www.bwconfidential.com The inside view on the international beauty industry July 10-August 27, 2014 #96

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The buzz 2 Retail on fire News roundup obile shopping strategies are likely to get a little Netwatch 6 Mmore serious now that Amazon has launched its own smartphone. The e-commerce giant’s Fire Beauty blogger review Phone is described as more of a shopping tool than a communication device, as it can recognize thousands Interview 7 of products and enable users to immediately buy them Givaudan fragrance division from Amazon’s website. The phone’s dedicated button president Michael Carlos for making a purchase means that shoppers have more opportunities to shop and shop more easily and Insight 9 can compare prices and buy an item that costs less on Amazon. This is likely to send shivers down the spine of most competing retailers, but could be a major opportunity for brands to sell more if they agree to Show review cooperate with Amazon. World Perfumery Congress 12 Amazon practically invented e-commerce, transforming (and in some cases MakeUp in Paris 14 destroying) a string of industries from book selling to electronics retail in the process. Its new phone could very well usher in another new chapter in retailing. Store visit 16 It’s unlikely that beauty will remain untouched by the online retailer’s ever- ArtDeco, Paris growing influence for long. Industry players may have to decide sooner than they thought whether they can beat Amazon with their own strategies or whether they will end up having to join them.

BW Confidential will be taking a break for the summer. We will be back with more news, analysis and commentary on August 28. The next issue of BW Confidential will be Oonagh Phillips published on August 28, 2014 Editor in Chief Stay informed with our daily news [email protected] service on www.bwconfidential.com CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIA CONFIDENTIA L L The buzz Strategy Stay informedwithourdailynewsheadlinesonwww.bwconfidential.com News roundup Christian Mahe, managing director of Chanel research said: of the center is natural actives non-invasive wayoftestingthe efficacyofactivesontheskin.Afocus and green chemistry. extraction ofactivesandamulti-photon microscope,whichprovidesa high-tech equipment, including a poly-fractioning machine for the 15,000m exterior is decorated with a blackand Neuilly,metallic alattice suburb structure,of Paris.site Thecovers inultra-modern Pantin, as building,well as sites whoseParis. in Sophia-Antipolis The center groups in togetherthe southJune. the ofThe activitiesFrance new center, of thewhich brand’s openedFrench brandChanel unveiled former in January its new 2013, Research is in andPantin Technology on the outskirtscenter to ofthe pressoff. LGis,however,stillsaidtobeinterestedinacquisitions. in it is thought that the mounting interested inacquiringArden,withaneyetoboostingitsinternationalbusiness.However, difficulties at Arden have causedoverheads the inKorean the facegroup of to growing back restructuring losses at the plan company. that involved LG said purchasing ElizabethArden.ThenewscameasArdensaiditwouldimplementamajor terminatingin April that fragrance it was licensesKorean groupLGHousehold&Healthcarehas andsaid cutting it is nojobs longer to reduce considering MEA andLatinAmerica. Prestige. Themarketswillbeorganizedintofourregions:NorthAmerica,Europe,APAC/ The Global Markets division willfour becategories: headed by fragrance,Jean Mortier, skincare, who waspreviouslypresidentofCotyBeauty.Allbrandswillnowbehousedunder previously color president of and Coty bodycare. Global Marketsdivision.CategoriesandInnovationwillbeheadedbyRenatoSemerari, The new organization will be structuredmarkets. intoIt is a alsoCategories expected and to and productcategoriesimprovecoordinationresourcesbetweenchannels Innovation generate savingsdivision by and reducing a group.The companysaysthatthemovewillbringamoreholisticapproachtoconsumers duplication. more integratedmodelfocusedoncategoriesandregionsinamajorreorganizationofthe Coty will eliminate its separate prestige and mass divisions to implement what it calls a Talking about Chanel’s vision of research and the new center, n n n n n n At aglance...

Interparfums launchesJimmyChooMan Harrods tounveilpremiumfragranceconcept Douglas finalizesacquisitionofNocibé Pola Orbiscreatesinternationaldivision LG nolongerbiddingforArden Coty implementsmajorreorganization 2 (161,500ft 2 ) and houses 200 researchers. It is also home to www.bwconfidential.com -July10-August 27,2014 #96-Page 2 n

News roundup n n n “Chanel’s research should be considered as an innovative and daring international ecosystem that respects the environment.” He added that the idea of the ecosystem can be seen in the brand’s association with universities internationally and its collaboration with start-ups. In addition to the Pantin center, Chanel operates research hubs in Piscataway, US and Funabashi, Japan. The buzz Japanese beauty group Pola Orbis has set up a new entity called Global Business Division to manage its overseas business. The company’s Global Business Strategy Office branch that currently manages the business outside Japan will integrate the new division. Chinese beauty executive Yutaka Den is joining Pola Orbis as chief global business officer to head up the new division. He will also become director of Pola Orbis subsidiary Jurlique International in Australia and H2O Plus Holdings in the US.

Retail German retailer Douglas has finalized its acquisition of French perfumery chain Nocibé. The new entity is now France’s largest perfumery network in store numbers, with 645 doors. Douglas operates 179 stores in France directly and through franchises, and Nocibé has 466 doors. In terms of sales, the group is now number two in France, behind LVMH-owned . Marionnaud comes in third place. Douglas was required to sell 38 stores in France in order to obtain approval for the Nocibé acquisition from French competition authorities. Douglas, which is owned by private-equity group Advent International and the Kreke family, signed a deal to purchase Nocibé in February this year.

UK-based department store Harrods is to launch a new fragrance retail concept at its London store this September. The retailer says the concept, which it calls the Salon de Parfums, is aimed at ‘ connoisseurs’, and that it will present high-end and rare scents, alongside perfume creation and personalization services. The 5,090ft2 (473m2) space on the store’s sixth floor features dedicated brand boutiques for 11 fragrance brands: Bond No 9, By Kilian, Chanel, Clive Christian, Creed, Dior, , Henry Jacques, Roja Dove, Tom Ford and Xerjoff. A separate fragrance gallery will stock another selection of and will include world- exclusives, such as London-based perfumer Thomas Kosmala, and fragrances, such as Dolce & Gabbana’s Velvet Collection. The space is intended to convey an intimate retail ambiance and is decorated in soft grays and natural tones. The 11 brand boutiques are situated along a corridor that features columns, showcase windows and decorative light fixtures. The fragrance gallery lies at the end of the corridor and is in the form of an oval-shaped room with seating and a crystal chandelier. n n n

www.bwconfidential.com - July 10-August 27, 2014 #96 - Page 3 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIA CONFIDENTIA L L The buzz Data Products News roundup African countriesservedbytheFrenchoffice. Italian companyGRCParfum. Maurel will be based at the company’s UK-based fragrancehouseCPLAromashasappointedOlivierMaurelasperfumer. creative center in Paris. He previously worked with Pacific. He will be replaced byGroup Katiba Asia Belkhadria, Pacific. Tallotwho worked was French groupClarins previouslyhasfor appointedClarins regional skincare Olivier marketing inTallot Paris. brand manager manager travel retail FragranceAsia president general merchandise managerShiseido cosmetics senior vice and presidentfragrances hasEurope at been travel Ariel with retailer Gentzbourger, DFS. since who 2009.worldwide. is toThe become appointment Lesne senior was followspreviouslyvice newsJapanese groupShiseido hasmanaging of named the departuredirectorPhilippe travelLesneof viceretail president Asia Pacific. travel Lesneretail appointments went into effect onFragrance, July 1. Bumble & bumble, Ojon and Smashbox for the UK andgeneral Ireland. manager The travel retail Americas.manager EstéeLauder travel retail worldwide. Assa Theis currentlyEstée Lauder vice Companies president has and appointed Israel Assa senior vice president and general reports that less than 80% of prestige retail stores are currently selling eyebrow make-up. reports thatlessthan80%ofprestigeretailstoresarecurrentlysellingeyebrowmake-up. now represent $122m, and 11% of total US prestige eye make-upthe USsawsalesgrowbyjust3%forperiod. sales. However, NPD March 2014, according to NPD Group.Prestige eyebrowmake-up in the However, US saw thesales total up 28%prestige in the make-up 12 months category ending in n CPL Aromas is currently focusing on developing its business in France and in North CPL AromasiscurrentlyfocusingondevelopingitsbusinessinFranceandNorth Assa replacesRenéFrion,whohasbeennamedvpandgmAramisDesigner Sales of eyebrow products have increased by double digits over the past three years, and Sales ofeyebrowproductshaveincreasedbydoubledigitsoverthepastthreeyears,and People at €42(30mlEdT), €55(50mlEdT)and€77 (100ml EdT). August andthenrolloutinternationally inSeptember.Itispriced Kit Harington. It will be supported by an ad campaignan antique featuring hip flask British and is actor toppedfragrance with acomes leather in aembossed smoked glasscap.a patchouli bottle intended base. It to was resemble composed fougere by Anne with Flipo a top from note IFF. of lavender,The Choo thisfall.JimmyManisdescribedasafresh,woody a heart of pineapple leafInterparfums istolaunchitsfirstmen’sfragranceforJimmy and Jimmy Choo Man will launch exclusively at Sephora in France in www.bwconfidential.com -July10-August 27,2014 #96-Page 4 n

Subscriptions RenataAshcar,MayuSaini,RaphaëlleChoël, www.bwconfidential.com orUS$699 printmagazine(4issues)+dailynews:€499 1 year:electronicpublication(20issues)+ Corinne Blanché Tina Clark,AlexWynne, Contributors: [email protected] Deputy Editor:AlissaDemorest [email protected] Editorial Director:OonaghPhillips Publisher: NicolasGrob ISSN: 2104-3302 Fax: +33(0)153010979 Tel: +33(0)174634961 [email protected] 92600 AsnièressurSeine,France 4 avenuedelaMarne BW Confidential permission isstrictlyprohibited. Reproduction inwholeorpartwithout Copyright ©2014.Allrightsreserved. 513 746297RCSNanterre BW ConfidentialispublishedbyNoonMedia [email protected] Advertising [email protected]

News roundup

n n n Coty is to launch a new scent for the Chloé brand this fall. Called Love Story, the fragrance plays on the theme of a Paris romance, and its bottle is in part inspired by the padlocks that couples attach to the Pont des Arts in the French capital. The fresh, floral fragrance was created by Anne Flipo of IFF and includes notes of neroli, orange blossom and jasmine. It will be backed by a print and TV ad campaign featuring The buzz French actress Clémence Poésy. Love Story will launch in September and retails at €56 (30ml EdP), €82 (50ml EdP) and €99 (75ml EdP).

Donna Karan (Estée Lauder Companies) is to launch a new fragrance for the DKNY franchise inspired by New York City. The fragrance, called DKNY MYNY, is a pink juice that comes in a heart-shaped bottle with a metal cap that represents New York’s skyline. It was created by Estée Lauder Companies’ Aramis and Designer Fragrances svp corporate fragrance development worldwide Trudi Loren. The scent will be backed by a print and TV ad campaign featuring singer and actress Rita Ora. DKNY MYNY will launch in the US in August and will retail at $48 (30ml EdP) $68 (50ml EdP) $88 (100ml EdP).

French company Nuxe is coming out with two major launches this fall. For the Nuxe brand, the company will introduce an anti-dark spot range called Splendieuse, whose formula boasts five patents. The range claims to reduce the size and intensity of dark spots. It comprises four skus: a serum (€37.50 for 30ml), a fluid and cream with SPF20 (€29.90 for 50ml) and a cloth mask (€29.90 for a pack of six). Splendieuse will launch in October. The group’s Bio Beauté brand will launch a new line for combination skin also in October. The range claims to rebalance skin, thanks to a “probiotic-like” plant complex said to limit production of bad bacteria and stimulate good bacteria. Prices range from €10.30 to €13.90.

Former Annick Goutal managing director William Bouhouret and luxury product specialist Anne-Cecile Vidal have joined forces to create a niche fragrance brand, Parfums de la Bastide. The brand comprises five unisex EdPs inspired by France’s Provence region. Each 100ml EdP is priced at €125. The brand opened two showroom-boutiques in Paris and Aix-en-Provence, and is to roll out to 30 to 40 selective doors in France from September. International distribution is planned for 2015. The aim is to enter around 150 doors and sell 40,000 units internationally in the first year, says Bouhouret. n Make-up CONFIDENTIAL Beauty insight CONFIDENTIAL

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L CONFIDENTIAL packaging andunbeatableprices(thepalettesretailfor£6/$10). treat” byoneblogger,thebrandispraisedforitssofttextures,wearablecolors,attractive Primark ismakingwavesjustmonthsafterthelaunch.Describedasa“luxuriouslittle The arrivaloflimited-editionmake-uppalettesbyMakeupRevolutioninmassretailer their fragrance. million fansonFacebooktovotefor the awardfollowingacalltotheir31 ‘connected’ teenfans.Thebandwon to highlightthebenefitsofhaving ,hasincitedwriters Our Moment,thefragrancebyband FiFi ConsumerChoiceAwardfor The FragranceFoundationUS’s2014 pigmentation. Bloggerssaythisclaimalonemakestheproductworthtrying. Skintone CorrectorSPF30ispartofacollectionthatformulatedtopreventhyper- Although theproducthassimilarclaimstoaBBCream,EstéeLauderEvenEffect AtweetaboutEstéeLauder’sEECreamhascausedabuzzontheblogosphere. Beauty bloggerreview BW Confidential BW what’s tocome? What’s changedand Luxury insight CONFIDENTIA L trends andnewopportunities An analysisofmarket data, Fragrance

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Color makes acomeback Make-up insight reportsonwhatthebloggersaresayingaboutbeauty Figures, retailinitiatives&trends Skincare insight Distribution atalltheindustry’s majorinternational events In-depth coverag eoftheglobalbeautymarket Luxe Pack Monaco • Beyond Beauty Paris • TFWA Asia Pacific Singapore Florence Make Pacific UpinParis •HBA GlobalExpoNew FragranzeYork... Pitti Asia Shanghai Pack • Luxe • Paris TFWA Beauté Kong Spa Mondial York• New Hong • Showcase Elements Asia Paris Cosmoprof • Beauty York New Beyond Pack Luxe • Monaco Pack Milan Luxe Esxence • Moscow Intercharm • Orlando Americas the of Show Free Duty ParisCosmetics Cosmoprof In • Shanghai Expo Beauty ParisChina Worldwide• Bologna PCD • Dubai East Middle World Beauty • Cannes Exhibition World ...TFWA How prestige is set to develop How prestigeissettodevelop Insight: Haircare

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The views expressed in this section are those of bloggers and do not represent the opinions of BW Confidential Givaudan fragrance division president Michael Carlos Mining growth

Interview Michael Carlos, head of Givaudan’s fragrance business, talks to BW Confidentialabout the fine fragrance industry’s most pressing issues and new directions for the company

How is your fine fragrance business performing? This year started out with double-digit growth in the first quarter, but you can’t look at the business by quarter in fine fragrance. We aren’t seeing a lot of increases in Europe and the US, but there is strong growth in Latin America and the Middle East. We’re beginning to see signs of a true fine fragrance market in some parts of Asia, as well. The culture of perfumery as we know it in the West hasn’t taken the same form in developing markets. It isn’t a developed industry in terms of marketing products, using evaluators and having solid technical teams—this needs to happen in an organized fashion to create a strong market. We’re seeing improvements in Brazil, in the Middle East and in some countries in Asia. [Fine fragrance] usage Should the ‘Western’ business model be replicated in developing markets? Yes, to a certain extent. But I also think that the business model in the West will have to “in China is still very change so there is more direct contact between the perfumer and the brand, for example. low [...]. I don’t see it This approach can then expand to other regions. growing enormously, How do you see the fine fragrance market developing? and I have much more The market is being pulled in two directions: on one end we’re seeing more niche, luxury designer brands, and on the other, the mass offer is expanding and becoming more faith in the markets of sophisticated. The premium segment is revolving much more around the perfumer, Indonesia and India ingredients, and stories, while mass will take the more traditional route of offering maximum value for money. Products in the middle will struggle, which is what we’re seeing in the US. Celebrity fragrances are declining and I can’t see that being revived. Givaudan fragrance division president Michael Carlos What is your view on the escalating prices in prestige? It can go far with a certain set of consumers, especially when you see that the niche ” Givaudan market is growing fastest. Consumers who love fragrance will pay these kinds of prices. l Fragrance sales 2013: Sfr2.08bn ($2.31bn), +5.1% Do you see the pace of launches slowing down? vs 2012 If you don’t offer newness you can’t grow your business. Brands are now launching l Fine fragrance more flankers. These flankers offer something new, but under the umbrella of the master sales 2013: brand, so you keep the masterbrand very strong. +1.8% vs 2012 l 2013 group sales Are brands investing more in the actual fragrance? by region: Yes. They see that to keep their masterbrand strong in the long term, to get consumers to Mature markets: 55% re-purchase, they have to put something back into the brand and advertise more. n n n Developing markets: 45%

www.bwconfidential.com - July 10-August 27, 2014 #96 - Page 7 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Givaudan fragrance division president Michael Carlos

n n n You signed a joint venture with Chinese aroma-chemical manufacturer Xinhua Chemical Co this year. Does this reflect your ambitions for China? This acquisition was not related to fine fragrance. A large portion of our business in the region is in home care, and with all of the growth we have in China and in the whole of Asia it was important for us to have a site for chemical manufacturing there. Interview How will China’s fine fragrance market develop? Let’s wait and see. I think usage is still very low, and consumers are more attracted to brand names than the true value of a fragrance. Some fragrances do quite well, like J’adore from Dior, but I don’t see it growing enormously. I have much more faith in the markets of Indonesia and India. There is also not a huge deodorant usage in China, and this category is growing everywhere else in Asia. Deodorants and body sprays are generally a building block for fine fragrance. Givaudan had a Brazil is the opposite. The market is huge mainly due to the direct-sales culture, which has pushed the consumption of fragrances. However, for foreign brands, Brazil is a pretty “cosmetics business closed market; there are high duties, and it’s hard to get in. When our clients look to […] which we gave manufacture locally, many struggle to find a business plan that can work. There are more deals happening, such as the agreement between Coty and Avon, but I can’t see Natura up more than 10 years or Boticário signing with third-party brands as it would only erode their own market share. ago. We’ve decided You are acquiring French active cosmetics specialist Soliance. Is this a new that it was time to area of investment for Givaudan? come back to this Givaudan had a cosmetics business, mainly in sunscreens, which we gave up more than 10 years ago. Quest also had a small cosmetics activity, but we left it aside when we business, [which is acquired the company [in 2006]. We’ve decided that it was time to come back to this why we purchased business. Soliance is very strong in the area of biotechnology, especially bio-fermentation, and for a lot of our aroma chemicals this will be a very important area in the future. Soliance]. Hopefully Hopefully, this will be the start of a bigger cosmetics business for us. this will be the start What are the major issues facing fragrance houses today? of a bigger cosmetics Securing supply will be very important in the years to come. If you want to be strong in business for us naturals, you have to invest to create strong partnerships with growers. Our expertise is not in growing ingredients, but in determining what is good quality, helping people to grow better and providing an outlet for consumption. It’s about investing with growers Givaudan fragrance division to set up equipment and collection networks, for example. We’re investing a lot in president Michael Carlos Madagascar to grow clove and vetiver, and also in Malaysia for patchouli and vetiver. ” Regulations is another major issue in terms of allergens in Europe and ingredient transparency and labeling, which is more of an issue in the US. Of course we need labeling for the 1-2% of the population who is allergy-prone, but we don’t need to get much broader than that. We can’t label all of the allergens as there isn’t room on the pack and if we do, we’ll have to insert leaflets like the pharmaceutical industry. What brand will want to do that? We also need look to new ways to test for allergens. There are projects sponsored by the industry and the EU on new technologies beyond the patch test. Transparency is a little bit of the same story. Should we put our entire fragrance formula on the pack? Clearly, the industry model of formula secrecy is going to change, but it needs to change so that the consumer gets relevant information, rather than a barrage of data that they will have difficulty understanding. n

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India Looking up Beauty retail in India looks likely to get a boost in the months ahead

n the road to recovery from a dip over the past two years when the Ogrowth of new malls came to a virutal standstill, the outlook for India’s beauty market now has a flavor of revival about it. The election in May and the formation of a new government that is seen as pro-business is expected to set the tone both for consumer spending, as well as retail growth. Beauty is still a small part of the $500bn retail market in India—it is estimated to account for less than 2%—but it is seen by mall developers and industry Apart from the main players as a growth area. Despite the slowdown in new retail offerings, beauty department-store“ has seen growth in existing stores over the past two years of around 15% annually, according to industry sources and the market was estimated to be chains, there has worth $8bn in sales in 2013. While better growth can clearly be seen in the been a lack of country’s main tier-one cities, consumer demand for beauty in tier-two and tier- three cities is growing exponentially. alternatives other “Things are looking up,” says Tony Chin, ceo of Beauty Concepts, which than Sephora, which distributes more than two dozen brands including Bulgari and Ferragamo. One indication of this is big players’ increased investment in marketing in the has just started to country. “The big boys of the industry have ramped-up their marketing spend expand from its three significantly and one can see high-decibel, above-the-line marketing coming in to play now from the likes of L’Oréal, and Lakme,” comments doors in Delhi Canadian brand Faces Cosmetics ceo Sameer Prasad. But Beauty Concepts’ Chin notes that there have been limited retail opportunities in the Indian market for the past two years. “Apart from the Beauty Concepts ceo Tony Chin main department-store chains, there has been a lack of alternatives other than Sephora, which has just started to expand from its three doors in Delhi,” ” he says. In addition, a shift in consumer spend over the past two years has meant more sales of mass products according to beauty retailers, while the premium market slowed down due to high inflation and a rupee that saw its worst depreciation in a decade. At the same time, mass brands have also continued to find n n n

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n n n a wider market through pharmacy chains such as 98.4, Apollo Pharmacy, Religare Wellness, Medi Plus, and Guardian Pharmacy, which have been growing the concept of modern beauty retail. Insight Interestingly, beauty Channels of beauty “specialist retailers such Department-store chains such as Shopper’s Stop continue to be the leaders in the premium beauty segment. Shopper’s Stop now has 68 stores (including as and five airport stores). Lifestyle, another chain of department stores, has 41 stores Dabur’s New U which across India and continues to be another driver for beauty. “Department stores such as Shopper’s Stop and Lifestyle have become very significant channels were not very common for sales of beauty and personal-care products, especially color cosmetics and a few years ago are perfumes,” comments Euromonitor International senior research analyst Ina Dawer. She points out that department stores account for around 12% of the now well known to beauty and personal-care market. consumers in tier-one Others however, like the Central department-store chain and Reliance retail, both of whom had ambitious growth plans for beauty, have seen a slowdown. and tier-two cities, Reliance, for example, has abandoned several of its beauty-specific retail such as Chennai formats, including a separate health and beauty store, and downscaled its plans for beauty in its hypermarket concept stores. Although the overall retail store and Lucknow concepts have been growing, beauty is currently taking a backseat. Another beauty format that has had several years of teething troubles, but has seen a spurt of growth in the past two years is New U, a subsidiary of Dabur India Ltd. New U stocks mass products from global and domestic brands with Euromonitor International senior research analyst Ina Dawer around 20% of its space taken by its private-label line. There are now n n n ”

s s Local standalone perfumery store Parcos is seeing success in the market, while French brand Dessange (above) is banking on the salon route to mine India’s growth

www.bwconfidential.com - July 10-August 27, 2014 #96 - Page 10 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL India

n n n more than 50 New U stores in the country. “Interestingly, beauty specialist retailers such as The Body Shop and Dabur’s New U, which were not very common a few years ago are now well known to consumers in tier-one and tier-two cities, such Insight as Chennai and Lucknow. According to Euromonitor data, beauty specialist retailers’ retail value sales grew by 21% in 2013, which clearly indicates their popularity,” Dawer comments. Health and Glow, a chain of beauty stores mainly in southern India is another strong specialist player in the market. Also doing well is the Parcos chain, owned by distributor Baccarose. Analysts say Parcos is the only standalone perfumery format that has successfully grown in India. India’s growth story The chain continues to expand and has more than 60 stores. Parcos caters only to the coupled with the premium segment and mainly stocks international fragrances. Its new-concept stores, “ launched two years ago, also stock make-up and skincare. increase in high Parcos’ main competitor is Sephora. The LVMH-owned chain opened its first store in India in 2012 and it now has three doors in . Although beauty analysts say net-worth individuals it is too early to say how successful Sephora will be in India, the retailer is expected has been hard to to open more stores in the metro areas and bring more brands to the country in the coming years. In 2013, after ongoing disputes with its local partner Genesis Luxury, ignore. Indians are Sephora changed partners for the market and now works with DLF Brands. now taking to luxury

The standalone route grooming brands Other foreign retail expansion is mainly in the form of international companies opening like never before branded standalone stores. These include The Body Shop and L’Occitane, which are both said to be doing well in India. Japanese group Shiseido launched a branded store for its Za brand in Mumbai and New Delhi this year, while Estée Lauder-owned launched in India in 2013 and now has two stores in New Delhi. Dessange Mumbai director Levan Pamishvilli Haircare company Jacques Dessange meanwhile, which entered India in 2013 is ” looking to sell its beauty products through the salon format. “India’s growth story coupled with the increase in high net-worth individuals has been hard to ignore. Indians are now taking to luxury grooming brands like never before and have developed a taste for opulence,” says Dessange Mumbai director Levan Pamishvilli. “The color cosmetics market grew by 29% in value in 2011. The Indian market is expected to become the sixth largest beauty market in the world by 2025,” he adds. But salons and branded standalones are not the sole preserve of foreign companies. Many home-grown brands are also expanding in the country through their own retail networks. These include Shahnaz Husain, Kama, Forest Essentials, and Biotique, which are expanding their presence to smaller cities. Some beauty brands have sought to take advantage of some of India’s recent challenges, for example, using falling real estate prices to reposition themselves and to grow quickly. For example, Canadian brand Faces Cosmetics, which launched only four years ago, has been able to take advantage of cheaper retail spaces and is now in more than 500 doors across 85 cities including 28 independent, franchisee- operated Faces stores in the country. This all seems to say that there are more opportunities for growth in India than just a year ago. However, in spite of this good news, the market is still a tough nut to crack and one where the returns will probably be more for the long than the short term. n

www.bwconfidential.com - July 10-August 27, 2014 #96 - Page 11 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL World Perfumery Congress Fragrance forward BW Confidential reports on what was seen and heard at the World Perfumery Congress, the trade show for fragrance suppliers, which was held in Deauville, France from June 10-12 Show review he future of fragrance was the theme of the World Perfumery Congress (WPC), and Tunsurprisingly emerging markets were highlighted as key to growth over the coming years by industry executives. Talk mainly centered on the BRICs, but also on markets such as the Middle East and Africa, where fragrance sales are expected to double to $8.5bn in 2018, according to Euromonitor International. However, the jury is still out on how to approach these markets. “Over the past decade, developing The regulations rollercoaster markets have come to account for 40-50% of fragrance sales, with Regulations were a major talking point at notable increases in Brazil, China, India and Mexico. But as an industry, the WPC, especially in light of recent EU can we remain very Western in our approach in the face of growth in proposals that would increase the current list emerging markets?” asked Givaudan fragrance division president Michael of 26 allergens to 91. While most bemoan the Carlos at the event’s keynote speech. increased restrictions, several executives said In China, for example, fragrance is mostly considered as a functional or the industry needs beware of misinforming hygiene product, but in the future it will have a more emotional appeal or alienating the consumer. “We need to and the industry needs to be ready for this now, explained Takasago safeguard the 1-2% of the population who executive director senior perfumer Kenji Maruyama. In India, meanwhile, are allergy-prone, but we mustn’t complicate although there is growing disposable income to spend on fragrance—by life for the remaining 98%. All transparency 2020 the middle class should account for the majority of the population, needs to be relevant, if not, it’s of no use. We up from 45% today—the price of fragrances continues to put a brake on are seeing closer collaboration between the consumption. “Consumers aspire to fragrance, but price is a stumbling industry, regulators and consumer groups as block. The industry needs to introduce convenience pricing they way it did well as a demand for greater transparency,” for . Around 10 years ago the shampoo market was extremely said Givaudan fragrance division president small until sachets at low prices became available; consumers would also Michael Carlos. Another industry executive buy fragrances if they could spend a little at a time for small quantities,” commented: “The industry needs to stop said Indian company Kelkar Group perfumer and owner Kedar Vaze. complaining about regulatory constraints. We have to be more vocal at the EU, but this issue New formats, new gestures is the business of industry players and regulatory Apart from emerging markets, exploring new formats, new perfume bodies. We shouldn’t be alarmist and get the gestures and looking at trends in other industries were cited as ways consumer involved—it’s up to us to straighten of generating growth for the industry. Research group Mintel global this issue out. Our industry neglected this issue fragrance analyst Emmanuelle Moeglin said that consumers don’t care for years and now we’re going too far in the about concentrations, such as EdT or EdP, and that the industry should opposite direction by involving the consumer. look at other ways to attract them. Mintel outlined these growth areas: We need to reassure them; consumers can’t be • Multi-functional fragrances, which is a largely under-exploited area, even made to believe that fragrance is dangerous.” though consumers are interested in products that do more than one thing. With increased regulations meaning more This could be fragrance with skincare benefits—in the US, three-quarters transparency about fragrance formulas, of women say they want skincare benefits from fragrance, according to a executives also noted the need for scent to be Mintel study. It could also mean bath perfume or scented make-up. safeguarded as intellectual property.

Revlon for example, launched that was not only n n n

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n n n scented, but that came in packaging resembling a fragrance bottle and was advertised with a scent strip. Fragrance could also take some inspiration from make-up. There are examples of solid fragrances intended to mimic a , so that when applied to the skin they make the fragrance last longer. • Fragrance for clothing. Mintel sees this is as an underdeveloped segment and says more projects like Guerlain’s La Petite Robe Noire limited-edition scent for lingerie should come to light. • Fragrance marketed as a health benefit. For example, there is demand for fragrances

Show review worn at night or sprayed onto bed linen to enhance sleep. • Co-branding fragrances. Teaming up with non-fragrance companies can entice consumers who are not regular perfume users to discover scent. One example is Nina Ricci’s partnership with pastry maker Ladurée for the launch of La Tentation de Nina. • Vintage perfumes. Mintel says that 70% of US women would like to see a discontinued scent re-launch and that they would pay more for these fragrances. Other growth areas covered at the conferences included: • Targeting low-cost consumers. There have been many efforts to push prices up, but there is a large consumer base interested in low-priced fragrances. • Targeting health-conscious consumers, who may see fragrance as allergenic or toxic. • Using different delivery systems and new technology to create customized scents. New delivery systems could also come in the form of devices. “If there are devices in skincare, why not in other categories, such as fragrance,” asks Mintel’s Moeglin. • Using new media to talk to younger generations about innovations in fragrance. • Fragrancing areas or products, such as movies or electronics.

Seen in show Swiss fragrance house Firmenich presented three new molecules: Firascone, which the company says is the closest cyclogeraniate to rose ketones and has applications in fine fragrance and bodycare; Clearwood, created from white biotechnology and offers a clean type of patchouli scent, and Z11, a Firmenich captive, which the company is now opening up to the market, and has a woody metallic-like scent. The perfumer’s changing role France-based Robertet showcased five new naturals at the show. Bengal A panel of senior perfumers discussed how Pepper has a warm spicy ambery character and its CO2 extraction process the role of the perfumer has evolved. The is said to reinforce the ingredient’s peppery smell. Wood 520 NAT is said to main talking point was the advances in bring a spicy, leathery complexity to woody notes, while Styrax is described technology, mainly over the past 15 years, as an answer to more stringent regulations by providing an animalic note to which allow perfumers to share formulas fragrances or personal-care products. Jasmine Petal meanwhile, is a result of and ideas with teams in different locations CO2 extraction and is said to provide the genuine scent of the flower and a around the world. This, said Symrise senior solar note. Lastly, Ylang Petal offers a fruity spicy white flower note. perfumer Emilie Coppermann, means that perfumers have access to specific regional Mane presented a range of new ingredients including two new materials: tastes through perfumers in other creative Gaharu Buaya has a smoky wood character, and Echinops is described as a centers, and so can more easily create juices dry woody note. for markets outside of their catchment area. “We have to work together more and IFF unveiled a new material called Karmawood. It says the woody, ambery technology is a big help when creating juices material adds strength and tenacity to fragrances and is said to be suitable for for other markets,” Coppermann said. applications from fine fragrance and shampoo to liquid detergents. n

www.bwconfidential.com - July 10-August 27, 2014 #96 - Page 13 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL MakeUp in Paris Color on show BW Confidentialreports on innovations presented at the fifth edition of the MakeUp in Paris trade show, which was held in the French capital from June 12-13

he fifth anniversary edition of trade show MakeUp in Paris was its biggest to date. MakeUp in Paris The show welcomed 114 exhibitors, up from 90 in 2013, while visitor numbers Took place: June 12-13 Show review T increased 12% to 2,804. This year, the show also welcomed pigment supplier Exhibitors: 114 companies, such as BASF and Univar, which presented their products in workshops. Visitors: 2,804 +12% vs 2013 The growth of the exhibition over the past five years reflects the success of a small, niche format event devoted solely to make-up. However, some question whether the show will be victim of its own success and lose the niche positioning for which it is appreciated. “We have often been asked about this, but we are not going to continue adding more and more exhibitors every year; once we get to 120 exhibitors we will have reached our maximum capacity,” says event organizer Beauteam co-founder Sandra Magurian. Co-founder Jean Yves Bourgeois added: “We don’t need to keep adding stands for Paris, as we have shows in four regions: Paris, Seoul, New York and a new event in São Paulo launching in December, which gives us a big pool of companies.” In addition to exhibitors’ latest make-up innovations, the show hosted 12 conferences and three workshops, as well as a range of make-up artist animations. There were mixed views from exhibitors about the state of the market. Some said that orders had picked up compared to the beginning of the year, while others highlighted that brands were still nervous about committing to major projects. In addition, the market is much more competitive today for suppliers. Brush manufacturer Bullier ma- naging director Fred Ghenassia comments: “The market has changed: companies are ordering smaller quantities and there is much more competition among brands. Chinese suppliers are now offering production runs of just 100 pieces, which was unheard of in the past. As European suppliers, we now have to be more reactive and less demanding when it comes to margins.” He added: “The market is also not evolving towards higher quality. Even upscale brands now offer cheap products at high price points, which means that the end-consumer is getting accustomed to lower-quality products.” Next year’s event will take place on June 18-19. Seen in show Glassmaker SGD signed a partnership with a pigment supplier to combine make-up pigments with inks to create new decoration techniques. SGD calls the decoration techniques Les Cosmiques (pictured) and they include metallic and crackled effects. The company also presented Color Match (pictured), whereby the color decoration on a make-up pot exactly matches the shade of the make-up inside making it easier for consumers to select their products.

Axilone (Ileos) presented Vaposphère, a sphere-shaped cap for fra- grance bottles, where upon turning the ring at the neck of the bottle, the cap opens to reveal the spray. This means that the cap can be manipula- ted by one hand, to cater to today’s multi-tasking consumer. In addition, as the cap is not separate, it cannot be waylaid. n n n

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n n n German brush specialist Geka showcased its technologies for mascara brushes and how they can be combined. Highlighted technologies included SEPA, whereby straight-cut bristle ends are ground to a tapered fiber form for better separation of lashes; the Hypno cut, where the brush can have up to eight cut edges so grooves better absorb formula; Siam Brush Cut, which has special vertical volume zones on the brush to absorb more formula and give a targeted application to the lashes and Hybrition Technology, a combination of fiber and an ultra-thin film coating that is wrapped around the inner wire thereby creating a reservoir to provide more volume. Show review China-based Libo Cosmetics presented its UV Light Mirror Compact (pictured). The compact’s lid changes color depending on the intensity of light, so the user can tell whether she should apply a product with UV protection. There are four variations of color that appear on the compact indicating UV light intensity: low, middle, high and very high. The technology could be applied to sunscreen caps or compact powders with SPF properties.

US-based Topline Products showed Flickable (pictured), a that it says looks like a lollipop. Topline developed a special mould to create the PCTA sphere shape of the gloss. The sphere is transparent, meaning that the user can easily see its shade. The applicator resembles the stick of the lollipop.

French contract manufacturer Strand Cosmetics launched an eye make-up collection at the show in partnership with German brush maker Da Vinci. This is Strand’s second collaboration with a brush maker after its collection with DuPont last year. The new line pairs three Da Vinci brushes (two made of natural sable bristles and one synthetic brush for oily textures), with two eyeshadow palettes co-created with make-up artist Louise Wittlich. The palettes (pictured), designed to create a smokey eye look, come in day and night versions. Strand also introduced its first organic make-up line called Biotiful World.

Alliance Boots-owned contract manufacturer BCM showcased new technologies including Line Lacquer, an eyeliner that retains its glossy aspect after drying to im- part a “vinyl-like” effect. New delivery systems for SPF-enriched formulas were also on show. These include a compact that encloses two sponges—one that is soaked with the fluid product and a second sponge used for application that the user gently presses onto the bottom sponge to release and absorb the proper dose of product. BCM also presented its new stick-format products including a blush and with cooling properties. The sticks contain a high proportion of water so that the colors blend easily, rather than coating the skin, which can magnify fine lines or wrinkles.

Korean packaging specialist FS Korea presented its Release & Shake dropper (pictured) for dual-formula skincare products. The glass dropper allows ingredients to be mixed just before application thanks to an actuator and a simple shaking action. The packaging allows for a dual formula—one inside the larger bottle, and the second in the dropper. When the dropper is actuated, the formula is released and when the bottle is shaken, the two blend together. Release & Shake comes in 25ml and 15ml formats. n

www.bwconfidential.com - July 10-August 27, 2014 #96 - Page 15 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Store visit

ArtDeco opens first European flagship The German brand is out to boost its image in France with its first Parisian flagship boutique

n a bid to boost its visibility in France, German beauty brand ArtDeco opened its first European Iflagship store in Paris this month. The boutique is located near the city’s boulevard Haussmann department stores Galeries Lafayette and Printemps and is intended to be a showcase for the brand. “It is very important to have a presence in Paris for our brand image. The objective of the store is to capture customers from Paris and other parts of France, tourists and also to be a training center for our French aestheticians,” comments ArtDeco general manager France Roger Meynlé. ArtDeco vice president marketing Anna Blasco adds: “This new store is also part of our strategy to reinforce our corporate identity and our image, which has included putting in place new and bigger counters [in-store] in other markets.” The need for the boutique became all the more urgent following ArtDeco’s decision to pull out of Galeries Lafayette’s Haussmann store last August, after the retailer opted to sell the brand along with several others in its lingerie department instead of on the main beauty floor. The 170m2 (1,829ft2) store is divided into three main areas for make-up, nails and skincare. The brand’s entire make-up offer is on sale and a special focus is put on its signature beauty box concept, where consumers can create their own personalized make-up sets through the use of individual units of color that fit magnetically into the box. There is a make-up bar, offering a range of services, including makeovers for the day or evening, wedding make-up and make-up lessons. The nail area is home to a nail bar, where consumers can choose one service, such as nail polish application, a hand mask or scrub, or a combination of services or full and . There are more than 200 shades of nail polish to choose from, which are displayed on a wall unit beside the nail bar. At the back of the store is the skincare area. The boutique also houses two treatment rooms, offering three 30-minute express treatments costing €29, and six longer treatments. ArtDeco, Paris ArtDeco is currently sold in around 2,200 beauty institutes in France and from September the l Located: rue de la company hopes to begin setting up partnerships with institutes, whereby they will incorporate Chaussée d’Antin, the ArtDeco name in their branding and sell the brand exclusively. Meynlé says he is targeting Paris, France 50 such partnerships in France in the space of a year. Currently some 120 institutes in France l Opened: July 2014 sell the brand exclusively. As for further standalone stores, the company is open to exploring this l Size: 170m2 (1,829ft2) type of distribution, but currently has no concrete plans for future openings. l Special features: ArtDeco reported wholesale sales of €105m in 2013, of which €52m is done in Germany and Make-up bar, nail bar, the rest in export. n two treatment rooms

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s The store sells the brand’s entire make-up range and has a make-up bar for makeovers and lessons

s The boutique houses a nail bar at the front and a skincare area at the back

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