L'Oréal re-signs Armani beauty license as sales hit $AUD1.6 billion; luxury retailing in Australia to pass $2 billion milestone; Guthy-Renker invests in Mally Beauty; and global pore strips market to soar to $US2.7 billion.
L'Oréal re-signs Armani beauty license as sales hit $AUD1.6 billion
When an Oscar-winning actress – Cate Blanchett – anchors a fragrance launch in Sydney, you know business is good. Yes, the superstar is the face of Armani's blockbuster fragrance Sì and its flankers, including the newbie Sì Passione, but she played a pivotal role in Armani Beauty generating global sales of $AUD1.6 billion in fragrances, skincare and makeup in 2017.
The license agreement between the prestige Italian fashion house and L'Oréal is one of the most lucrative in the international fragrance and beauty category. Armani first signed a deal with the French multinational in 1988 and since then the brand has become a giant killer in men's prestige fragrances with perennial bestsellers such as Acqua di Gio and Code. Cracking the women's fragrance sector took longer and the game changer was Sì, following the appointment of Cate Blanchett in 2013 as the brand's first global face for a fragrance.
Armani-branded skincare and makeup also show strong growth and L'Oréal and Armani have signed another agreement to extend the license to 2050, taking the longterm collaboration to an unprecedented 42 years. "There is a real synergy between the savoir-faire of L'Oréal and the exceptional creative inspiration of Giorgio Armani, which contribute to make Armani one of the most beautiful and dynamic beauty brands in the world", notes Jean-Paul Agon, Chairman and CEO of L'Oréal.
Luxury retailing in Australia to pass $2 billion milestone
Online sales and consumer belt-tightening have battered many retailers over the past five years, but Aussie luxury retailers have bucked the trend reports IBISWorld. The sector has experienced double digit growth year-on-year and is expected to reach sales of $2.1 billion through 2017-2018. The two main drivers are Asian tourists and younger local consumers.
About a third of luxury sales in Australia can be traced to international tourists, mainly from China. According to Tourism Research Australia, China is expected to overtake New Zealand as Australia's largest source of international visitors by the end of this year. Collectively, Chinese tourists spent over $10.3 billion in Australian retail in the 12 months to September 2017 and shopping centres and airports nationwide have been welcoming some of the most prestigious luxury names in the world. Chadstone, Australia's largest shopping complex, for example, has added Saint Laurent, Givenchy, Dior, Cartier and Balenciaga with more on the way. While Tiffany & Co, Emporio Armani and Burberry opened their doors at Melbourne Airport's International Terminal after its recent $50 million revamp.
The local market has shifted towards younger consumers buying luxury goods as investment pieces, notes IBISWorld. "This has been particularly prevalent for items such as handbags, jewellery, belts and other accessories, which have grown as a share of industry revenue over the past five years", says Kim Do, IBISWorld senior analyst. Social media has been a huge catalyst in stimulating demand for luxury items and many luxury retailers have curated their product ranges and changed their marketing strategies to reach out to younger consumers, she adds.
Guthy-Renker invests in Mally Beauty
Taking a minority stake in small beauty brands has become a trend for multinationals. Both sides benefit. The major player doesn't risk big bucks if the deal doesn't result in massive growth. Yet the smaller brand can access the bigger partner's clout, which may include distribution, R&D and marketing expertise.
Guthy-Renker, the owner of Proactiv, the world's leading non-prescription acne brand, has taken a minority interest in US colour cosmetics brand, Mally Beauty. Founded by makeup artist Mally Roncal, the brand scored a coup last year through a collaboration with Disney for a cosmetic collection based on the movie Frozen. Beauty Visions, the owner of Mally Beauty, is an affiliate of TPR Holdings, whose portfolio also includes Cargo Cosmetics, ZIRH men's skincare, Freeze 24/7, Badgley Mischka and Elie Tahari Parfums.
Guthy-Renker has made a couple of prime moves over the past two years, collaborating with Nestle Skin Health in a joint venture linked to Proactiv in 2016. The company boasts global sales of $US1.8 billion and also acquired Dermaflash, a hand-held exfoliating device. This latest investment will take Mally Beauty to a wider audience through direct-consumer, television and e-commerce channels.
Global pore strips market to soar to $US2.7 billion
Cheap and effective is a simple but very powerful combination when it comes to appealing to beauty consumers. Price, aside, single-use pore strips have been a runaway success because the desire for pore reduction is strong in both sexes. Yet another example of selfie-inspired sales.
According to Transparency Market Research (TMR), pore strips continue to "trend" and global sales are expected to reach $US2.7 billion over the next eight years. Some of the biggest names in the beauty and personal care industries are responsible for the bulk of worldwide pore strips sales – Kao Corporation (Bioré), Unilever, P&G, Sephora, Ulta Beauty and Walgreens Boots Alliance. A dominance that could lead to increased R&D. Studies have linked excessive use of pore strips to broken capillaries and some consumers feel discomfort when they are removed. With billions of dollars up for grabs, the field is wide open for more innovation in the lucrative sector.
Snippets from the wires
- Stockland, one of Australia's leading shopping centre groups, unveiled the $414 million expansion of Green Hills Shopping Centre last week. The largest retail development nationwide to reach completion this year, the centre which services the Hunter and Maitland region of NSW now features 220 retailers, including Endota Spa, Mecca Maxima and a new David Jones store. A two-level H&M will open in May.
- Chanel Beauté will launch the world's first 3-D printed mascara brush in June. Dubbed Volume Revolution de Chanel mascara, the prestige French brand will rely on six industrial printers which can produce 50,000 brushes a day. The futuristic brush will help mascara to adhere better to the lashes because of the granular textures of the bristles.
- With the oldest cohort of Millennials reaching the age of 36 this year, it's no surprise that the global anti-ageing market is on the upswing. According to Research and Markets, the worldwide anti-ageing market will reach $US66.2 billion over the next five years when the first Millennials pass the age of 40.
- Eastern Europe, excluding Russia, is again a growing market for beauty and personal care products. The region's sales reached $US23.68 billion in 2018 – up from $US21.74 billion in 2016.
