Korean beauty exports top $5 Billion in 2016, emphasis on travel retail, online and speciality retailing pays off For Estée Lauder, Tom Ford to launch luxury watch brand, and global cosmetic surgery market continues to boom.
Korean beauty exports top $5 Billion in 2016
Myer and Sephora are stocking a higher number of Korean beauty brands and AmorePacific, the Korean market leader, plans to open 100 more Aritaum concept stores in the US over the next three years. No wonder. Exports of Korean cosmetics rose 44.3 per cent in 2016 to $US3.97 billion ($AU5.165 billion), reports the Korean National Trade Association.
China accounted for more than a third - 36.5 per cent to $US1.45 billion (AU$1.88 billion). Although the Koreans are worried about this over-dependence on a single market, it represents a tiny 2 per cent of the total Chinese beauty market. AmorePacific led the pack with a 35 per cent hike in international sales last year, thanks to its five "Global Champion Brands" - Sulwhasoo, Laneige, Mamonde, Innisfree and Etude. The multinational also expanded US sales by a significant 10 per cent with new standalone stores and further penetration of department stores.
AmorePacific's goal of becoming a top 10 global beauty company will also hinge on growth in other regions, notably Southeast Asia, India, Europe and the Middle East. The company recently announced a partnership with the Alshaya Group, one of the largest retailers in the Middle East, to launch Etude Studio, its top-selling makeup brand aimed at Millennials. Initially in Dubai, before launching in Saudi Arabia, Qatar, Bahrain and Kuwait.
Emphasis on travel retail, online and speciality retailing pays off For Estée Lauder
Riding the boom in prestige beauty, the Estée Lauder Companies posted global sales growth of 3 per cent in the second quarter of fiscal 2017 to $US3.21 billion ($AU4.17 billion). With the uncertain climate in the US department store market, including last week's rumoured takeover of Macy's by Canada's Hudson's Bay Co, owner of Saks Fifth Avenue, Lauder's latest results proved the wisdom of strengthening its business in other channels.
According to Lauder's president and CEO Fabrizio Freda: "Our small, mid-sized and luxury brands continue to lead growth, contributing strong sales increases, and recent acquisitions added incremental sales. We achieved strong double digit growth in our most profitable channels including travel retail, online and speciality-multi".
Drilling down, a drop in department store sales in the US put a dent in Clinique and M.A.C sales. But global makeup sales rose 4 per cent to $US1.306 billion ($AU1.70 billion) over the three month period. The Tom Ford brand enjoyed double-digit upticks in every region, notably in the lip category. The Double Wear and Pure Color Envy franchises continued to produce strong results for the core Estée Lauder brand.
Skincare sales edged up 1 per cent to $US1.248 billion ($AU1.62 billion). A standout performance from La Mer - double-digit growth in all regions - and the success of Estée Lauder's Advanced Night Repair Intensive Recovery Capsules and Revitalizing Supreme Global Anti-Ageing Creme offset lower sales in Asia/Pacific.
Fragrance sales spiked 6 per cent to $US497 million ($AU646.6 million) for the quarter, buoyed by double digit growth from Jo Malone, Tom Ford, Le Labo, Frederic Malle and incremental sales from recent recruit, By Kilian.
In an upbeat forecast, Freda and senior management expect sales and profit growth for the pure-play prestige multinational to accelerate in the second half of the financial year, driven by strong product innovation, increased consumer coverage and improving trends in certain brands and markets. Big things are also expected from the two newly acquired, fast-growing makeup brands - Becca and Too Faced.
Tom Ford to launch luxury watch brand
Fashion's man in black likes to gain the upper hand in one sector of the fashion and beauty business before moving on to the next. Back in 2005, Tom Ford started his climb to solo success after revving up the fortunes of Gucci and YSL with eyewear and a fragrance and beauty collaboration with Estée Lauder. Two years later, he opened his first standalone menswear store, expanding into women's fashions and accessories in 2010.
Watches are a natural segue for Ford. But he's not interested in the mid-market space like other fashion brands, including Michael Kors, Giorgio Armani, Burberry and a host of others. Tom Ford Timepieces is a partnership with the Bedrock Manufacturing Company, the parent company of C.C. Filson, the heritage American outdoor outfitters, and Shinola, the US luxury maker of watches, bicycles and leather goods. Watches have long been an obsession with Ford and his Swiss-made arm candy will have 'luxury timepiece price positioning'.
Global cosmetic surgery market continues to boom
Ageing gracefully or putting up with what nature gave you isn't for everyone. The global cosmetic surgery market surged 8.3 per cent in 2016 to $US8.5 billion ($AU11.05 billion), reports IMCAS (International Master Course in Ageing Science). The US is way out in front, accounting for close to half the worldwide market – 46 per cent. But Asia is driving global growth. By 2020, the market for medical, surgical and injectable procedures will be mainly divided between the US (44%), Europe (25%), Asia (23%) and South America (7%).
Many people are taking the softly-does-it approach, though. Sales of cosmeceuticals (active skincare) enjoyed stronger growth than breast implants – up 7.6 per cent. The market leader by a country mile is injectables –neurotoxins like Botox and fillers – which account for 38 per cent of the global cosmetic surgery market.
Energy-based beauty procedures – laser, ultrasound and radio frequency – aren't far behind with a 35 per cent market share. Body contouring procedures, an expansive category which includes facelifts, tummy tucks, buttock implants and liposuction, saw the biggest increase of any category in 2016 – up 16.3 per cent.
There are plenty of regional preferences. Breast augmentation and lipsosuction are the two most popular procedures in the US, Brazil, Mexico and Europe, notes IMCAS. But in the third largest market – South Korea – the face gets the most attention for eye, nose, cheek and chin re-sculpting.
Analysts expect the global cosmetic surgery market to continue at the same pace of growth, rising by just over 8 per cent a year to reach $US9.2 billion ($AU11.97 billion) over the next three years.
Snippets from the wires
- The top five fragrances for women in the US don't change much from year-to-year. According to NPD, America's bestselling fragrances for women in 2016 were: Chanel Coco Mademoiselle, Chanel Chance, Philosophy Amazing Grace, Chanel No 5 and Lancôme La Vie Est Belle. The stars among new releases were: YSL Mon Paris, Coach New York and Michael Kors Wonderlust.
- Prestige makeup is on a massive roll, says NPD. In 2016, 76 per cent of total incremental gains and 83 per cent of volume worldwide came from the prestige makeup sector.
- Beauty specialist retail has been the fastest-growing retail category in the US for the past five years, notes Euromonitor. Ulta, which took over from Sephora in 2015, is the largest beauty specialist retailer with a 27 per cent market share.
- The world is far from being a level playing field when it comes to ad spend, says International Data Corp. A huge 85 per cent of global mobile ad spending is allocated to the 10 leading advertising markets. The same fortunate few also get 70 per cent of total global advertising revenues.
- Fake news may be the current buzz topic. But Randall Rothenberg, CEO of the Interactive Advertising Bureau, reminded the Annual Leadership Meeting in Florida last week that the phenomenon is nothing new. "As the child of clickbait and the grandson of the direct mail scams of the 1920s, fake news is also another form of hucksterism with which the ad industry has been associated since its origins in the 19th century. The shocking headlines. The wild over-promise and under-delivery. The Barnumesque mendacity".
