Private equity firm circles L'Occitane; global dermo-cosmetic skincare market to hit US$13 billion; beauty sales jump 20 per cent in global travel retail; and beauty brands key to inaugural AuMake trade show.
Private equity firm circles L'Occitane
According to the Financial Times in London, Advent International, the global private equity firm with US$31 billion in assets, is considering a bid for L'Occitane. The prestige French skincare and fragrance retailer with a market value of US$2.7 billion is also said to be fielding interest from other private equity companies and cosmetic industry peers.
Advent International has runs on the board in the beauty industry. In 2012, the company acquired a major stake in Douglas, Europe's largest perfumery and cosmetics chain with 1700 stores in 19 countries. During its three year involvement, Douglas achieved 70 per cent EBITDA growth and acquired leading French beauty retailer, Nocibe. Advent sold its share to a holding company owned by CVC Capital Partners and the Kreke family, the founders of Douglas, in 2015.
There are plenty of pluses if the rumours are true. L'Occitane's latest results haven't lived up to analysts' expectations, but growth in China was up 13 per cent in the six months to September and cash flow is good. Advent also fuelled 30 per cent growth in Douglas' online business and L'Occitane's increased stake in US cosmetics brand, LimeLife by Alcone, opens up the fast-growing natural makeup category. The agreement of Reinold Geiger, L'Occitane's 71 year old CEO and major shareholder, who took over control 20 years and expanded the business to 1555 directly-operated stores in 90 countries, including Australia, is key to any deal.
Global dermo-cosmetic skincare market to hit US$13 billion
L'Oréal-owned CeraVe has launched a Diabetics Dry Skin Relief range in the US and it's not alone in catering to increasingly specific skincare concerns. According to Fact.MR, the global insight and market intelligence provider, worldwide sales of dermo-cosmetic and OTC dermatological skincare are expected to hit US$13 billion by the new year.
With advances in biomedical sciences and technology, the major manufacturers of dermo-cosmetics are creating more sophisticated formulas and treatments for widespread skincare problems such as eczema, psoriasis, atopic dermatitis, irritation and dryness caused by medical treatments and conditions such as diabetes, and sensitised and reactive problems triggered by allergies and lifestyle issues. More consumers are also seeking out herbal and natural products and ranges that can be used by adults and children, reveals Fact.MR
The major companies involved in the dermo-cosmetics category are centred in the US, France, Italy and Spain. Mergers and acquisitions are on the rise, such as the recent Johnson & Johnson buyout of Japanese skincare company, Ci:z Holdings. Brand loyalty is very strong in the category which is good news for the titans of the sector – J&J, Bayer, L'Oréal (La Roche-Posay), Pierre Fabre (Avene), Reckitt Benckiser, Merck and GlaxoSmithKline.
Beauty sales jump 20 per cent in global travel retail
News of lavish installations and key cosmetics brands expanding in airports worldwide hits the headlines on a daily basis. One of the major reasons why beauty and cosmetic revenues spiked 20 per cent in global travel retail in 2017, reveals The Beauty Shopper Review 2018 from Counter Intelligence Retail (CiR). The sector is now double the size of its closest rival, wine and spirits, and boasts the highest average duty-free spend of US$144.
According to Garry Stasiulevicius, founder and president of CiR: "About 40 per cent of travellers actively visit a duty free or specialist retail store while in the airport, with almost half going on to browse the beauty category. Of those browsing beauty, almost two-thirds go on to make a purchase. That is a high conversion rate and reflects the sizeable demand that is being seen for the category".
No prizes for guessing that the strongest demand and highest conversion rates are in the Asia/Pacific region. The prestige beauty names most in demand are Chanel, Estée Lauder and M.A.C, notes CiR. Women's fragrance is the most visited and bought beauty category, but the highest conversion rate is for cosmetics. Interestingly, 50 per cent of beauty buyers in travel retail purchase their favourite brands and only one-in-10 buy a brand for the first time in duty-free. Swept away by the glamour of travel, just under 50 per cent of beauty buyers are willing to trade up to more expensive purchases than they would normally buy closer to home.
Beauty brands key to inaugural AuMake trade show
Australia is one of the top 10 international destinations for Chinese travellers and they spend up big. Tourists from China have an average spend of $3500 and 25 per cent is ear-marked for skincare, local products and gifts, reports Nielsen.
Launched in 2010, AuMake is a retail business that connects Chinese shoppers and the 50,000-strong locally-based daigou (Chinese personal shoppers) community to key Australian brands in its showroom-style stores. The company launched on the Australian stock exchange last year and sales more than doubled in the 2018 financial year to $21.4 million. In May, AuMake acquired Kiwi Buy, a retail network of five stores in Sydney also selling to daigous, to expand its Sydney store network to thirteen.
AuMake is hosting its inaugural trade show in the Grand Ballroom of the Shangri-La Hotel in Sydney's CBD on Saturday, December 8th. More than 100 leading Australian and New Zealand brands will be on show, including Jurlique, Blackmores and Nature's Way. Over 20 leading daigous will be live-streaming the event to customers in China and selected Chinese media will be in attendance. Go to aumake.com.au
Snippets from the Wires
- The total Australian sales figures for Black Friday are still being collated. But online marketplace, Catch Group, which carries more than 1.9 million SKUs including cosmetics, enjoyed a turnover of $5 million. Over $2 million more than its previous single-day sales record.
- Grasse in the South of France is the spiritual home of the fragrance industry. UNESCO has recognised the iconic town's cultural heritage in the art of perfume-making, the cultivation of fragrance plants and knowledge of natural ingredients.
- K-Beauty favourite Tonymoly is boosting its international chops through a collaboration with Italian fashion house Moschino. The curated range includes a liquid lip colour, compact, foundation and two eyeshadows embedded in a smartphone case. The reasonable price tags range from US$17 to US$19.
- Scalp care products are on a roll in China, reports Mintel. Once viewed as upmarket treats, multinationals such as P&G and Henkel, the makers of Schwarzkopf, have picked up on the trend and are launching mass market products such as Syoss Nature Pro Scalp Expert Shampoo.
