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The beauty industry is set to have a host of well-financed start-ups it seems. Hardly a month goes

by without a major beauty group announcing the creation of a fund, accelerator program or an incubator to nurture up-and-coming players in the industry. Just last week, there were announcements from two big companies in this area. French group L'Oréal said it had launched a venture capital fund to take minority stakes in start-ups, while German group Beiersdorf stated that it will set up an accelerator program for nascent beauty

companies in Seoul. There are many advantages to this approach. It allows large corporate outfits

to test new ideas and move into non-core areas without too much risk. It is also, in most cases, a much less expensive way of gaining insight into new business models or technology than making an outright acquisition. Launching an incubator or supporting a start-up may also make some companies look like they are embracing innovation.But there are also a lot of questions. To what extent will many of these large

groups be able to transfer the ideas and learnings of these start-ups to their existing brands and businesses? Will major players allow start-ups to disrupt their ways of working? And essentially, will identifying, studying and financing new companies with new ideas and business models enable large corporations to stave off, or become better prepared, for the disruption of tomorrow?

Start-up beauty The buzz 2 News roundup

Netwatch 6 Social media monitor

Interview 7 Designer Parfums chairman & ceo Dilesh Mehta

Insight 9 M&A analysis

Show review 13 Cosmoprof Asia

Store visit 16 Sephora's first Asian concept store, Shanghai

Oonagh PhillipsEditor in [email protected]

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News roundup

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Strategy

French group L’Oréal has launched a venture capital fund to take minority interests in start-up companies, and as part of the initiative has taken a stake in Sillages Paris, a French company offering an online service to create customized fragrances based on Artificial Intelligence and machine learning. The start-up is part of L’Oréal’s incubator at Station F in Paris, a hub of tech start-ups.The new venture captial fund, called BOLD (Business Opportunities for L’Oréal

Development), will invest in new business models. L’Oréal says it will offer the start-ups financial support, networking opportunities and mentorship. L’Oréal says the launch builds on its open innovation strategy that includes partnerships with Founders Factory, Partech International Ventures, Station F and Raise Ventures.

Nivea (Beiersdorf) will launch an accelerator program for beauty start-ups in Seoul, South Korea in the first quarter of 2019. Beiersdorf has teamed up with co-working company WeWork for its ‘innovation hub’, which will be located in the WeWork co-working space in Seoul’s Hongdae district.

French luxury house Chanel has invested in Finnish start-up Sulapac, which has created a sustainable and fully biodegradable alternative to plastic. Terms of the deal were not disclosed. Made of FSC-certified wood chips and natural binders, Sulapac is said to have the same benefits of plastic. Plastic manufacturers can use the material with their existing machinery, the company says.According to Sulapac, which was founded in 2016, Chanel is its first investor from the

cosmetics industry. A-round funding is planned for 2019.

US-based Coty has launched what it calls the first at-home hair color Action for Google Home’s Google Assistant. Named the Clairol Color Expert, it is a hands-free, voice-activated guide for the different steps of at-home hair coloring. The tool guides the user through different steps of at-home hair coloring, including finding the right shade, applying and re-applying color and aftercare.

Chinese online player JD.com has partnered with US-based technology company Intel to launch a lab that will study the use of Internet of Things (IoT) in retail. Called the Digitized Retail Joint Lab, it will use JD’s data analysis capabilities and Intel’s computing technologies to build tools for use in future stores and develop ‘smart’ vending n n n

Stay informed with our daily news headlines on www.bwconfidential.com

n L’Oréal launches fund for start-ups, takes stake in fragrance company

n Nivea to launch beauty incubator in South Korea

n Unilever appoints Alan Jope ceo

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n n n machines and solutions for media and advertising. For brick-and-mortar retailers, the new lab plans to develop tools including smart shelving and price tags as well as new checkout solutions. It is part of an ongoing partnership between the two companies that has already resulted in personalization tools for store owners on JD.com.

Color institute Pantone has named Pantone 16-1546 Living Coral as color of the year for 2019. The pinkish-orange shade is described as a nurturing color.

The traditional gala dinner for CEW France’s Centres de Beauté, which provide beauty treatments to cancer patients, was held at the Ministry of Foreign Affairs in Paris on November 29. More than 350 industry executives came out to support the event. Proceeds from the gala dinner go towards the Centres de Beauté. BW Confidential published a special brochure distributed at the gala. BW Confidential

has also donated €5,500 to the Centres de Beauté, a portion of its advertising revenues from the CEW France Achiever Awards magazine, as well as our own contribution to the cause. We would like to thank our advertisers who contributed to this special issue: Chanel, LVMH, Hermès, Albéa, Mane, Symrise, IFF, Greentech, Marie-Laure PLV and RPC Bramlage.

Retail

Hedge fund ESL Investments, run by Sears Holdings chairman Eddie Lampert, has made a bid to acquire the bankrupt department-store operator. The acquisition, worth $4.6bn, would be made via newly-formed company Newco. Newco expects to keep around 50,000 Sears employees, reinstate a Sears severance program and honor liabilities concerning gift cards and points from Sears’ loyalty program.

Amazon may be looking to expand its Amazon Go checkout-free stores to airports, according to Reuters. The company is said to be assessing top US airports for new locations, as a way to capitalize on time-poor travelers.

Beauty retailer Sephora continues to roll out its Fragrance to Go units in its stores in a bid to recruit more consumers to scent. The Fragrance to Go units offer small-size formats (10ml and 15ml) of key perfumes from leading brands, and so at lower prices. The idea is to encourage fragrance impulse buys and incite consumers to try new fragrances without having to invest in a 30ml or 50ml scent. The concept is also aimed at those looking for convenient, easy-to-carry fragrance formats. The Fragrance to Go offer will be renewed four times a year. Sephora maintains that there is no cannibalization with larger sizes of the same fragrance also sold in its stores. The unit is currently in half of Sephora’s stores in France and is rolling out to the chain’s boutiques internationally.

Lolita Lempicka Parfums has opened its first pop-up store, in Paris’ Marais district. Measuring 25m2 (269ft2), the store is the brand’s first standalone boutique. n n n



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n n nTravel retail

Changi Airport Group (CAG) will extend its duty-free beauty concession held by Shilla Travel Retail. The concession will be extended for a two-year period from 2020. CAG said that Shilla's innovative retail concepts were instrumental in driving sales growth over the past four years. These include the Shilla Beauty Loft at the central Cosmetics & Perfumes store in Terminal 3. CAG revealed that it will use new technologies to encourage online-to-offline shopping and that Shilla plans to rejuvenate its beauty offer, including revamping one of its existing stores and hosting large-scale beauty events with workshops and special deals. The extended tenancy for the beauty concession will include 22 outlets.

French retailer Nous opened a concept store at Geneva International Airport on December 8. Located in the departures hall, the 85m2 (915ft2) store will highlight ‘essentials of the future’, with limited-edition products and what the retailer calls avant-garde collaborations. It will offer curated collections in streetwear, watches, sneakers, cosmetics and technology. Founded in January 2018 by ex-staffers of famed Parisian concept store Colette, Nous has a store in Paris at 48 rue Cambon.

Data

The market for natural and organic fragrances continues to be small and consumer demand for these products still low compared with other beauty items, according to speakers at a conference on organic scents organized by The Fragrance Foundation France and held in Paris in December.The market for organic fragrances was

worth €500m in France last year and grew by 13%, according to figures cited by natural fragrance brand Acorelle R&D director Sophie Thirion. Cosmébio director Nicolas Bertrand said that fragrance came last on the list when it comes to consumer demand for organic products in beauty.Acorelle’s Thirion said there is much

opportunity for expansion, especially given growing awareness of allergens and harmful ingredients in consumer products. However, stumbling blocks to the expansion of the category include a limited palette of ingredients that can be used to create natural fragrances. Perfume houses present at the conference also stated that natural fragrances will be unable to rival traditional scents that use synthetics in terms of quality, the richness of the ingredients and long-lastingness. n n n

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n n n Some 78% of French women have a monthly beauty budget of €50 or less and make purchase decisions based on price-quality ratio, rather than factors such as transparency, innovation and social responsibility, according to a new survey by cosmetics subscription service Birchbox France and market intelligence company Toluna. Further key findings from the survey included:• Gen Z consumers discover new brands via social media and blogs; millennials mostly search and discover on the internet, while Gen X consumers tend to find out about new brands in-store.• Traditional media has little marketing appeal for Gen Z, with only 9% learning about new brands on TV and 8% getting this information from women’s interest media.• All age groups listed mascara in their top-three must-have products. It was the most important product for Gen Z and millennials and took third place, behind face cream and perfume, for Gen X.

People

Anglo-Dutch consumer goods company Unilever has appointed Alan Jope (pictured) ceo, effective January 1, 2019. Current ceo Paul Polman is to retire after more than 10 years in the role and will also step down from his position as board member, as of December 31. He will assist in the transition process and will leave the company in early July.Unilever’s chief marketing officer Keith Weed will retire in the

second quarter of 2019.

German group Beiersdorf, owner of personal-care brands including La Prairie and Nivea, has announced a management reshuffle starting January 1, 2019 , when new ceo Stefan De Loecker takes office. The company has appointed Asim Naseer to the executive board as chief marketing officer for Consumer Brands, starting January 1. He was most recently Procter & Gamble (P&G) global marketing director for Skin Care. Ramon A. Mirt has been appointed to the executive board effective March 18 and will be responsible for the Near East and Americas regions, succeeding Stefan De Loecker. Mirt began at Reckitt Benckiser in 2006 and was most recently senior vice president Central and Eastern Europe. Ralph Gusko, a member of the executive board and responsible for brands, R&D and the Asia Pacific region, is to leave the company. He will continue to be responsible for Asia Pacific until the end of 2019 at the latest. From 2019, the group’s Consumer Business segment will be overseen by a newly established executive committee. The committee will include the executive board as well as Beiersdorf global head of Research & Development Dr May Shana’a and head of Supply Chain Harald Emberger.

Symrise master perfumer Emilie Coppermann has received the François Coty Prize.The prize recognizes the creativity of a perfumer and was chosen by a seven-member jury. Former François Coty Prize laureates include Maurice Roucel, Alberto Morillas, Dominique Ropion and Christine Nagel. The prize was re-launched this year by François Coty Association president Véronique Coty, after a seven-year hiatus. n

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BW Confidential reports on what’s being said about beauty on social networks

Social media monitor

The well-being category continues to gain ground on social media. This is seeing innovative players like Binto, which is a personalized supplement brand and health platform, and Instagrammable brands like Ritual, a supplement brand, take off.

La Roche Posay's new wearable My Skin Track/UV clip-on device is liked for its small size and price. Retailing at $60, it is deemed as good value given the protection it offers.

Bloggers have been impressed by limited-edition packs, which are described as inexpensive and excellent gift ideas. Examples include gift cards, crackers and tree ornaments, like Fenty Beauty's Fairy Bomb and Benefit's hanging mascaras (pictured).

Liquid lipsticks are trending strongly as more effective formulas emerge, such as velvet-like finishes or shiny plant-based lip color oils.

The innovation in patches and stickers has caught the attention of bloggers. In addition to the Instagrammable aspect, bloggers are intrigued by new concepts from brands like Body Vibes (pictured), a vibrational energy disc designed to help people achieve harmonic homeostasis, or Patchology's medical-inspired delivery technology.

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Designer Parfums' Dilesh Mehta discusses the evolution of the celebrity fragrance category and how to reinvigorate it

Celebrity comeback?

How do celebrity fragrances fit into the current market given the impact of social-media influencers?Designer Parfums is evolving from a niche, entrepreneurial company to a company focusing on newness. What do we mean by newness? We recognize the millennial/Gen Z trend, the move towards IT/social media and AI, which is happening now. My gut feeling is that a third of the market is now internet controlled, replacing sales that used to be made on the high street. Another third happen in shopping malls as they offer a broader, richer shopping experience, and the other third happen in the travel retail and outlet environment.Where does Designer Parfums fit into this landscape? We have the advantage

that we are small enough to move faster than many of our larger competitors, and yet large enough to have the critical mass to give us the means to invest in our brands. We are currently going against the tide because while some companies don’t want to carry celebrity fragrances anymore, we are investing in the celebrity category. We have three celebrity fragrances in our portfolio: Ariana Grande, Jennifer Lopez and Naomi Campbell, and all of them are very successful. Ariana Grande has been the market leader in celebrity fragrance for the past two years and has proven that, managed in the right way, celebrity brands still have huge potential. Why are they so successful? Simply because we are giving these brands the care and attention that they deserve. Although the celebrity market is in decline, that doesn’t mean celebrities are no longer

important; in fact the opposite is true. Celebrities are more important than ever given the impact of social media. The difference with 10 years ago is that we are working very closely with our celebrities on each of our projects. The recent launches on Jennifer Lopez and Ariana are a case in point—they were both very involved in creating the fragrances that bear their names, which might not have been the case in the past.

How much of the social-media marketing of the fragrance is down to the celebrity and how much comes down to you?It’s a bit of both and when they post about a new product we get a fantastic response. Contractually, they approve everything we do and obviously we give recommendations and try to make sure that the communication on social media is very much in line with their own style. Today it is very clear that for the fragrance to be successful it has to be the extension of the celebrity. The celebrity can be a real powerhouse. Ariana Grande has 136 million followers and

Jennifer Lopez 83 million followers on Instagram. We need to be an integral part of that and tap into that resource. Interestingly, some celebrities have recognized this for cosmetics and make-up. If you look at Fenty or the Kardashians, the celebrity is so much a part of the product they have become their own go-to-market. In fragrance, celebrity is no longer a hot territory, but we plan to change this […] our mandate is to reinvigorate the category. n n n

Designer Parfums chairman & ceo Dilesh Mehta

”Designer Parfums chairman & ceo Dilesh Mehta

If you look at Fenty or the Kardashians, the celebrity is so much a part of the product they have become their own go-to-market. In the world of fragrance, celebrity is no longer a hot territory, but we plan to change this […] our mandate is to reinvigorate the category

“


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”Designer Parfums chairman & ceo Dilesh Mehta

With the celebrity category the key is newness: The new album, the ‘in’ footballer. But I don’t see this excitement and newness in travel retail at all. I see beautiful presentations of great brands, but where is the newness, the latest trend in travel retail?

“


n n n What is the best distribution strategy for the celebrity category?For the new Ariana fragrance, Cloud, which we launched in September, we launched on dot-com first, before rolling out to stores. It was very well received and was the number-one seller at launch. In Europe and Germany, we approached Douglas, which traditionally does not have so many millennial customers, and it loved the idea. We gave it exclusivity not only for Germany, but all of Europe. It has been so successful that we haven’t expanded distribution to anywhere else for the past three years. So, we identify our retail strategy in each market, we bring some exciting opportunities and if there are retailers that want to partner with us, we work closely with them to build a successful business. This is also the case with travel retail.

What are the opportunities for your products in travel retail?In travel retail, we have a real issue, as there is not a celebrity category. For me this is a disaster because the category is absolutely perfect for this type of distribution; it’s all about the “in” thing. [Travel retail] has the right customer base for celebrity because travelers by nature like to explore more. With the celebrity category the key is newness: The new album, the ‘in’ footballer. But I don’t see this excitement and newness in travel retail at all. I see beautiful presentations of great brands, but where is the newness, the latest trend in travel retail? On top of that, the pricing of celebrity fragrances is perfectly positioned for the travel-retail and duty-free market, by the nature of the customer base and the clients that are there.

Are e-commerce platforms like Amazon suited to celebrity fragrances? It’s a good question. We appreciate the might of Amazon; the question mark is over longevity and branding. Amazon can play an important role because of its amazing distribution channel, but it does not help so much with transmitting the brand values and the storytelling; it’s more of a logical, algorithm-driven channel. Amazon predicts what you are looking for and it gives you alternatives. When we are trying to launch something new, offering alternatives is not the objective for us.But if we talk about the dot-com arms of brick-and-mortar retailers, or the pure players

who are trying to talk to millennials or gen Z through their dot-com stores, that is a different game. This is an interesting opportunity. These sites are trying to translate the essence of the brand; they are trying to be creative in the way they translate the brand online. We are certainly looking with a lot of interest into how to define our dot-com strategy for this specific category, with pricing, speed-to-market and brick-and-mortar playing a role.

What was the rationale behind the sale of Jean Patou to LVMH?Designer Parfums is no longer the owner of Jean Patou. The French fashion brand was bought by my children Akash Mehta and Nikita Mehta, who decided to enter into partnership with LVMH through a share deal. There is strong leadership with Sidney Toledano as president and Sophie Brocart as managing director and we are looking forward to the revival of the Patou fashion brand. I remain a member of the board and my children will be very much involved when the brand is launched next year. It is a great team, and LVMH is the best company for creating authentic stories and preserving savoir-faire. n

s Designer Parfums claims that Ariana Grande has been the market leader in celebrity fragrance for the past two years



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A roundup of the state of M&A in beauty

Buying into beauty

M&A analysis

While 2018 has been largely lacking in mega-deals in beauty, there has been no slowdown in the appetite for

buying beauty companies overall. Mid-market players and indie brands continue to be snapped up at a rapid pace by both strategic and private-equity buyers."Based on the transactions we track, transaction volume is up

9% year-to-date [up to the end of the third quarter],” says Steve Davis, managing director and head of the beauty and personal care practice at Intrepid Investment Bankers. “It’s on track for the third year in a row with 100+ transactions, which is a sign of a very healthy and robust beauty M&A landscape.”The lack of mega-deals is in many ways related to scarcity on the market,

with few players up for grabs. Upcoming larger deals anticipated in the coming months include L Catterton’s potential sale of Elemis, as well as Nestlé’s spinoff of Nestlé Skin Health, which includes a significant skincare activity. Rumors are also circulating around a potential acquisition of L’Occitane, which is listed in Hong Kong and could be an appealing target in the current market for its natural stance and skincare-heavy portfolio. It is thought that private-equity firms including Advent International, and strategic players are interested in L'Occitane. Other assets currently housed in private-equity portfolios and reaching the end of their cycle are also expected to hit the market. “There’s still a good portfolio of beautycare assets within the private-equity groups so there will be a sell-side mandate,” says Davis.

L'Oréal active on acquisitionsIn terms of the major strategic players, L’Oréal has been the most acquisitive this year, making three deals and tapping into naturals with Logocos Naturkosmetik, K-beauty with Stylenanda and influencer-led professional haircare with Pulp Riot. After selling off much of its beauty portfolio to Coty in 2016, Procter & Gamble

has moved into buying beauty again, snapping up First Aid Beauty and Snowberry in skincare, which followed its 2017 purchase of natural deodorant maker Native. While Unilever has been quieter of late, it has made its growth ambitions in

prestige clear. “It has made it very clear historically that it's not ready to make supertanker deals, but it is certainly looking for speedboats. However, I think something has shifted slightly there in the last couple of years in that it's become more ambitious with its own launches, especially when it comes to areas like natural and organic,” observes Deutsche Bank analyst Eva Quiroga-Thiele.With top management changes ahead at both Unilever and Beiersdorf, strategic

shifts may be anticipated, according to Quiroga-Thiele. “[Beiersdorf] is a company where expectations will always be high that it will eventually use its rapidly mounting cash pile for M&A,” she says. While the German firm has traditionally been shy in the M&A space, notably after its unsuccessful 2007 purchase of n n n

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n n n C-Bons in China, certain assets in skincare that may be coming onto the market could be a good fit with its portfolio, according to Quiroga-Thiele. However, she believes it may be shy of the multiples at which some brands are currently changing hands—sometimes as high as six times sales. As for Coty, observers suggest the company’s current difficulties mean it is unlikely that it will make a move on the M&A front, although it is still expected to divest certain brands.Japanese group Shiseido is actively looking for new brands, and has recently

announced that Shiseido Americas president and ceo Marc Rey will add the role of chief growth officer to his remit, which will include overseeing global M&A for the company.

Interest in skincare and haircareIn terms of categories, industry observers expect the needle to continue to move away from make-up and continue to migrate more towards skincare and increasingly haircare. “We’re seeing an uptick in transactions in skincare and haircare, as was predicted, but the investment in direct-to-consumer brands is also something that’s being funded,” observes Kelly Kovack, founder and ceo of consultancy BeautyMatter. Color cosmetics brands including Anastasia Beverly Hills and Pat McGrath Labs both got equity investments this year, just two examples of how digital-native brands continue to appeal strongly to buyers, even in make-up. Asia also continues to be an area of focus, with investors keen to find the next potential beauty boom, whether from Korea, Japan or elsewhere.Unsurprisingly, naturals are another area seeing an uptick in investment—

L’Oréal’s purchase of Logocos Naturkosmetik is one case in point. “You need to do this via M&A, because your existing brands just don’t lend themselves to [convincing natural concepts], and I think that trend will continue,” says Quiroga-Thiele. “Problematic is the fact that the sizeable natural brands like Weleda and Dr Hauschka are not really up for sale, so you are kind of stuck with the smaller acquisitions.” Brands that sit on the cusp of beauty and wellness, for example in bodycare, are also expected to attract more interest.

A new dynamicIn the private-equity space, new players continue to be keen to enter beauty. “Everyone likes the beauty multiples and the margins,” says Kovack. Platform-like companies that bridge the gap between private equity and strategic also continue to gain ground, with Topspin-backed JD Beauty acquiring haircare brand Ouidad, for example, and Ancora Investment Holdings, backed by Winona Capital, snapping up Vapour Organic Beauty. “That has created a new dynamic,” says Davis. And this is especially a boon for brands that may be too small to attract the attention of strategic players or the larger private-equity groups. “A lot of really good brands die on the vine because they can’t get the money they need because they’re not big enough,” observes Kovack. “It requires someone to have an appetite for that risk and know how to scale a brand, someone with an entrepreneurial mindset.” On the strategic front, UK-based The Hut Group continues to ramp up its

portfolio and provide competition for assets for both private equity and n n n

”Intrepid Investment Bankers managing director and head of the beauty and personal care practice Steve Davis

Based on the transactions we track, transaction volume is up 9% year-to-date [up to the end of the third quarter]. It’s on track for the third year in a row with 100+ transactions, which is a sign of a very healthy and robust beauty M&A landscape

“

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n n n strategic buyers. It snapped up Eyeko on the brand front and Acheson & Acheson to bolster its supply over the past year, and is increasingly proving to be a competitor to be reckoned with.A growing number of strategic players are investing more in incubators. Just last

week, L'Oréal said it had set up a venture capital fund to take minority stakes in start-ups. It has taken a stake in Sillages Paris, which offers an online service to create customized fragrances based on AI. Beiersdorf too, said that its Nivea brand will launch an accelerator program for beauty start-ups in Seoul, South Korea. This strategy of nurturing start-ups is increasingly seen as an alternative to the traditional M&A process. This is especially the case when it comes to early stage brands, with less potential risks involved for acquirers and few larger assets out there to be bought. “Between creating, incubating and acquiring, it’s become a much more faceted brand development process,” says Quiroga-Thiele.With the wave of indie-brand creation still ongoing, meanwhile, there is no

shortage of early-stage assets looking for investment. “The brand creation environment is to a large extent one of the biggest drivers of M&A, and we don’t see anything changing on that landscape,” says Davis.With brand creation looking set to flourish, the ways and means of investing in

smaller brands and the profile of potential investors are likely to be increasingly diverse, making for an even more varied beauty investment landscape in the years to come.

”Deutsche Bank analyst Eva Quiroga-Thiele

Between creating, incubating and acquiring, it’s become a much more faceted brand development process

“



Key beauty M&A 2018

• Johnson & Johnson - Ci:z Holdings Co Johnson & Johnson made an offer to buy Japanese cosmetics maker Ci:z Holdings Co in a move to strengthen its presence in Japan and bolster its dermocosmetics business. Johnson & Johnson plans to buy all outstanding shares in Ci:z Holdings Co for around ¥230bn ($2.05bn).

• L’Oréal - Logocos Naturkosmetik, Pulp Riot and Stylenanda L’Oréal bought into the naturals, influencer-led haircare and K-beauty businesses with its three major acquisitions this year.

• P&G - First Aid Beauty P&G is back on the acquisition trail, snapping up First Aid Beauty, which fits into its skincare portfolio at a price point between SK-II and Olay.

• The Hut Group - Acheson & Acheson and Eyeko The Hut Group continues to bolster its portfolio and grow its beauty offer with its acquisition of contract manufacturer Acheson & Acheson and eye make-up brand Eyeko.

• Astral Brands - Butter London US-based Astral Brands, owner of mineral make-up and skincare brand Pür, professional skincare brand Cosmedix and botanical skincare brand Aloette, snapped up make-up brand Butter London, its first acquisition. n n n


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• Unilever - Equilibria Unilever added a 75% stake in Italian natural personal-care and wellbeing company Equilibria, further bolstering its presence in the clean beauty space.

• Istituto Ganassini - The Organic Pharmacy Italy’s Istituto Ganassini bought UK-based The Organic Pharmacy, taking it into the organic beauty space.

• Eurazeo Brands - Pat McGrath Labs Eurazeo Brands, which also owns Nest Fragrances, snapped up a $60m minority stake in hot make-up artist brand Pat McGrath Labs.

• TPG Capital - Anastasia Beverly Hills and Rodan + Fields TPG Capital bought minority stakes in make-up brand Anastasia Beverly Hills and skincare company Rodan + Fields, two of the larger brand acquisitions of the year, ramping up its beauty presence.

• Tengram Capital Partners - Lime Crime Another digital native brand, Lime Crime, was picked up by Tengram, which bought Révive from Shiseido last year.

• Puig - Dries Van Noten Puig continued to bolster its fashion portfolio with the addition of a majority share in Dries Van Noten, which is seen by observers as having significant potential in the fragrance space.

• L Catterton - The Honest Company LVMH-backed L Catterton, which already has a strong beauty presence, bought a $200m minority stake in clean beauty brand The Honest Company.

• Douglas - Parfümerie Akzente, parfumdreams Douglas’ latest acquisition is intended to bolster its presence online in Germany and the rest of Europe.

• Shiseido - Violet Gray Shiseido is aiming to ramp up its online presence with the purchase of a minority stake in online luxury retailer Violet Gray.

• Groupe Rocher - Arbonne One of the year’s biggest acquisitions—Arbonne has annual sales of more than $550m—is in part intended to help French firm Groupe Rocher strengthen its direct-sales activity.

• Edgewell Personal Care - Jack Black Edgewell, whose brands include Schick Hydro and Bulldog skincare, added the leading brand in the US men’s prestige skincare market to its portfolio. n

n n n Key beauty M&A 2018


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The increasingly sophisticated needs of Chinese consumers, growth in demand from Southeast Asia and the boom in natural beauty both in Asia and beyond were the

key topics of conversation at this year’s Cosmoprof Asia show. Suppliers continue to up their game to cater to the specific demands of the array

of new Asian brands arriving on the market and conform to new environmental constraints in China, while in finished products, especially skincare, there was much buzz surrounding brands from South Korea and Japan. Growing demand for make-up and fragrance in Asia, especially China, was another talking point.Visitor numbers to the show grew 4.2% to 87,284. “This year’s visitor numbers, fair

exhibitors and products confirm what the global trends are telling us; that as an industry beauty and cosmetics are not only continually pushing the boundaries of innovation and science, but also that the Asia market is full of savvy consumers keen to understand and invest in cutting-edge products,” says David Bondi, senior vice president, UBM Asia, who is taking over from Michael Duck as director of the show following Informa’s acquisition of UBM earlier this year. “We are delighted to share that this record-breaking year brought together more exhibitors, attendees and business than ever before, to both our AsiaWorld-Expo and Hong Kong Convention & Exhibition Centre venues, and trend forecasts suggest 2019 will continue building on this year’s success,”said Bondi.

BW Confidential reports on what was seen and heard at Cosmoprof Asia, which took place from November 13-16 in Hong Kong

Eastern appeal

Cosmoprof Asia

Cosmoprof AsiaTook place: November 13-16 (Cosmopack November 13-15, Cosmoprof November 14-16)Total exhibition area: 113,800m2 1(1.2 million ft2), +5% vs. 2017 Visitors: 87,284, +4.2% vs. 2017

Talking heads: Heard in show"We have invested €7m to make our factory in southern China compliant [with new environmental rules, and] we have increased our capacity to supply customers looking for added value. We are facing unprecedented environmental constraints, which is making for unprecedented inflation in costs. But factories are closing, and there is less supply, production capacity is not infinitely extensible. Demand for our products is growing strongly.” SGD Asia Pacific general manager Frederic Barbier

“There is a bit of an air pocket in the South Korean market—companies are looking for new markets, but the Japanese are back at the forefront. In China, demand for quality products is pushing local players to become more competitive. The environmental question in China is favorable to international brands, especially European brands, and for European suppliers, but is also pushing Chinese suppliers to up their game. We are seeing strong growth in projects in southern Asia, especially India, Indonesia and the Philippines, with local brands, and Chinese brands are also developing strongly in the region.”Centdegrés co-founder and artistic director Elie Papiernik n n n

Cosmoprof Asia



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“Chinese retailers are looking for interesting brands. This opens up a lot of opportunities. Today, you can be niche in China and have 450 stores. There is a lot of opportunity. What’s very important is to have a strong concept—Chinese consumers are very demanding.Creative Capital founder and ceo Louis Houdart

“We’re finding more and more each year that US brands are coming here because they get inspiration. For us, it’s become one of our biggest shows.” HCT vice president of product sales Nicole Amorosino

n n n Talking heads: Heard in show

Seen in showGerman company Schwan Cosmetics is expanding its offer of sustainable and environmentally friendly solutions. As well as an expanded selection of pencils in the Perfect line, made of wood, the company showcased a Halal-certified line to meet fast-growing demand in the area, especially in countries like Indonesia and India. It also presented a range dubbed “All you need is less,” developed with less than 10 ingredients and mini formats designed with changing consumption patterns in mind.

Italian contract manufacturer Artcosmetics has developed a range targeting the Indian market for the first time, in line with growing demand from local brands there. Products in the range include several specific foundation shades and brightly pigmented products for lips and eyes. The company is seeing growing demand for its products from Asia in general, according to operational marketing and events manager Paola Mazza, and is working to offer better targeted ranges for Asian markets.

Several suppliers were showing new synthetic make-up brush solutions designed to better replicate animal hair, in line with the movement towards cruelty-free and vegan beauty. FSKorea presented its G-Clon project, with synthetic filaments akin to goat hair. HCT, meanwhile, expanded its Unreal range with the “P” line (pictured), designed to imitate pony hair, following the launch of the “G” or goat range earlier this year. New variants will be rolled out in coming months.

Spain-based Quadpack presented The Elements Collection, a range of fragrance bottles with caps made from different materials, including wood, real marble, resin, leather, cork, ceramic and concrete effect, in a bid to offer brands maximum differentiation possibilities on the market and expand its offer.

MS Swiss Cosmetics, which specializes in skincare, presented its first color cosmetics formulations. The four products in the line—a primer, two foundations and a concealer—all offer skincare properties with ingredients like HYAL-X3 complex and active natural ingredients as well as offering light coverage. n n n

Cosmoprof Asia



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n n n Three year-old South Korean skincare brand Cosmetea was presenting a new look with seven different lines of between five and eight skus based on the antioxidant benefits of tea and housed in minimal soft-touch packaging. The products blend tea water, botanical extracts and oils, with lines based on mint for pore care, chamomile for soothing and rosebud for brightening, for example. The average price of the line, which will hit retail following the show, is $25. Cosmetea’s current products are stocked by retailers including Fenwick and Asos.com.

France-based Corine de Farme chose Cosmoprof Asia to showcase its first organic skincare line, set to hit the market in April next year. The range consists of a micellar foam, mist spray, two creams and micellar water products. An organic babycare line is also set to launch in January. Corine de Farme is seeing double-digit growth on the French market this year, which accounts for around half of its sales, and is also growing strongly in Asian markets including Thailand and Indonesia, according to Laboratoires Sarbec president and ceo Eric Jacquemet.

Two companies presenting new products intended to counter the effects of blue light radiation were Greece’s Farmeco and Germany’s Annemarie Börlind. Farmeco showed the Peptumax line under its Coverderm brand. Three skincare products and three associated make-up products will launch from December, claiming to combat oxidative stress and “e-aging”. German natural beauty firm Annemarie Börlind, meanwhile, presented its three-in-one Anti Blue Light Facial Oil (pictured), which uses marigold to protect against blue light radiation. The new product took home the Cosmoprof Asia Award for the Natural and Organic category.

UK-based Fragrance and Beauty Limited (FAB) presented several new fragrance licenses signed this year. The company showed its new scents for the Karen Millen and L.K. Bennett brands, the former to launch next March, while the latter just hit the luxury fashion brand’s own stores. A scent duo for classic outerwear brand Barbour will also hit the market in fall next year, according to chief executive Mark Earnshaw. FAB has also just renewed its license with e-tailer Missguided, which is performing well in the fragrance category, Earnshaw says, and will launch color cosmetics for the brand next year.

California-based Venn is inspired by the South Korean 12-step skincare routine, but aims to simplify it by creating all-in-one solutions. Launched last November, its All-in-One Concentrate combines three patent-pending technologies to boost the skin’s hydration, elasticity and texture and fight wrinkles. The line also includes a mask, and a cleanser, serum and a second concentrate will be added early next year. The brand currently sells online only, but is in talks with premium retailers. Prices range from $53 to $185.

UK-based OO1 London offers skincare inspired by traditional Chinese and Western medicine—founder Ada Ooi’s grandfather was a pharmacist in Hong Kong. It includes London’s Fortnum & Mason among its stockists. The products, housed in simple black packaging, are claimed to be 98% natural. Bestsellers include the brand’s cleanser and serums, and 001 presented its new multi-purpose product, Alpha-Glow Flash Facial, at the show. n


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In what it calls its first concept store in Asia, LVMH-owned retailer Sephora aims to offer a ‘prestige playground’ for beauty, with a futuristic design and a mix of

services that blend online with brick-and-mortar. The 535m2 (5,759ft2) space, at the World Trade International Plaza in Shanghai,

carries close to 100 brands, including classics and exclusives. The concept store aims to offer an interactive online-to-offline experience. High-tech features include the Cloud Shelf, which allows customers to browse, search for and order products using a voice-activated interactive touchscreen in the store, then have them home-delivered. There is also a Virtual Make-Up Artist tool, created in collaboration with mobile internet company Meitu. The augmented reality make-up try-on allows customers to virtually play with different looks.Sephora’s strategy is to capitalize on consumers’ thirst for digital retail tools,

explains president of Sephora Asia, Benjamin Vuchot: “Customers’ appetite for combining their online and offline experience predominates and the adoption rate of new technologies is very high. This leads to further blurring of the line between offline and online experiences. Our launch of the Virtual Make-Up Artist has been a great way to promote engagement in our stores but also a great way for our clients to experiment with products on their mobile devices. Our e-commerce wall, or Cloud Shelf, which allows customers to order products online for same day delivery in Tier 1 cities like Shanghai or Beijing, blurs this line as well, bringing a digital shopping experience to our physical store.”There are also a range of physical features aimed at allowing consumers to

interact with products. The Discovery Tables are intended to let customers test products; the Beauty Studio offers complimentary makeovers, while at the Skin Care Bar, customers can find products suited to their complexion. There is also an engraving machine to create personalized gifts. n



Sephora’s first Asian concept store focuses on product discovery and online-to-offline services

Beauty playground

Sephora l Location: World Trade International Plaza, East

Nanjing Road, Shanghai, China

l Size: 535m2 (5,759ft2) l Opened: September

l Special features: Cloud Shelf enabling customers to

order in-store for home delivery; engraving machine for gifting;

Virtual Make-up Artist try-on tool

s Several stations are set up to let customers try products before they buy

s The Beauty Studio offers complimentary make-overs (left). The store carries close to 100 brands, including classics and exclusives (right)

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