Why Johnny Depp is on the money for Dior, private equity firm invests in Too Faced Cosmetics, natural and organic sales in Asia to hit US$1 billion, and Europe's largest perfume chain finds a buyer.
Why Johnny Depp is on the money for Dior
The heat is on in the men's prestige fragrance market. Over the past year, Invictus has been a global smash-hit. Bleu de Chanel has been challenging Giorgio Armani Acqua di Gio for some time now as the number one men's prestige fragrance worldwide. L'Oréal is so determined to get its dominance back, the multinational launched a limited edition of Acqua di Gio in May to "tide fans over" before Armani's mega men's launch of the year - Profumo - in August.
Dior Homme effectively revived the prestige brand's global men's fragrance fortunes, fronted by Jude Law and then Robert Pattinson. But the choice of Johnny Depp as the face of its yet-unnamed men's juice launching in September isn't simply a promotional coup for Dior because it's the first time the star has agreed to be the "face" of a fragrance. He certainly doesn't need the money. Currently filming the fourth installment of Pirates of the Caribbean in Australia, the franchise guarantees him a paycheck of US$20 million each time he steps out as Captain Jack Sparrow.
Depp is such an inspired choice as a global face because he cuts across generations and hits the two major sweet spots of the soaring men's fragrance market. The Chinese, Japanese and Korean men's markets are all in double-digit growth as high-end males aged 25 to 40 in all three countries are seeking out designer fragrances as never before. They've grown up with Depp and probably don't even know that the ageless star is now 51.
Then there are the men who do, who see Depp as the guy they want to be - married to 29 year old Amber Heard, always hip and relevant with a spate of movies set to bow, including Mortdecai and Black Mass. The world's top five markets for prestige fragrances are the US, France, Germany, Italy and the UK, all of whom have ageing populations. The major fragrance houses are well aware that a huge percentage of sales come from the over-40s market. That's why Chanel hired Brad Pitt for Chanel No 5 and the strategy worked. Dior have also pressed a known quantity into service as the perfumer of its new men's fragrance: Francois Demachy, the creator of Dior Hypnotic Poison, Eau Sauvage Fraicheur Cuir and Dior Addict 2 Eau Fraiche.
Private equity firm invests in Too Faced Cosmetics
With annual revenues of US$150 million and sales increasing by up to 60 per cent a year, Too Faced Cosmetics has been on the block for some months. was rumoured to be interested in the 17 year old brand, stocked by Sephora and Ulta Beauty in the US and Mecca Cosmetica in Australia.
Private equity firm Weston Presidio has owned a majority share since 2012 and valued Too Faced at just a shade under US$500 million. A lucrative figure which offered plenty of temptation to another private equity investor, General Atlantic. Like , Too Faced products have cheeky names such as Better Than Sex mascara and Chocolate Bar eyeshadow. According to Andrew Crawford, Managing Director of General Atlantic: "Too Faced is one of the largest and fastest growing independent beauty brands, and we're very bullish about the prospects of the company".
The founders of Too Faced - Jerrod Blandino and Jeremy Johnson - will continue in their roles of Chief Creative Officer and CEO. But General Atlantic has appointed Ken Stevens (ex Philosophy skincare and Ulta) as the new chairman. The private equity firm also has stakes in bagmaker Tory Burch, Chinese e-mall giant Alibaba and flash sales retailer, Gilt Groupe Inc, which boasts 6 million members.
Natural and organic sales in Asia to hit US$1 billion
That's the conservative estimate from marketing and information services firm, Organic Monitor. Using a broader definition of the terms, Future Market insights reports that sales doubled to US$2.5 billion in 2014 and are expected to reach US$4.4 billion by 2020.
China leads the way, even though several international brands have pulled out of the market in protest against animal testing. Japan is the second largest market in Asia. But the highest growth region is ASEAN, including Thailand, Malaysia, Indonesia and Singapore. Future Market Insights predicts that Southeast Asia will account for nearly 6.6% of the global organic cosmetics market within five years.
Concept stores are the most popular channel for selling natural and organic products in Asia with the Lauder-owned a clear frontrunner. But department stores are experiencing the second highest levels of growth in dollar terms. According to Organic Monitor, the Asian market is awash with products sporting dubious natural credentials - a particular problem with local brands. To achieve cut-through in the lucrative Asian market, Western brands are advised to focus on certification and deliver on performance promises - particularly anti-ageing benefits.
Douglas, Europe's largest perfume chain, finds a buyer
Douglas, the largest perfume chain in Europe with 1700 stores across 19 countries, is also a major cosmetics retailer. Boasting revenues of $3.6 billion in 2013/14, the German giant had announced plans for an IPO early last week. But within days, the news broke that the largest specialist retailer in Europe is to be bought by CVC Capital Partners, the former owner of ACP Magazines in Australia.
Douglas plans to go global under its new ownership and the founding Kreke family will re-invest in the company through a joint venture with CVC. The terms of the deal were not disclosed but CVC has dipped a profitable toe in the cosmetic industry before. The company bought a major stake in Danish health and beauty chain, Matas, in 2007 and on-sold it last year for US$216 million.
Snippets from the wires
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has a track record of distributing fragrances through its subsidiary, Beaute Prestige International. But the Japanese giant has inked a deal to distribute the luxury Brit brand's beauty/fragrance products in its home market. My Burberry fragrance is being rolled out across Japan from September. Shiseido will also open the first Burberry Beauty Box counters in Tokyo and Osaka.
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We recently reported that L'Oréal had teamed with 3D tissue company, Organovo, to access exclusive testing rights. P&G is following suit as part of a US$44 million, five year research program with the Agency for Science, Technology & Research in Singapore.
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Byredo's Founder, Ben Gorham, has been diversifying the brand away from fragrance, notably with sunglasses, a luxury bag collection and a penknife. The entrepreneur has now opened a freestanding store in New York's SoHo district - the first outside Byredo's home market in Sweden. There's also a bespoke service for bags and scents.
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High unemployment, rising prices and many other serious issues are forcing leading South African retailers to look beyond their borders. Mr Price, a popular fashion and homewares value retailer, has announced it will enter the Australian market just before the Christmas rush.
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Chinese mega e-tailer, Jumei, has openly admitted that it fears losing a competitive edge in cosmetic sales since the Chinese government lowered tariffs on imported skincare last week. With South Korean cosmetics posting massive increases in the Chinese market, Jumei has bought a minority stake in It's Skin, a prestige South Korean brand with a loyal following among Chinese women.
- US private label cosmetics manufacturer, Maesa, specialises in exclusive beauty brands for retail giants in the US and Europe - Flower for Walmart, Circa for Walgreens and Elle for Monoprix, the French equivalent of Kmart. The company has now bought P2 cosmetics, sold exclusively in DM, a leading drugstore retailer with 1800 stores across Germany. , the other reasonably priced German beauty brand distributed by the Heat Group in Australia, has successfully gone global and analysts believe that's what Maesa wants to do with P2, starting in the US and Canada. The brand was founded in 2004 and is a major force in the German cosmetic market with 350 SKUS and average price points of $4 to $5.
