Michelle Phan's IPSY raises US$100 Million in funding, Australian beauty market doubles growth rate, Jurlique helps to boost profits for Pola Orbis, and L'Oréal moves to in-house media strategy.
Michelle Phan's IPSY raises US$100 Million in funding
Michelle Phan may have carved out her name as the world's most popular beauty vlogger but her business acumen is as expansive as her social media reach. The cosmetics subscription service IPSY was co-founded by Phan and CEO Marcelo Camberos, former vice-president of business development at popular humour channel, Funny or Die, in 2011. With US$150 million in annual sales, the company has raised US$100 million in a second round of funding, led by private equity heavyweights TPG Growth and Sherpa Ventures.
Even though there's been no official word, the deal valued IPSY at US$500 million say insiders. The four year old startup currently has 1.5 million subscribers in the US and Canada for its US$10 monthly offering - the Glam Bag. Subscribers can customise their selections, access discounts for additional orders and watch beauty tutorials created by IPSY's 10,000 content creators. The company will use the injection of funds for international expansion and to amplify its marketing strategies and campaigns.
According to David Trujillo, a partner at TPG, IPSY's appeal for investors lies in its ability to connect the big beauty players to a generation of Instagram and YouTube celebrities to help market products and drive sales. IPSY's first round of funding raised US$3 million from 500 Startups and Crosscut Ventures.
Australian beauty market doubles growth rate
The sliding Aussie dollar is boosting Australian domestic beauty sales says bU Australasia. Total beauty and cosmetic sales rose 6.7 per cent in the first half of the year - nearly double the growth rate of the same period in 2014. Prestige beauty sales did even better, reports the market analyst, with an 11.8 per cent hike in sales - in contrast to a 7.9 per cent increase in the first half of last year.
Department stores were major beneficiaries of the buoyant upswing with sales rising 10 per cent to carve out a 23 per cent market share. Pharmacy sales, led by Priceline and Chemist Warehouse, increased 8.4 per cent in the first half to account for a 33.1 per cent slice of the domestic cosmetics market.
The strong result was mainly due to three factors notes bU Australasia. A lower incidence of online shopping from overseas websites, especially in prestige, as the weaker Aussie dollar translated to higher prices. More international visitors arrived to shop and get more bang for their buck. The number of Chinese tourists, keen beauty shoppers everywhere, rose more than 20 per cent in the first half. Parallel imports were also impacted by the drop in the dollar.
Jurlique helps to boost profits for Pola Orbis
Pola Orbis, Japan's fourth largest skincare company, is reaping the benefits of its push into premium. The owner of and US skincare brand, H2O Plus, now run by Joy Chen, the former CEO of Yes To, is forecasting a 25 per cent increase in consolidated operating profit for the January to September period.
Ranked 30th in the world with a US$1.8 billion annual turnover, Pola Orbis enjoyed record sales for the first half of 2014 and new launches from August are already upping the ante again this year. The multinational is expecting a year-on-year increase in profit of US$106 million for the first nine months of the year on a revenue increase of 5 per cent.
Chinese tourists have been a major factor in boosting sales of Jurlique, which is on-track to break the global AUD$200 million sales mark by the end of the year. Sales of the premium BA ( bio-active) and White Shot brands are also fueling the fast-growing company's bottom line.
L'Oréal moves to in-house media strategy
In a move that sent shivers through the US advertising industry, L'Oréal has inked a deal with TubeMogul, the independent advertising software platform which serves 70 countries, including Australia. In a shift from its longtime agency-led strategy, the French cosmetics giant will manage its video advertising campaigns in the US using the brand advertising software.
Major multinationals have led the way in the US market in buying media space directly. According to a recent survey conducted by MediaSense in partnership with Ipsos Connect and ISBA, over 54 per cent of brands expect to bring more ad tech-related functions in house over the next five years.
Media agencies will have to move with the times, say analysts, and offer greater transparency to brands to hold on to their media spend. Recently, for example, AKQA built out trading desk functionality for Clorox, the parent company of Burt's Bees, allowing the company access to data and insights.
Snippets from the wires
- Victoria's Secret Beauty and Accessories stores have fared very well in Australia - first in travel retail and then landside in major Sydney and Melbourne shopping precincts. Following similar success in Adelaide, Cairns and Coolangatta airports, the lingerie and beauty brand has opened an outlet in Auckland Airport - its first foray in New Zealand.
- Elizabeth Arden's strongest markets have always been in the Anglosphere - the US, Canada, the UK and Australia. Currently rolling out its new brand philosophy, the company has broken new ground in France and opened its first pop-up store in Paris in the chic 16th arrondissement. Arden products are available in beauty chains in France, including Sephora, Nocibe and Marionnaud, and leading department stores. But the pop-up store will showcase selected products previously not sold in France such as Prevage.
- No wonder Arden is targeting France. The French prestige skincare market has returned to growth says the NPD Group. Lighter textures, serums and oils are the main drivers of the turnaround says the researcher. Sales of oils in selective distribution soared 44 per cent in the first half of the year. French women are also seeking out products with a higher concentration of actives and more advanced technology.
- Skin cells are a lot tougher and more adaptable than previously thought says Beiersdorf, the maker of . The multinational has published the results of a four year research study into how cells protect themselves against UV-induced and oxidative stress. According to lead author, Dr Janosch Hildebrand: "We discovered a previously unknown mechanism - the First Line Response. It enables skin cells to counteract stress caused by solar radiation or oxidative stress within minutes". The study was a collaboration with the Swiss Federal Institute of Technology in Zurich and the next step is to develop skincare products to enhance this natural defence mechanism.
- Emerging markets offer the greatest opportunity for Sephora's continued store expansion. Over the past decade, the LVMH-owned beauty chain has opened 200 stores in China. The company has signed a deal with local expert Arvind Lifestyle Brands to open 40 more stores in India over the next five years - up from the current three in Delhi and one in Pune. The agreement also covers e-commerce rights.
- Like his fellow soccer god, David Beckham, Real Madrid's Cristiano Ronaldo has long slapped his name on a series of lifestyle products from underwear to fashions and watches. His first fragrance - Cristiano Ronaldo Legacy - has just debuted in Europe. An EDT that opens fresh with lavender and bergamot and dries down warm withpatchouli and vetiver.
- Over 35 per cent of Asian tourists to Japan rated visiting a beauty salon higher than touring historical monuments reveals a study by the Hot Pepper Beauty Academy. Preferred treatments are nail art and facials and the Japanese salon industry is gearing up to provide Mandarin and Korean-speaking therapists and more.
- It could happen here. Essence, one of the leading US magazines for women of colour, is launching the first multicultural beauty subscription service next month. Called the Essence Beauty Box, hair styling products and colour cosmetics that match a wide range of skin tones will lead the charge.
