www.bwconfidential.com The inside view on the international beauty industry June 9-22, 2016 #132

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The buzz 2 Color buys News roundup n terms of niche acquisitions, the focus has been mainly Netwatch 6 Ion fragrance over the past year and a half. However, more purchases are likely to come in the color category, Social media monitor especially given the growth of make-up and the number of new, creative brands emerging—many of which have Interview 7 expertise in social media and target the much-talked L’Oréal travel retail Americas strategic about millennials. business development director Last week, Shiseido announced that it would take over Gabriela Rodriguez the Laura Mercier make-up brand (as well as the Révive skincare brand), as part of a strategy to capture a greater Insight 9 share of the fast-growing color market—a key objective for the Japanese group. Japan It is likely that other multinationals are eyeing up middle-sized players, as well as start-ups in the market in a bid to fill gaps in their portfolios. One executive from Show review a major color brand recently told BW Confidential that it is no longer competing Luxe Pack New York 12 with traditional companies, but is trying to keep up with newer brands in the Cosmopack New York 13 market. Perhaps the easiest way to keep up with these new players is simply to buy them up. Store visit 14 Yves Rocher, Paris

Oonagh Phillips Editor in Chief [email protected]

Meet the BW Confidential team at:

l World Perfumery Congress, Florida, June 13-15 l Alternative Fragrance & Beauty, Paris, June 16-18 News headlines daily on www.bwconfidential.com @BWCbeautynews News roundup At a glance...

n Shiseido to acquire Laura Mercier, RéVive

n Johnson & Johnson to acquire Vogue International

The buzz n Revlon acquires Cutex’s international business from Coty

n YSL launches new fragrance Stay informed with our daily news headlines on www.bwconfidential.com

Strategy

Shiseido Americas is to acquire US-based Gurwitch Products, which markets prestige make-up and skincare brand Laura Mercier and luxury skincare brand RéVive. Gurwitch Products is a wholly owned subsidiary of Alticor Inc. In 2015, Gurwitch generated net sales of $175m. Financial details of the transaction were not disclosed. The deal will be funded with existing cash and loan facilities and is expected to close in the third quarter of 2016. Shiseido said the move is in line with its Vision 2020 strategy to accelerate global growth, and is expected to enable the group to strengthen its foothold in the fast-growing prestige make-up market.

US-based Johnson & Johnson Consumer is to acquire US-based haircare company Vogue International for $3.3bn in cash. Vogue International markets haircare and other personal-care products. The acquisition will include the company’s OGX collection of hair, bath and bodycare products, the FX line of hair styling products and the Maui Moisture and Proganix haircare lines. Its products are sold in the US and in 38 countries. The acquisition is expected to close in the third quarter of 2016. J&J said that the deal is not expected to impact its 2016 sales and BW Confidential earnings forecasts. 4 avenue de la Marne The deal follows the announcement in April that Johnson & Johnson Consumer is 92600 Asnières sur Seine, France [email protected] to acquire dermocosmetics specialist NeoStrata Company. Tel: +33 (0)1 74 63 49 61 Fax: +33 (0)1 53 01 09 79 www.bwconfidential.com ISSN: 2104-3302 US-based Revlon has acquired nailcare brand Cutex’s international businesses Publisher: Nicolas Grob from Coty. The international businesses are mainly in Australia and the UK. Revlon Editorial Director: Oonagh Phillips [email protected] already owns Cutex’s US business and the addition of international operations Journalist & Copy Editor: Katie Nichol [email protected] under Revlon management is aimed at expanding the brand’s geographical reach Journalist: Hannah Ikin and moving into new categories. Coty stated that the deal ties in with its strategy of [email protected] Contributors: Sophie Douez, Alex Wynne, focusing on fewer brands. Renata Ashcar, Mayu Saini, Raphaëlle Choël, Corinne Blanché, Naomi Marcoulet Subscriptions 1 year: electronic publication (20 issues) + Brazilian direct-seller Natura has begun selling its Sou line in vending machines. print magazine (4 issues) + daily news: €499 The vending machines are located in metro stations, a university and at the or US$699 [email protected] Congonhas Airport, São Paulo. Natura has also launched an app for the Sou line, Advertising [email protected] which lets consumers order the products online to receive them at home. This move BW Confidential is published by Noon Media into vending machines and apps is part of Natura’s strategy to diversify its 513 746 297 RCS Nanterre Copyright © 2016. All rights reserved. distribution and be less dependent on direct sales. The company began selling Sou Reproduction in whole or in part without permission is strictly prohibited. through pharmacies in March 2016. n n n

www.bwconfidential.com - June 9-22, 2016 #132 - Page 2 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL News roundup

n n n Retail

UK-based retailer The Perfume Shop opened a pop-up fragrance cocktail bar at London’s Mahiki nightclub last month in a move designed to showcase its fragrance

The buzz expertise. The Perfume Bar was open from May 24-26, and interested consumers were invited to apply to win tickets to the event. Mixologists created six cocktails infused with notes from a selection of perfumes, which the retailer said would enable consumers to taste their favorite fragrances. The cocktails included a Marc Jacobs Daisy Margarita, a Thierry Mugler Angel Colada and a Chloé Signature Martini.

Sephora has launched The Beauty Board platform on its French website. The Beauty Board, which already exists on the retailer’s US website, is a community feature, which is described as Sephora’s own version of Pinterest for beauty. Clients can create their own social pages on The Beauty Board, post photos, identify the products used to create their looks and share advice and beauty techniques.

France-based L’Occitane en Provence has launched a packaging recycling program at its stores. The brand has partnered with recycling company Terracycle, which will treat the used packs. L’Occitane will offer 10% off purchases when consumers bring three packs to its stores to be recycled.

Data

French women are increasing their annual make-up budget, spending more in this category than on skincare despite the latter’s higher prices, according to a study on cosmetics consumption trends from strategy consultancy Simon Kucher & Partners. The study, carried out among 1,000 French consumers in February 2016 in partnership with Research Now, found that those surveyed spend an average of €225 per year on make-up compared with €188 on skincare. Some 26% spend less than €100 on make-up annually, while 33% spend less than €100 on facial skincare. While 27% spend more than €300 on make-up, just 19% do so on facial skincare. There are psychological thresholds when it comes to price—50% of women think €10 is an acceptable price for a lipstick, above €15 is expensive and above €25 is very expensive. Meanwhile, 50% consider around €15 to be an acceptable price for an anti-aging day cream, above €15 to be expensive and above €25 to be very expensive. The study revealed a higher usage rate of make-up items than skincare products: 74% of consumers use mascara, 65% use nail polish, 64% use lipstick and 61% use eye pencils and eyeliner. In comparison, only 40% of women surveyed said they use day cream, although 90% of those who do, use it every day. More than half of French women buy make-up on impulse, with consumers in this category less loyal to brands and more responsive to promotions than skincare consumers.

US consumers are spending more on prestige fragrance candles and diffusers and purchasing more of these items, according to market-research company The NPD Group. This category is driving much of the growth in the fragrance category, NPD reports. Candles saw an 18% rise in dollar sales and a 15% increase in unit sales in the n n n

www.bwconfidential.com - June 9-22, 2016 #132 - Page 3 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL The buzz current executivechairmanAGLafley. The appointmentfollowstheretirementof in additiontohisroleaspresidentandceo. joined P&Gin1980,takesontheposition of theboard,effectiveJuly1.Taylor,who P&G hasnamedDavidTayloraschairman Shop Canada. €126 for100ml. 35ml (alimitededition),€89for 50mland in September,N°5L’Eauretails at€68for is tobethefaceoffragrance. Launching the zests.ModelandactressLily-Rose Depp ylang andincreasingthevibrancyof scent oforangerind,addinggreentothe giving preferencetoaldehydeswiththe key facetsoftheoriginalN°5,forexample Olivier Polge. fragrance wascreatedbyin-houseperfumer franchise thisfall.CalledN°5L’Eau,the Chanel isaddinganewscenttoitsN°5 Launches experiences acrossL’OréalUSA’sbrandportfolio,thecompanysaid. chief retailofficer.Inhisnewrole,Rischwillhelptoestablishomni-channelconsumer L’Oréal USAhasappointedMarc-AlexandreRischtothenewlycreatedpositionof packaging development,procurementandsupply-chain. International France,effectiveJuly1,2016.Ronsinwasmostrecentlyvpinchargeof who istobecomegeneralmanager,EMEAoperationsandpresidentofShiseido president ofShiseidoInternationalFrance.GuillerminwillbereplacedbyHervéRonsin, and saidthatDanielGuillerminwillfillthenewrolefromJuly.waspreviously Shiseido hascreatedthepositionofchiefsustainabilityofficerforEMEAregion People n home scents market in the US is worth $49.9m. home scentsmarketintheUSisworth$49.9m. average retailpricegrew7%tonearly$37.Salesforroomfresheners26%.The last 12months,andsaleshavenearlydoubledinvolumeduringthetwoyears.Their NPD. Theaveragecandleretailpriceincreased2%tonearly$29. scents, andthecategoryhasgrownbyover$11minpasttwoyears,accordingto News roundup According to Chanel, Polge brought out According toChanel,Polgebroughtout Risch joinedL’Oréalin2005.HewasmostrecentlygeneralmanagerofTheBody Fragrance diffusers saw a 36% increase in dollar sales and a 27% rise in units over the Fragrance diffuserssawa36%increaseindollarsalesand27%riseunitsoverthe 12 months ending April 2016. Candles represent the largest segment within home 12 monthsendingApril2016.Candlesrepresentthelargestsegmentwithinhome n LPTC_banner_Corporate_110x1130mm_BW Confidential_ENG_AAFF.indd 1 ® 2016 The Lubrizol Corporation. Lubrizol The ® 2016 www.lipotec.com cosmetics. in application for systems delivery -and extracts botanical to molecules biotechnological and synthetic peptides, -from ingredients active innovative of production and development research, the in specializes Lipotec INSPIRING YOUR INNOVATION

3/6/16 10:25 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIA CONFIDENTIA L L The buzz News roundup n Essence In-Lotion willlaunchinSeptemberand ispricedat€213for150ml. water. Theproductalsocontains caviarextractandthebrand’scellularcomplex.Caviar formula. Thebrandsaiditcreated anewdistillationprocesstocomeupwiththecaviar with thislotion,”explainsLa Prairie managingdirectorFranceJean-BaptisteGrosdidier. there wasamissingproductintheirskincareritual,which is whywehavecomeout Caviar LuxeCream.“Consumers’skincareregimenshave become morecomplexand skincare regimenandtopreparetheskinforbrand’sSkin CaviarLiquidLiftandSkin this fall.SkinCaviarEssenceIn-Lotionisdesignedtobeused asafirststepinthe La PrairieistolaunchwhatitcallsthemissinglinkinitskeyCaviarskincare collection Sì RoseSignature. fragrances inGiorgioArmaniParfums’Sìlineare:EdP, EdT,SìIntenseand Parfum islaunchinginSeptember,retailingat€134.50for 40mlEdP.Theother Mane. Itcontainsnotesofblackcurrantandamberachypreaccord.SìLe franchise thisfall.CalledSìLeParfum,thescentwascreatedbyJulieMasséof L‘Oréal-owned Ewers andBritishactorTheoJames. top. ThelaunchissupportedbyacampaignfeaturingGermanmodelAnna The pinkjuicecomesinabottlethatfeaturescufflink-inspiredjewelatthe capture the juxtaposition of masculine and feminine, according to the brand. Inspired bytheBosscufflink,TheScentForHerisintendedto August. Themen’sfragranceBossScentlaunchedinSeptember2015. Hugo Boss(P&G)islaunchingawomen’sversionofTheScentin license lastyear.ThewaspreviouslyheldbytheEstéeLauderCompanies. for 30ml,$7550mland$9590ml.InterparfumsacquiredtheCoachfragrance Fragrance islaunchinginSeptember,bothEdPandEdTformats.Itpricedat$55 fragrance. MoretzisalreadythefaceofCoach’sfashionaccessories.Coach handbag clasp. carriage motif,aleatherandmetalhandtaganatomizerinspiredbyitsturnlock The bottleissaidtoreferenceCoach’sdesigncodes:itfeaturesthebrand’shorseand City. ThefragrancewascreatedbyJulietteKaragueuzoglouandAnneFlipoofIFF. fall. CoachtheFragranceisawomen’sscentsaidtocaptureenergyofNewYork Interparfums islaunchingitsfirstscentfromfashionaccessoriesbrandCoachthis for 90mlEdP. Paris launchesinJune,pricedat€58for30mlEdP,€8450mlEdPand€110 Cober andFrenchactormodelJérémieLaheurteastwoloversinParis.Mon resemble afloppynecktie. tuxedo jacket.Itisadornedwithasilkribbonleathertailsdesignedto Firmenich. MonPariscomesinamulti-facetedglassbottlesaidtopaytribute created byperfumersOlivierCresp,DoraBaghricheandHarryFremontof fragrance thissummerinspiredbyParis.CalledMonParis,thechyprescentwas Key to the new product is the use of caviar water rather than ordinary water in the Key tothenewproductis useofcaviarwaterratherthanordinaryinthe American actressandmodelChloëGraceMoretzisthefaceofnewCoach The launchisaccompaniedbyanadcampaignfeaturingCanadianmodelCrista L’Oréal-owned is adding a new scent to its Sì Giorgio ArmaniParfumsisaddinganewscenttoitsSì is to launch a new women’s Yves SaintLaurentBeautéistolaunchanewwomen’s www.bwconfidential.com -June9-22, 2016#132 -Page 5 n brands, retailers, packagers and fragrance allthe Plus houses latest data and listings on the category’s launches, •Retail developments •Online sales •Travelretail •Mature &emerging markets NEW The FragranceGuide more than100 pages of insight and analysis

E verything you need to know about fragrance: The views expressed in this section are those of bloggers and do not represent the opinions of BW Confidential

Netwatch of the global fragrance market personalized products. and body,ingredientsthatcanbemixedtocreatefreshnatural customizable concept.Thebrandoffersbaseproductsfortheface,hair Mixnature tattoo brandsarealsoemerging. hair colorsprays,thedesignsaresaidtobeeasyproduceandofferoriginaleffects.Hair Hair stencilingisbecomingabigtrend,accordingtoInstagramusers.Usingtemporary by asocialmediacampaignaskingconsumerstovoteonproductbemassproduced. The two-skuediblenailpolishlineisinspiredbyKFC’sfriedchickenflavorsandbacked plays onthe‘FingerLickinGood’taglineandisthoughttoappealyoungerconsumers. A limited-editionnailpolishlaunchbyKFCHongKongislikedforitscleverstrategythat suitable forwearingovernight. which containsbreathablecolorants,andTheBalm’sTimeBalmConcealer,is who wouldliketoseemoreoftheseitems.ProductsincludeDrJart+NightBeautyBalm, Sleep-in orovernightcosmeticsproductshaveattractedtheinterestofbloggers, Social mediamonitor BW Confidential BW

has been praised on the blogs for its interesting and easy has beenpraisedontheblogsforitsinterestingandeasy reportsonwhat’sbeingsaidaboutbeautysocialnetworks

• • • • Packaging... Sampling New formats Consumer habits • bypost: • byemail:[email protected] Please completethisformandreturnit: Signature &date: VAT number (requiredforEuropeanUnion):...... Email (required):...... Country:...... Postal code:...... City:...... Address:...... Last name:...... First name:...... Company:...... Contact information • Numberofcopiesat r r Pleasebillme(issueswillbedelivereduponreceptionofpayment) r American Express r CB, Visa, Mastercard/Eurocard Yes, Iwanttoorder Expiration date: Expiration date: BWConfidential-4av.delaMarne92600ASNIERESFrance €55 each: Order form The Fragrance Guide l_l_l_l_l l_l_l l_l_l_l_l_l l_l_l_l_l_l_ll_l_l_l_l l_l_l_l_l l_l_l_l_l

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Offer valid until August 31, 2016 L’Oréal travel retail Americas strategic business development director Gabriela Rodriguez

Market challenges Interview BW Confidential talks to L’Oréal travel retail Americas strategic business development director Gabriela Rodriguez about the challenges and opportunities facing beauty in the region

How is your business performing in travel retail in the Americas? Business in the region is challenging due to three factors: a strong US dollar, the Latin American crisis, and efforts by the Chinese government to promote purchases within China. Even confronted with these challenges, L’Oréal finished 2015 ahead of a negative market, and we are observing the same dynamic in 2016.

What are your expectations for 2016? Our sources indicate that overall traffic in the Americas will post single-digit growth in 2016. People are still traveling, but are dedicating their available dollars to leisure, not shopping. For this reason, we expect a single-digit contraction in the market this year, driven in large part by the Latin American crisis. The Brazil Central Bank indicated that Brazilian spend In 2016, we expect abroad declined by 62% in January 2016 versus January 2015. And a recent study from CIR lower average states that more than 50% of Latin Americans plan to buy less in duty free, or to not buy at “ all. In line with this, we have observed that traffic to stores has declined. Even so, as of the transactions from end of March, L’Oréal is performing better than the market. Brazilians, with fewer

How do you expect the crisis in Brazil to continue to impact business? visits to duty-free Brazilian confidence is down, and consumer purchasing power is affected by the political stores, and perhaps scandals, prolonged recession, growing unemployment and currency devaluation. The common practice of paying in installments means that some once key duty-free customers fewer items per are dedicating a considerable portion of their salary to debts acquired a year ago. In 2016, transaction or a we therefore expect lower average transactions from Brazilians, with fewer visits to duty-free stores, and perhaps fewer items per transaction or a shift to more affordable products. shift to more affordable products How can you adapt to such challenging conditions? I have seen this type of crisis several times in travel retail. We must be aware of what’s happening in the markets, adapt to current times, and focus on the opportunities. Our brand L’Oréal travel retail Americas portfolio and product assortment is key to surfing the crisis. We have to carefully determine strategic business development which brands and products to focus on and in which locations. We have to have an open director Gabriela Rodriguez” exchange of information with the retailer to help us both address the consumer’s needs. One of L’Oréal’s strengths is our brand portfolio, which allows us to address different segments. For example, both L’Oréal Paris and Maybelline are performing very well in travel retail in the south because of their strong image and accessible price. For the established brands, we are addressing the need for more promotional items through sets and incentives like gwps. We understand that customers are attracted to price incentives, but we prefer to be cautious to protect the DNA of our luxury brands. n n n

www.bwconfidential.com - June 9-22, 2016 #132 - Page 7 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL L’Oréal travel retail Americas strategic business development director Gabriela Rodriguez

n n n What other challenges and opportunities are you facing? The Chinese are our second nationality after Brazilians. This year, we expect they will become the first nationality given the traffic forecast from tier-one and tier-two cities. This Interview is a great opportunity, but the environment is becoming much more competitive. We see aggressive promotional activity at airports in tier-one cities, an increase in pre-orders, and the development of new arrival shops in China. Additionally, where the Chinese once The Chinese are traveled more in tours, they are now traveling more independently. “our second How are you working to better target Chinese travelers in North America? nationality after We have a Chinese tracker tool that allows us to understand where and how they are traveling, their motivations while shopping and which category they are looking for. We Brazilians. This year, have recently witnessed an increase of the penetration of fragrances while traveling in we expect they will Europe and in America. We are also closely following the best sellers in the markets of reference. Only by systematically following the trends throughout the world are we in a become the first position to take advantage of the opportunities ahead. By doing so, we can better adjust nationality given our offer and our brand expression at the pos. As an example, while La Vie est Belle is the most strategic fragrance for Lancôme in the Americas, Miracle is key on the West Coast the traffic forecast given its success in Asia. from tier-one and

How can you encourage shoppers in the region to buy in travel retail? tier-two cities Even if shoppers in duty free have been historically driven by price, the brand’s expression, the product offering and service are equally important. During a recession, we need to keep price competitiveness because it becomes definitive in the purchase decision, mainly when L’Oréal travel retail Americas travelers are hyper-connected. We have adapted our counters to better serve our global strategic business development director Gabriela Rodriguez shoppers with tools that facilitate the dialogue despite language barriers and passengers ” with time limitations. Our beauty advisors are constantly trained on the products, and on the most relevant trends worldwide. We have improved service by addressing the customers’ needs according to information obtained from global shopper studies: who they are, how they travel, their interests, the categories they are looking for and the best sellers in the markets of reference. If we want to increase penetration of duty free, we need to listen to what consumers are looking for and become consumer-centric.

How are you addressing the millennial consumer? Millennials are key for the group. Kiehl’s and Urban Decay are relevant brands for this segment. […] YSL is [taking] important steps in attracting millennials, while Lancôme also had relevant initiatives with the recent launches Juicy Shaker and Energie de Vie. Specifically in travel retail, we don’t have enough data to dimension their importance, sales-wise. Their behavior varies based on the travel destination. In some locations, millennials are purely interested in the trip, dedicating their traveling budget exclusively to leisure purposes. In other locations, we have seen millennials integrating s Launches such as Juicy Shaker shopping as key part of their journey, with a high average ticket from Lancôme are hoped to appeal to and openness to the advice of our BAs. n millennials in travel retail

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Japan Beauty revisited Tourism continues to give the Japanese beauty market a much-needed boost

oosted by an increase in inbound tourism from neighboring countries, beauty Bplayers in Japan are optimistic about renewed growth in what has otherwise been a difficult market in recent years. However, even last year in spite of the flow of tourists, retail beauty and personal-care sales fell by 0.4% to $32.15bn, according to figures from Euromonitor International. Economic measures such as the removal of taxes for foreigners on consumer products like cosmetics, the devaluation of the yen and a relaxation of visa requirements have contributed to pushing monthly visitor numbers to Japan to record highs over the past 12 months. February 2016 saw a 36.4% year-on- year increase in visitor numbers to 1.89 million, led by the Chinese (498,900), South Koreans (490,800) and Taiwanese (349,00), according to data from Japan Macro Advisors. It is estimated that around half of all visitors purchase cosmetics during their stay. Mintel beauty analyst Hinako Sugioka says Chinese visitors tend to engage in ‘bakugai’, or shopping sprees, purchasing cosmetics in bulk during their stay. She says both department stores and drugstores have benefited from the influx of overseas consumers. For prestige beauty brands, the influx of cashed-up inbound tourists has driven renewed growth in key department store doors, and offset domestic consumption patterns that have been weakened by hikes in consumption n n n

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n n n taxes and an aging population. “Beauty is growing extremely fast again in Japan and this has been the case for a good two years now. Department stores specifically are growing very fast. The Chinese impact has been tremendous,” Insight comments Estée Lauder svp general manager international Justin Boxford. Most of the major Japanese companies’ domestic sales over the past year or more have been buoyed by the tourist impact. The market’s number-one group Shiseido for example, saw a 4.5% increase in sales in Japan for its first fiscal quarter. The company said that inbound sales for the first quarter were around ¥10bn ($91.7m), or around twice as much as last year. It expects inbound sales to increase by 30% year on year to around ¥34bn ($31m). Meanwhile, Japanese beauty company Kosé, whose Sekkisei brand is the number-one cosmetics brand among Chinese visitors according to Mintel research, reported a 17.1% increase in net sales for 2015. This was due in part to increased sales to tourists in Japan.

Adapting to new consumers Industry players are looking to adjust their business in light of travelers to Japan, and especially the Chinese. Shiseido for example, said that it had aggressively opened counters at downtown duty-free stores. “To respond to this drastic change in the dynamics of consumers in Japan, brands and retailers have adopted tax-free checkout cashier’s sections in their stores,” says Sugioka. “Also, if you go to stores, we see multiple languages of signage explaining product features, and multilingual staff to help those tourists.” In addition to Chinese language merchandising and staffing, which is relatively new, Boxford says that Estée Lauder, which is present in 135 doors plus e-commerce, is tailoring its product assortment to tourists and adding services like personalized monogramming on lipsticks or two-minute touch-ups.“We want to make sure that our leading lines in China, like Advanced Night Repair or Nutritious, are in those China-driven doors,” says Boxford. He says that the Japanese tradition of high service standards is also a Japan beauty sales* by category 2015 $bn “great way to engage with Category Sales % change tourists so that when they $bn 2015/2014 go back to their country they purchase your brand Skincare 14.10 -0.5 there as well.” Color cosmetics 5.73 -0.2 Foreign tourists, and Men’s grooming 1.67 -0.7 especially the Chinese, are Fragrance 0.41 0.0 more likely to prefer Premium beauty & 12.35 -0.2 Japanese brands and personal care products, say industry Mass beauty & 16.85 -0.8 observers, providing a lift to personal care local brands both at home and abroad. “Many Total beauty & 32.15 -0.4 companies are starting to personal care claim ‘made in Japan’ on Source: Euromonitor International *Retail sales price Figures do not add up to total as some categories are their brands as n n n not included

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n n n visitors prefer products made locally,” says Sugioka, noting that Shiseido recently added “Ginza Shiseido” to its packaging and created skincare sets packaged in signature red to appeal to Chinese consumers. Insight

The local challenge However, while inbound tourism is providing a much-appreciated boost to growth, capturing the business of domestic consumers in a country that is home to some 127 million people remains a challenge. Boxford notes that the impact of tourism is generally restricted to select doors in tourist hubs like Tokyo. Outside these areas, retailers and brands are increasingly focusing on adding services to appeal to domestic consumers. Nippon Menard France, owner of Japanese skincare brand Menard, general director Junko Sumyia says: “Some cosmetics companies have discounted prices to boost sales, but luxury brands don’t do that. In Japan, many cosmetics firms are focused on advice, with beauty advisors listening to the consumer’s skin problems, advising on treatment and introducing new products”. Estée Lauder’s Boxford agrees that service is key for capturing domestic consumers. He says that department stores are seeing good growth from young Japanese consumers buying color cosmetics such as lipsticks. Department-store chains like Isetan are introducing new specialty-multi open-sell environments that have an emphasis on make-up in a bid to attract younger consumers away from mass channels. In addition, retailers are working hard to leverage their e-commerce sites to capture sales. “We find that where there isn’t a big key store for the Japanese consumer, then they are buying our brands on these retailer sites in a big way,” he says. Mintel’s Sugioka notes that brands and retailers are increasingly moving towards omni-channel retailing. She points to Seibu Department Store Ikebukuro launching a new concept in a subway concourse, which enables consumers to browse and purchase some 10,000 cosmetic products across 92 brands from the retailer’s e-commerce site. Japanese consumers still very much prefer local brands and products, believing that they are better suited to their needs. Whitening products in particular remain popular with Japanese consumers, notes Menard’s Sumyia. Sugioka agrees, adding that men of all ages are becoming more interested in anti-aging skincare. To this end, Japanese company Kanebo last year launched its first prestige men’s skincare line in Japan, dubbed Lissage Men. Korean beauty brands have struggled to gain the traction in Japan that they have seen in other markets. Sugioka says that because they are often single items, Korean products don’t offer the skincare regimen that is so important to Japanese consumers. “The challenge for them is to establish and nurture loyalty,” she says. “[Korean] product innovation definitely impacts the Japanese market, and domestic companies make copycat products, but with comprehensive messaging in Japanese.” Industry players say the beauty market in Japan remains very much dominated by Japanese brands. It is also a market where mass and masstige brands play a key role. Prestige players say the opportunity lies in trading up Japanese consumers and recruiting those who buy mass products. n

www.bwconfidential.com - June 9-22, 2016 #132 - Page 11 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Luxe Pack New York

Packs on show BW Confidential reports on what was seen and heard at Luxe Pack New York, which took place from Show review May 11-12 Credit: UBRProd

his year’s Luxe Pack New York packaging event, which took place in Luxe Pack New York TManhattan from May 11-12, showcased a string of new trends. Exhibitors Took place: May 11-12 highlighted the importance of environmentally friendly packs, including Visitors: 3,768, +4.6% vs 2015 applicators that reduce waste, and multi-functional packs. Exhibitors: 240 Cooling and heating technologies were also showcased. Cosmogen for example presented its Attract One Expert product, an applicator that has a removable roller ball that can be frozen or warmed up before use. Its closed system also means that when the applicator is cleaned, water cannot contaminate the tube. Packs to protect more potent ingredients were also much in evidence. Fusion Packaging for example, unveiled airless applicators for skincare with new anti-microbial additives that are included during the injection molding to provide additional surface protection. There was also a focus on new decoration techniques with HCP Packaging USA showcasing a new air-sputtering decoration technology. The technology gives packs a fireworks display effect due to a spray that is applied and then blown to create an explosion of color cascading from the center outwards. Metallization was also a focus at the show, with SGD showcasing its Metal In technique, which gives the illusion of metal floating inside a bottle. Exhibitors also pointed to the growing trend for specific packs for the travel-retail channel. As to the market, exhibitors said that the US is seeing good growth, but that the performance of beauty’s product categories remains mixed. “Facial fine mists are doing well, but skincare as a whole seems to be flat, while color cosmetics are picking up,” explained Aptar Beauty + Home account manager Caitlin Harris. SGD North America vice president of sales and marketing, perfumery division Sheherazade Chamlou added: “The prestige fragrance market in the US is growing. Last year celebrity fragrances tanked; however, now you can see that designer fragrances in the US are doing better because the prestige market is where the growth is.” This market dynamic was reflected in the show itself. This year the show was bigger and attracted 3,768 visitors, up 4.6% on the previous year. Some 240 exhibitors attended. Luxe Pack executive director Nathalie Grosdidier told BW Confidential that in addition to a higher number of visitors there was also a good balance between American and European packaging manufacturers, with the split now being 50:50 compared with 80% of European exhibitors in the first few years of the show.n n n

www.bwconfidential.com - June 9-22, 2016 #132 - Page 12 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Cosmopack New York

Sustainability focus Conferences at this year’s Cosmopack New York put the focus on sustainability and branding Show review

he Cosmopack New York international business forum & exhibition attracted more Tthan 150 buyers from the US, Canada, Mexico, Chile, Brazil, Guatemala and Peru. Buyers attended the event to meet Italian beauty suppliers in the areas of packaging and contract manufacturing. The event, which is organized by Cosmoprof in collaboration with Italy’s beauty association Cosmetica Italia and industry cluster Polo Tecnologico della Cosmesi, was held from May 11-12 this year (coinciding with the LuxePack New York show) instead of its usual September date. The event hosted a series of conferences, which put the focus on sustainability and how companies can continue to bring newness and innovative packaging to the market that is also environmentally friendly. Brand strategist and author Leslie Sherr said that consumers like new and creative packs, but loathe the associated environmental waste, and that this will drive the adoption of more sustainable materials. There is also a move towards a packaging crossover from other industries, such as food, and the creation of small, single- use packs and concentrated formulas that use less water. Design agency Centdegres managing partner and creative director Elie Papiernik highlighted that social media is exposing brands and said that now “brands are STAY INFORMED WITH OUR naked”, meaning companies need to put DAILY NEWS SERVICE more emphasis on sincerity. This is resulting in packaging moving into what he calls the emotional era. Unique packaging and News headlines daily on www.bwconfidential.com designs are breaching the emotional bond @BWCbeautynews between brand and consumer, he says. This year’s event also saw the launch of the Make Up Room, a series of workshops and lectures intended to demonstrate the impact of fashion trends on the beauty industry. The event also hosted an exhibition called Visionnaire 0.2. Organized in collaboration with Italian contract manufacturer Chromavis, the gallery used objects, words,

colors and images to give indications on • All major news on the industry published every day on our website News headlines complement analysis and interviews in our electronic directions the beauty industry could take in • publication and print magazine the future. Meanwhile, the Innovation Circle • BW Confidential is the destination for keeping up-to-date with what’s showcased new products from suppliers at going on in the industry and staying ahead of the competition the event. n BW Confidential, the inside view on the international beauty industry

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Yves Rocher revamps Champs Elysées store Yves Rocher puts its plant-based heritage on show at Paris flagship

rance-based Yves Rocher has revamped its Champs Elysées flagship in Paris, Fwhich it now likens to a botanical beauty lab that puts the focus on its plant- based cosmetics heritage. The trademark green banner on the facade of the 120m2 (1,291ft2) store has been replaced by one decorated with vegetation, while the store’s decor features wood, moss and stone. The store has a large hanging structure made up of 240 light elements shaped like the Y of Yves Rocher and intertwined to resemble a genome. There are also interactive screens and scientific projections. The renovated flagship comprises four shop-in-shops for skincare, make-up, perfume and bath, intended to clarify the offer for consumers. The skincare shop-in-shop, located on the first floor, includes face, hair, body and sun care Yves Rocher Paris products. It also houses a beauty lab, where shoppers can do skin diagnostic flagship tests, as well as a nail bar. l Opened: May 2016 The make-up shop-in-shop features a make-up wall, and consumers will be l Location: Paris, France able to take part in beauty sessions with advisors. The perfume area is home to l Size: 120m2 (1,291ft2) a mini fragrance lab, where visitors can test scents and learn more about the l Special features: composition of the juice, while the bath shop-in shop showcases the store’s new Four shop-in-shops for skincare, bath collection, which was launched for the opening. Gift sets and travel formats make-up, perfume and bath. The are available at checkouts. zones include a beauty lab for Yves Rocher worked with retail design company Workshop to complete the skin diagnostic tests, a nail bar store renovations. n and a mini fragrance lab

www.bwconfidential.com - June 9-22, 2016 #132 - Page 14 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Store visit

s The store is divided into four shop-in-shops for make-up, skincare, perfume and bath

s The skincare shop-in-shop features a beauty lab for skin diagnostics and a nail bar

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