MidOcean Partners acquires US cult brand BH Cosmetics; Kao acquire Oribe hair care for $US440 million-plus; Chanel sibling leads new investment in clean beauty leader Beautycounter; and fiscal 2018 starts strongly for Coty and Estee Lauder.
MidOcean Partners acquires US cult brand BH Cosmetics
Google recently reported that LA-based BH Cosmetics was the second most searched beauty brand in 2017. Famed for its youth-oriented, quality makeup at value prices, the BH range is very similar to our own Designer Brands which sells more than two million products a year in Australia. The company has built up a global social media following and, although it started as digital only, the eye-popping palettes and more are also available in Ulta and Target stores in the US.
MidOcean, the owner of IMAGE Skincare which is sold in 52 countries, has extended its focus on the beauty sector with the buyout of BH Cosmetics. With $US6.9 billion under management, the private equity firm is the perfect partner to springboard BH Cosmetics into new channels and overseas markets by adopting a similar strategy to L'Oreal's master plan for NYX Cosmetics.
Fred Sadovskiy, Kirill Trachtenberg and Robert Sefaradi, the founders of BH Cosmetics, will continue to helm the brand and retain a significant stake as it shifts to the next level on the international stage.
Kao acquire Oribe Hair Care for $US440 million-plus
Japanese giant Kao Corp is already a formidable force in the professional haircare market as the owner of KMS and Goldwell. Way back in 2002, the company also forked out 54 billion yen (over $US477 million) for John Frieda and acquired Molton Brown three years later. Oribe Hair Care, a luxury US professional haircare range turning over $US100 million a year, is the latest acquisition target to catch Kao's eye. The terms of the deal were undisclosed, but industry sources estimate the price tag was 50 billion yen ( $US441 million).
Oribe was founded in 2008 by Cuban-born celeb hairstylist Oribe Canales, in collaboration with Daniel Kaner and Tev Finger of Luxury Brand Partners. The award-winning brand has become a runway and red carpet favourite for its high quality products stocked by prestige hair salons and key upscale retailers such as Neiman Marcus and Space NK. Adore Beauty is the official Australian stockist for Oribe.
Kao has a medium-term strategy to increase profit margins for overseas markets through acquisitions and gain a bigger foothold in the US prestige hair care market. But global expansion is very much on the cards according to Daniel Kaner, who will become president of Oribe as it slots into the Kao Salon Division. The two parties are not strangers. Oribe has had a strategic partnership with Goldwell colour in the US for some years.
Chanel sibling leads new investment in clean beauty leader Beautycounter
Alain and Gerard Wertheimer, the billionaire owners of Chanel, are famous for avoiding publicity. Their half-brother, Charles Heilbronn, also keeps his business cards close to his chest. The founder of Mousse Partners, he has also been a director of Ulta Beauty, the largest specialist beauty retailer in the US, since 1995.
In 2011, Forbes ran a story titled - How the House of Chanel Quietly Made a Fortune in A US Chain Store - pointing out that the prestige French fashion house was sitting on a $US750 million investment in Ulta. A year later, Chanel sold off about $US250 million in shares but retains a significant interest in the fast-growing beauty retailer.
Mousse Partners, with offices in the US, China and Hong Kong and investments in menswear brand Bonobos and more, has led a new round of funding for Beautycounter which raised $US65 million. Other investors include TPG Growth, who participated in an earlier $US21.3 million investment in the non-toxic clean beauty leader in 2014. Since its founding four years ago by serial entrepreneur, Gregg Renfrew, Beautycounter has raised a total of $US107 million in funding, including the latest cash infusion. The company is valued at $US400 million and annual revenues have reached $US225 million through 25,000 independent sales consultants.
The company's "safe cosmetics" skincare is also sold in Target and J.Crew stores in the US. Beautycounter's parent company, Counter Brands, acquired NUDE Skincare, the natural range founded by U2's Bono and his wife Ali Hewson, from LVMH, the world's largest luxury goods group, in mid-2016. As part of the deal, the Irish singer-turned-venture capitalist became an investor in Counter Brands and Hewson was appointed as a director.
Fiscal 2018 starts strongly for Coty and Estee Lauder
Coty is gearing up to unveil the new Covergirl strategy to Australian media over the next few weeks. A reminder that the multinational’s financial results reflect two eras - the pre and post P&G buyout. The first quarter of fiscal 2018 saw the doubling of net revenues to $US2.2 billion by contrast to what's now called the Legacy Coty figures of the same period last year.
The luxury division was on a roll in Q1, increasing 70 per cent to $US764.4 million compared to the corresponding period a year earlier which did not include ex-P&G master brands such as Hugo Boss and Gucci. The net revenues of the consumer beauty division rose a hefty 82 per cent to $US1.4 billion, helped by former P&G stablemates such as Covergirl and Max Factor.
The addition of Wella and ghd to Coty's portfolio saw net revenues in the professional division jump by over 50 per cent to US$430.5 million. CEO Camillo Pane is particularly excited about Coty's strategic partnership with Burberry to grow the luxury division going forward.
Estee Lauder experienced growth of 14 per cent in the first quarter of fiscal 2018 to $US3.27 billion. Ongoing growth in China, Hong Kong, travel retail and e-commerce were major drivers of an outstanding financial performance for the period, said CEO Fabrizio Freda. The multinational is raising its full year constant currency sales growth forecast to eight to nine per cent as a result of such a boom start to its financial year. Standout performances included double digit skincare gains for the core Estee Lauder brand, La Mer, Glamglow and Origins. Double digit growth was also the order of the day for Tom Ford and Estee Lauder makeup and Jo Malone, Tom Ford and Le Labo fragrances.
Snippets from the wires
- Unilever acquired Sundial Brands in November, the US haircare and skincare company aimed at women of colour. Essence Ventures, which has Sundial Brands founder Richelieu Dennis as its chairperson, has bought media company Essence Communications, including Essence magazine, from Time Inc. Another touchpoint in escalating the beauty in diversity trend.
- No wonder the major haircare players are ramping up their natural/organic cred through new launches such as L'Oreal's Botanea and acquisitions. A new report from Crystal Market Research predicts the global organic haircare market to reach $US6.7 billion by 2023 - up from $US2.56 billion in 2014. The Asia/Pacific region is on track to become the number one market, followed by North America and Europe.
- Strong sales in Africa, Asia and Australia helped to lift Beiersdorf's global sales to $US6.22 billion in the first nine months of 2017 - a rise of 4.9 per cent. All core brands - Nivea, Eucerin, Hansaplast and La Prairie - turned in strong performances.
