Priceline parent API meets growth forecast as customers spend less on beauty; Aussie medical cannabis supplier inks $40 million deal with South Korean cosmetic company; YouCam beauty app developer attracts $US25 million investment; and US online sales to reach $US1 trillion by 2027.
Priceline parent API meets growth forecast as customers spend less on beauty
Australian Pharmaceutical Industries (API), the parent company of Priceline Pharmacy and Soul Pattinson, announced a profit of $54.2 million for the 12 months to August – an increase of 5.4 per cent over the previous year. Group revenues for the 2016/2017 fiscal year increased six percent to $4.1 billion.
According to CEO Richard Vincent, key beauty categories remained in positive growth but had slowed by contrast to previous years. API fingered challenging economic conditions and increased competition as the main reasons for slower growth in beauty sales.
But a fightback plan is already on the drawing board. Priceline Pharmacy added 20 new stores to its network over the 2016/2017 financial year and will add 20 more over the current fiscal year. Major strategies to entice beauty lovers to spend more include a new store format which includes "play spaces" to allow consumers to try before they buy, an increased emphasis on Priceline's beauty advisors and promotional activities, and more exclusive offers.
Aussie medical cannabis supplier inks $40 million deal with South Korean cosmetic company
Shares in MGC Pharmaceuticals skyrocketed 80 per cent last week on the news that the European-based, ASX-listed company had signed a deal worth $40 million a year with South Korean cosmetic company Varm Cosmo. MGC will supply 15,000 kilos of cannabiodol (CBD) products a month, a non-psychoactive compound beneficial in the treatment of skin problems such as inflammation and psoriasis. Varm Cosmo claims that it uses significant percentages of actives and CEO Hwang Jung-Yoon revealed the company will use at least 1ml of CBD in facial skincare and masks to boost their moisturising performance.
South Korean skincare manufacturers have been targeting the global dermo-cosmetic market for some time. Early reports of the MGC agreement have made much of the size of the domestic South Korean beauty market, currently worth $US13 billion, where facial skincare accounts for 50 per cent of sales. But the opportunities for export of natural, hemp-based products are enormous. MGC CEO, Roby Zomer, describes the Varm Cosmo deal as transformational for the company, making it the largest Australian medical cannabis supplier. The company is also working with the University of Ljubljana in Slovenia to create new strains of CBD to treat serious diseases such as epilepsy and cancer.
YouCam beauty app developer attracts $US25 million investment
Augmented reality and AI were rarely mentioned in the same sentence as beauty and cosmetics until very recently. Over the past two years, Perfect Corp has become a market leader in the field. In late September, its suite of beauty-focused apps, including YouCam Makeup and YouCam Perfect, surpassed 500 million downloads worldwide. The company has teamed with more than 150 global beauty brands, including Estée Lauder, L'Oréal Paris and M.A.C Cosmetics, to revolutionise how consumers discover, try and buy makeup.
Perfect Corp closed a Series A funding of $US25 million last week, backed by major Asian investors such as China Creation Ventures and Yuanta Asia Investment. According to CEO Alice Chang, the investment will drive further development of the cutting-edge applications that have attracted the attention of leading beauty brands, retailers, makeup artists, and media outlets around the world.
US online sales to reach $US1 trillion by 2027
By the end of the calendar year, US online retail sales are expected to rise to $US445 billion. But over the next decade, reports FTI Consulting, annual e-commerce sales will climb to $US1 trillion. Amazon currently has a 34.2 per cent market share and is expected to account for more than 50 per cent by 2027.
Raw figures aren't everything. For all the talk about the retail apocalypse in the US, online channels only account for 12.2 per cent of total retail sales. More importantly, the National Retail Federation in the US has revealed that only 21 per cent of online shoppers are responsible for 50 per cent of all e-commerce purchases. To reach the fabled $US1 trillion dollars in sales, FTI Consulting expects that the future growth in online shopping will rely on existing e-commerce purchasers buying more frequently across a wider range of categories.
Bricks-and-mortar retailers shouldn't take too much comfort from such data, warns Christa Hart, a senior managing director at FTI Consulting. "If online sales double, as we expect, stores still have to contend with the prospect of losing the same amount of sales to the online channel in the next six years as they did in the previous 16".
Snippets from the wires
- Laser Clinics Australia, recently sold to private equity heavyweight Kohlberg Kravis Roberts for $AU650 million, opened its 89th location at The Glen in Melbourne's south-east last week. The expansion also coincided with the debut of a new brand personality and tagline: What's Your Youness? Developed following six months of customer research, the new approach rubber-stamps the fact that we all have our own ideas of beauty, says Nicole West, Head of Marketing for Laser Clinics Australia.
- Maybelline New York has debuted 12 New York Minute makeup kits exclusive to Amazon. Priced from$US14, global shoppers can now choose from beauty-on-the-run offerings such as The Bold and Busy Minute Kit.
- Johnson & Johnson reported global sales of $US19.7 billion for Q3, a jump of 10.3 per cent by contrast to the same period last year. Babycare sales in the US had a negative impact, but OGX haircare and Neutrogena helped to pick up some of the slack.
- Unilever didn't do as well as expected in Q3, but still managed 2.6 per cent growth worldwide. Cleansers such as Dove shower foam, the newly launched Baby Dove brand, deodorants and the prestige division, led by Dermalogica and Kate Somerville, all performed well. The multinational's shaving market disruptor, the Dollar Shave Club, posted another quarter of double-digit growth.
