly exciting addition to THG and I am delighted to welcome this very talented team, says THG CEO Matthew Moulding." We have made a significant investment and one that uniquely positions THG to make a step-change in its innovation, operational excellence and manufacturing capacity".
Christmas casual positions up 40 per cent
The three month lead-up to Christmas accounts for as much as 60 per cent of annual sales in Australia. Christmas gifting in the beauty industry is shifting into high gear and targeted makeup, skincare and fragrances are currently being sent to media on an almost daily basis. According to jobs site Indeed, Christmas casual positions are already tracking 40 per cent higher than 2017 halfway through the peak September to October period.
Retailers are far and away the leading casual employers over the Festive Season, says Indeed, representing 67 per cent of Christmas job placements nationwide. Clothing and jewelry retailers lead the pack with the top 10 businesses hiring for Christmas including Pandora Jewelry, Bed Bath N' Table, The Just Group, Sunglass Hut and Rebel.
Chinese market fuels new boom in candles and home fragrances
China has been top-of-mind for international beauty, skincare and haircare brands for well over a decade. But home fragrances, diffusers, candles and essential oils are fast becoming must-haves for fashion-forward Chinese consumers, says Jing Daily, the leading digital publication on luxury consumer trends in China. A trend of particular importance to Australian and New Zealand speciality brands such as Ecoya, Coco Lux, Lumira and Glasshouse.
Scenting homes is not a new idea to the Chinese, of course. The elite and imperial households were fragrancing their living quarters back in the 3rd century BCE. An exhibition titled The Perfumes of China: The Culture of Incense in Imperial Times has just closed its doors at the Musee Cernuchi in Paris. But beyond the fact that more Chinese consumers are becoming increasingly affluent, there are more modern reasons home fragrance, diffuser and candle sales are on the upswing.
Firstly, there are many more choices available with the coveted Western edge from leading brands such as Diptyque, Dior and Jo Malone and the leading Chinese investment company, Nan Hai, bought Crabtree & Evelyn in 2015. Home fragrance and candle brands have also followed their beauty counterparts in using celebrities and key influencers to push the idea on the major Chinese social media platforms that luxury home fragrances and candles are an intrinsic part of an aspirational lifestyle.
Unilever reveals 10 to one ratio in beauty buyout strategy
Launching a beauty brand and hoping to sell it at a huge profit to a major multinational has been the MO of many businesses for decades. Think L'Oréal's acquisition of Lancôme in 1964, Estée Lauder's buyout of M.A.C in 1994 and Elizabeth Arden's string of owners since the founder moved on. But it's never been easier to start a cosmetics and skincare brand because of the expansion of the global contract cosmetic industry, notably in Asia. The number of niche brands has exploded in recent years and hopes of selling to an industry giant or private equity firm have soared.
But for every brand that does manage to attract acquisition interest; the vast majority don’t. There's also been quite a few misfires in recent years where leading players have paid too much for brands which have failed to set the world on fire. Unilever has been on a major shopping spree since 2015, but Beauty and Personal Care president Alan Jope, recently threw the corporate equivalent of a bucket of cold water over start-ups hoping to score a multi-million dollar deal.
Speaking at the Barclays Global Consumer Staples Conference in Boston, Jope pointed out that even though he had approved 130 "licenses to hunt" over the past three years, Unilever had made only 13 acquisitions as a result. As he pithily put it – "We're on a ten-to-one ratio of frogs we have to kiss to find the occasional prince or princess". It should also be noted that Unilever has launched seven new brands of its own over the past 18 months, including Love Beauty and Planet which is on track to reach US$60 million in sales in its first year in the US and the UK alone.
Snippets from the Wires
- Consumer demand for organic ingredients in food and personal care products is fuelling massive growth in the global flavours and fragrances market, reports Hexa Research. An annual growth rate of 4.5 per cent is expected to propel the sector to US$28.65 billion a year by 2025.
- L'Oréal China and JD.com, the second largest online company in China, have signed a landmark Inclusive Beauty program to promote the employment of people with disabilities in e-commerce. The French multinational will also create makeup tutorials in sign language – a first for China – and JD.com will provide professional training at two of its leading service centres.
- Beauty brands suffer the most through sales of counterfeit products by third party sellers on Amazon, reports the World Trademark Review. Makeup has the highest share of third party listings on the online giant, says data tracker Gartner L2. Over 30 per cent of listings by third party sellers have at least one product review that includes fake or suspicious products.
- Unilever is ramping up its presence in global travel retail through its prestige division. The personal care and beauty heavyweight will showcase two of its recent acquisitions – Murad skincare and Living Proof premium haircare – at the TFWA Tax Free World Exhibition & Conference to be held in Cannes from September 30th to October 5th because of their "huge untapped potential".
