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BW Confidential Team At www.bwconfidential.com The inside view on the international beauty industry November 17-30 , 2016 #139 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Comment Inside The buzz 2 Sowing the seeds of growth News roundup t’s no secret that beauty M&A is heating up. But there Netwatch 6 Iis another trend that is picking up steam: the seeding or incubating of small cosmetics players by major multinationals. Social media monitor Recently, this has taken the form of groups buying a minority stake in a small company—such as the investment Interview 8 by Spanish group Puig in US-based fragrance concern EB Revlon svp international, Florals—or setting up programs to nurture new companies responsible for Revlon/Arden through advice, funding and infrastructure. AmorePacific for integration David Carvalho & example, just announced that it has partnered with start-up Elizabeth Arden brand president accelerator FuturePlay to launch an incubator initiative aimed global JuE Wong at developing startups in the beauty sector. Earlier in the year, French group L’Oréal said it invested in UK-based Founders Factory, a digital incubator, becoming its exclusive Insight 10 partner for investments in beauty tech start-ups worldwide. Coty This approach has many benefits for multinationals. It allows them to explore and test a new market trend at a relatively low cost and with little risk to their core business. And Show review 14 at a time when the prices for acquiring young companies are at an all-time high, such a Cosmetic360 strategy also gives the majors an early partnership with what could become the winning brands of tomorrow. Store visit 17 This seeding trend combined with the frenzy of acquisitions shows that increasingly, Dove pop-up store, Paris the market’s major players are having to look outside their companies for new ideas and for growth. Oonagh Phillips Editor in Chief [email protected] Meet the BW Confidential team at: l MakeUp in São Paulo, December 7-8 l PCD, Paris, January 18-19 l CosmeTokyo, January 23-25 News headlines daily on www.bwconfidential.com @BWCbeautynews News roundup At a glance... n Estée Lauder Companies to acquire Too Faced n IFF to acquire Fragrance Resources The buzz n Kate Spade signs fragrance license with The Premiere Group Stay informed with our daily news headlines on www.bwconfidential.com Strategy Estée Lauder Companies (ELC) is to acquire US-based make-up brand Too Faced for $1.45bn, making it the group’s biggest acquisition to date. The deal is part of ELC’s strategy to boost its presence in the fast-growing make-up category, build its business among millennials and increase the group’s reach in specialty-multi distribution channels. Launched in 1998, Too Faced is currently owned by private-equity company General Atlantic. It is among the top eight make-up brands in the specialty-multi channel in the US, according to ELC, and is expected to generate net sales of more than $270m in 2016, a growth rate of more than 70% over 2015. Too Faced has developed a strong following among millennials on social media and boasts more than 7.3 million followers on Instagram. Too Faced is led by co-founders Jerrod Blandino and Jeremy Johnson, and ceo Eric Hohl. ELC executive group president John Demsey will add Too Faced to the roster of brands he oversees. The acquisition is expected to close in December 2016. The announcement comes just a few weeks after ELC revealed that it would acquire US-based color brand Becca Cosmetics, and is part of the growing trend for major multi- nationals to buy color brands with a strong social-media presence—in July, French group L’Oréal said it would take over color cosmetics brand IT Cosmetics for $1.2bn. BW Confidential The move is also the latest in a string of acquisitions for ELC over the past three years, 4 avenue de la Marne which have included By Kilian, Le Labo, Editions de Parfums Frédéric Malle, Glamglow 92600 Asnières sur Seine, France [email protected] and Rodin olio lusso. Tel: +33 (0)1 74 63 49 61 Fax: +33 (0)1 53 01 09 79 www.bwconfidential.com ISSN: 2104-3302 US flavor and fragrance company IFF is to acquire Germany-based Fragrance Resources Publisher: Nicolas Grob for an undisclosed sum. The transaction will be funded by existing resources and is set to Editorial Director: Oonagh Phillips [email protected] close in January 2017. It is expected to add around $75m in revenue in 2017, excluding Journalist & Copy Editor: Katie Nichol [email protected] transaction costs. Family-owned Fragrance Resources was founded in 1987. It has Journalist: Hannah Ikin facilities in Germany, France, China and North America. [email protected] Contributors: Sophie Douez, Alex Wynne, Renata Ashcar, Mayu Saini, Raphaëlle Choël, Corinne Blanché, Naomi Marcoulet UK-based packaging company Collcap, and Spain-based packaging manufacturer Subscriptions 1 year: electronic publication (20 issues) + Quadpack Industries SA have merged. The new, combined group will keep the print magazine (4 issues) + daily news: €499 Quadpack name. Quadpack’s office in Barcelona, Spain will continue to be the new or US$699 [email protected] group’s global headquarters, while Collcap’s office in Leek, Staffordshire, will become the Advertising [email protected] center of the group’s UK operations. Collcap founder John McDermott will become a BW Confidential is published by Noon Media Quadpack Industries board member. Earlier in 2016, Quadpack Industries acquired 513 746 297 RCS Nanterre Copyright © 2016. All rights reserved. injection-moulding company Rinaplast, which was rebranded Quadpack Plastics. Reproduction in whole or in part without permission is strictly prohibited. Quadpack generated sales of €61m in 2015. n n n www.bwconfidential.com - November 17-30 , 2016 #139 - Page 2 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL News roundup n n n US-based lifestyle company Kate Spade & Company has signed a global license with The Premiere Group for the development and distribution of kate spade new york fragrances. The Premiere Group will take on the development and distribution of the existing fragrance business built under the kate spade new york brand. These fragrances include Walk on Air and Live Colorfully, and are available on katespade.com, in the The buzz brand’s stores and in more than 2,300 selective stores in the US. The Premiere Group has already begun distributing kate spade new york fragrances in the US, and will expand the products internationally in fall 2017 and in travel retail in spring 2018. The Premiere Group is the prestige division of Perfume Center of America, Inc, a distributor of fragrance products in North America. Consumer products company Edgewell Personal Care has acquired UK-based men’s grooming and skincare products company Bulldog Skincare for an undisclosed sum. The transaction was funded from operating cash. Bulldog Skincare was founded in 2006 and operates in 14 markets and is distributed in some 17,000 doors. Its largest markets are the UK, the US, Sweden and South Korea. Korea-based AmorePacific has partnered with startup accelerator FuturePlay to launch an incubation program, with the goal of nurturing startups in the beauty and healthcare sectors. Called AP TechUP+, the program aims to help startups to secure stable business partners. AmorePacific says that it will provide financial resources for startups along with employee mentoring, in-house infrastructure and follow-up investments. FuturePlay will manage the planning and administration parts of the program, and will also be responsible for identifying and nurturing startups and developing patents. Brazil-based Natura is to put an end to its direct-selling operations in France. The STAY INFORMED WITH OUR company’s direct selling business in France, DAILY NEWS SERVICE which counts 1,100 representatives, will close by December 31, 2016. The focus in France will instead be on three main News headlines daily on www.bwconfidential.com channels: Natura stores, e-commerce and @BWCbeautynews beauty specialists. Natura stated that direct sales in France account for just 2% of the cosmetics, fragrance and toiletries market, compared with 30% in Latin America. Results L’Oréal reported a 3.6% increase in third- quarter sales to €6.15bn. On a like-for-like basis, sales rose 5.6%. For the first nine • All major news on the industry published every day on our website months sales were up 1.6% to €19.05bn • News headlines complement analysis and interviews in our electronic (+4.7% like-for-like). The Luxe division publication and print magazine reported a 9% increase in sales for the • BW Confidential is the destination for keeping up-to-date with what’s quarter (+9.3% like-for-like) to €1.86bn. going on in the industry and staying ahead of the competition The Active Cosmetics division also saw n n n BW Confidential, the inside view on the international beauty industry The website - daily news•The electronic publication - every two weeks•The print magazine - four times a year CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL News roundup n n n solid like-for-like growth of 6.5% (+4% on a reported basis) to €425.7m for the third quarter. L’Oréal said that the Consumer Products division is outperforming the market, driven by growth in make-up, the global rollout of Ultra Doux by Garnier and a strong business in North America. The consumer division reported a 4.7% increase in sales on a The buzz like-for-like basis (+2.1% on a reported basis) to €2.86bn for the quarter. In terms of region, the group highlighted that it is seeing good growth in North America (third-quarter sales rose 8.2% to €1.76bn), while its business in Western Europe is growing faster than the market, except for France, where the environment remains sluggish.
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