www.bwconfidential.com The inside view on the international beauty industry November 19 - December 2, 2015 #120

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The buzz 2 Consumer connections News roundup here has been much talk for some time about the Netwatch 6 Tconnected store—a boutique that incorporates the latest technology and integrates online sales. However, Social media monitor beauty brands and retailers now seem to be getting more serious about it. just opened what it calls its Interview 7 first connected store, Sephora Flash in Paris. The store, Rituals founder and ceo which is smaller than the retailer’s traditional outlets, is Raymond Cloosterman intended to expose consumers to the range of products that they would find in a flagship thanks to easy access to Insight 9 its online offer. Upon entering the store, consumers take Budget beauty brands a card that acts as a virtual shopping basket, which they can use to access more than 14,000 references online. Show review Sephora is not the only company showing interest in this area. Hermès’ first standalone Luxe Pack Monaco 12 perfumery, which opened in New York in September, put the focus on digital with the use Cosmetic 360 15 of interactive displays. Meanwhile, L’Oréal-owned make-up brand NYX has just launched a new store, which it claims has unique digital features and brings the best of online to real- Store visit 17 world retail. NYX, California, US While connected stores are becoming more popular, analysts say that the industry needs to put the consumer at the center of these new outlets and be wary of adding the latest technology just because it is new, rather than because of its use to shoppers. They add that retailers should use the connected store to put a greater focus on service and do more to offer what the consumer cannot get online: face-to-face interaction with a beauty advisor.

Oonagh Phillips Editor in Chief [email protected] Order your copy of BW Confidential’’s special edition The Fragrance Guide on p.11 News headlines daily on www.bwconfidential.com @BWCbeautynews News roundup At a glance...

n to discontinue sales of its Za brand in India

n Red Door Spa acquires Manicube The buzz n Coty reports mixed results in first quarter

n Questions raised over impact of terrorist attacks in Paris

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

Strategy

Shiseido is to discontinue sales of its Za brand in India. The company will remove the mid-to-low-priced skincare and make-up brand from the market by the end of the year, it said, to concentrate on its prestige offer in the country, which is distributed by Baccarose. Za products have been sold in India since April 2014, but results have fallen short of expectations due to increased costs associated with in-store counters, marketing and counseling, the company said. Shiseido India Private Limited, the company set up in July 2013 to import and sell Za in India and target the country’s expanding middle-income population, will be dissolved. Shiseido does not expect the decision to significantly impact its 2015 results.

Elizabeth Arden Red Door Spa has acquired US-based Manicube, a provider of in-office beauty and grooming services. Elizabeth Arden Red Door Spa said the acquisition is the first of many changes it will be introducing over the coming year. Founded in 2012, Manicube operates in New York, San Francisco, Boston and Chicago, and has more than 200 corporate client offices. Its menu of in-office services will be expanded in 2016. Elizabeth Arden Red Door Spa has 29 day and resort spa locations across the US.

Results

US-based beauty group Coty reported mixed results for the first quarter of its fiscal 2016. The group’s net sales declined 6% (-2% like-for-like) to $1.1bn. At constant currency, sales grew 3%. Reported net income came in at $125.7m, up from $10.6m in the prior- year period, while adjusted net income increased to $219.7m, up from $103m, mainly due to a favorable tax settlement of $113.3m, the group said. Sales in Coty’s color segment grew 9% like-for-like to $390.9m. However, this growth was offset by a 1% like-for-like decline in skin & body care sales, which came in at $173.3m, and an 8% like-for-like drop in fragrance sales, which stood at $548.1m. Coty, which expects to complete its planned merger with Procter & Gamble’s beauty business in the second half of 2016, announced that to date, it has concluded negotiations for 10 of P&G’s 12 fragrance licenses to transfer to Coty upon completion and subject to regulatory approval. n n n

www.bwconfidential.com - November 19 - December 2, 2015 #120 - Page 2 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL News roundup

n n n French company Interparfums SA has said it anticipates a sales increase of nearly 8% next year, with revenues set to reach around €340m. According to the company, specific growth drivers for 2016 will include: continued progression for Montblanc, notably as a result of the launch of men’s line Montblanc Legend Spirit; consolidation for Jimmy

The buzz Choo; expanded distribution for Rochas, which will see a new launch in 2017; and the launch of a first women’s scent for Coach, planned for fall 2016. Interparfums said it is on the lookout for further acquisitions or licensing opportunities, and has around €200m in cash available for such eventualities.

Elizabeth Arden’s net sales fell 1.6% to $266m in its first quarter ended September 30, 2015. Adjusted net sales grew 2.8% at constant currency. Net loss stood at $16.5m, compared with a net loss of $45.7m in the prior year period. Net sales in North America were flat (+1% at constant exchange rates) at $172m, while sales in the international business declined 7% (+5% at constant exchange) to $93.7m.

German perfumery retailer Douglas said that based on preliminary figures, it generated sales of about €2.6bn for the 2014-15 financial year, representing pro-forma group-wide growth of roughly 5%. Both the German market and international sales contributed to growth, the group said, and international sales now stand at about €1.4bn. E-commerce grew strongly, with online sales now accounting for 10% of the retailer’s business.

Retail

Questions have been raised over the impact of the Paris terrorist attacks, which took place on November 13, on France’s retail and tourist industries and the overall economy. Many fear that the events and the possibility of future attacks will see consumers stay away from key shopping areas in the city, which could put a severe dent in retailers pre- Christmas sales. The Saturday following the attacks, many Paris-based stores closed their doors including department stores Galeries Lafayette and Printemps and LVMH-owned perfumery retailer Sephora. There are also worries over tourism, with some market watchers predicting cancellation of trips planned to the city for the end-of-year holidays.

UK-based online beauty retailer Feelunique is opening its first pop-up store in Paris from November 27 to December 13, focused on the theme of celebrating the best of British beauty. Located in the Marais district, the 100m2 (1,076ft2) store will stock 16 British brands in haircare, make-up, skincare, fragrance, devices and accessories. Brands include Miller Harris, Aromatherapy Associates and Crabtree & Evelyn. Each day, there will be a different animation such as a nail bar, hair styling and personalized skincare diagnostics.

Swiss skincare brand Chlorys (SCD Cosmetics), which launched this fall, has opened a standalone store in Geneva. The 40m2 (430ft2) boutique is on Rue de Chantepoulet, not far from the prestigious Four Seasons Hotel des Bergues. As well as offering the brand’s full line of products, the store offers personalized skincare diagnoses and integrated digital features like LCD screens and iPads. n n n

www.bwconfidential.com - November 19 - December 2, 2015 #120 - Page 3 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL The buzz third morethan in2014. accounted for18%oftotallipstick sales,a products launchedoverthepast year been drivenbyinnovation,says NPD.New which generatesannualsales of €70m,has €11m) wereup5%.Thelipstickcategory, (which representannualsalesofmorethan , illuminatorsandcontouringkits segment, withgrowthof15%.Sales promise werethefastest-growingsub- August 2015.Foundationswitha‘radiance’ per year,grew4%betweenJanuaryand which representamarketofcloseto€102m trend forselfies. (+2%). Lipsticksaleswereboostedbythe sales oflipsticks(+11%)andfacialmake-up 2015, reportsNPD,drivenbyincreased grew 1%betweenJanuaryandAugust The last, withfragrancetheprimarydriver. beauty productsthisholidaycomparedwith year throughSeptember,saysNPD,andmoreconsumersplantopurchase the holidayseason.Dollarsalesofprestigebeautyproductsrose8%in Juice salesincreased5%,whileofgiftsetsdeclined11%. skincare masksaleswereup23%.Fragrancegrew2%to$683.4m. Skincare grew2%to$1bn.Whilefacialskincaresaleswerealmostflat, segment increased49%,drivenbytrendsincludingstrobingandcontouring. Eyebrow make-upsalesgrew29%,whileintheAllOtherFace lip (+13%)andface(+14%)productsalesallseeingdouble-digitgrowth. firm TheNPDGroup.Make-upsalesrose13%to$1.5bn,witheye(+12%), quarter of2015toreach$3.2bninretailsales,accordingmarket-research The Data n October 7,LuxeMallissaidtohaveattracted150,000uniquemonthlyvisitors. the luxurymall,brandspaymonthlyrentofbetween€150and€500.Sinceitslaunchon and itsposition.Inadditiontoaflatfeeofbetween€1,500€4,500forpresencein the brand’soffer.Brandscanchoosedifferentformats,includingsizeofstorefront arrows. Onceinfrontofthestoretheywishtoenter,shoppersclickondoorsaccess present includeChanel,CartierandGuerlain.Usersnavigatethemallbyclickingon exclusively toluxurybrandscalledLuxeMall,designedwelcome572stores.Brands News roundup In make-up, sales of , In facialmake-up,salesoffoundation, NPD alsonotesthatthemarketisinahealthypositionasitheadsinto French selectivebeautymarket US prestigebeautymarketgrew7%year-on-yearinthethird has created an online 3D shopping mall dedicated French start-upeKoncepthascreatedanonline3Dshoppingmalldedicated n

publicationandprintmagazine • • • goingonintheindustryand stayingaheadofthecompetition The website -dailynews News headlinesdailyonwww.bwconfidential.com BW Confidential, theinsideviewoninternational beautyindustry

BW Confidentialisthedestination forkeepingup-to-datewith News headlinescomplementanalysis andinterviewsinourelectronic All majornewsontheindustry published everydayonourwebsite • The electronic publication-everytwo weeks US prestigebeautysales*thirdquarter2015 Source: TheNPDGroup*Retailsales Total Fragrance Skincare Make-up Category DAILY NE STAY INFOR 0.68 Sales Sales $bn 3.2 1.0 1.5

• WS SERVICE MED WITHOUR The printmagazine -fourtimesayear % change Q3 2015 % changeQ32015 vs Q32014 @BWCbeautynews +7 +2 +2 +13 what’s

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L The buzz News roundup program andinnovation awards. will followthesameformatas theParisshow,withanexhibition,educationalconference September 13-14.Over120exhibitors areexpectedtoparticipateintheevent,which The NewYorkedition,launched inresponsetoindustrydemand,willtakeplacefrom show Paris-based tradeshowPCD(PackagingofPerfume,Cosmetics&Design)andsister Trade shows February 2016,withthelaunchsupportedbyanadcampaign shotbyRyanMcGinley. viewed bothrightsideupandupsidedown.Theck2linewill beavailableworldwidefrom cylindrical bottlemadeofthickglassandsetinaclearbase, allowing thefragrancetobe a baseofvetiver,sandalwoodandincense.Thefragranceis packaged inaminimalist top notesofwasabi,mandarinandvioletleaf,aheartorris rootandroseabsolute targeting millennials.Thescent,whichcomes21yearsafterthelaunchofckone,has US-based Coty younger generations. skincare onadailyoralmostbasis,higherpercentagethanamong conducted bythecompanyin2014revealedthat90%ofthesewomenuse women intheir60srepresent17%ofJapan’sfemalepopulation.Research advisors onhandtoprovideadviceconsumers.Kanebohighlightsthat products, withpre-taxpricesrangingfrom¥1,800($14.57)to¥5,000($40.49). naturally occurringcomponentsoflipidsandsebums.Thelinecomprisesfive sebum, thebrandsays.Theproductscontainnaturallyderivedoilsthatparallel Glow, thelineisdesignedtoreplenishessentialoilsinskinthathaslowlevelsof Twany brandinmid-Octobertargetingwomentheir60s.Called Japanese companyKanebolaunchedanewfacialskincarelineunderits Launches n and tier-threecities. being ofhigherquality,andhavingmadeinroadsintotier-two 3.3%. Klineattributesthistoforeignbrandsbeingperceivedas Decléor, witnessedsalesgrowthof8.8%,whilelocalbrandsgrew growth driverin2014,withasalesincreaseof7.1%. growth, Klinesays.Byskincareconcern,acnewasthebiggest channels, themedicalcareproviders’channelsawstrongest While salesofprofessionalskincareproductsincreasedacrossall corruption campaignthathasimpactedsalesofluxurygoods. in spiteofthecountry’seconomicslowdownandanti- market-research companyKline&Co.Thisgrowthwasreported in Chinagrew4%tonearly$1.6bn2014,according Twany Glow is mainly sold in freestanding cosmetics stores, with beauty Twany Glowismainlysoldinfreestandingcosmeticsstores,withbeauty Foreign brands, which include Matis, Deynique and L’Oréal’s Foreign brands,whichincludeMatis,DeyniqueandL’Oréal’s professional skincare products Manufacturers’ salesofprofessionalskincareproducts will hold their first US event in New York in 2016. Aerosol &DispensingForum willholdtheirfirstUSeventin NewYorkin2016. , called ck2, is launchingasecondunisexfragranceforCalvinKlein,calledck2, n www.bwconfidential.com -November 19-December 2,2015 #120-Page 5 body oils,andscrubs,amongothers facial care,suncosmeticprocedure-relatedproducts, Source: Kline&Co*Includesnon-condition-related products inChinabyskincareconcern2014 Growth oftake-homeprofessionalskincare All other* Cellulite Dehydration Aging /hyperpigmentation Rosacea/hypersensitivity Acne Segment Subscriptions orUS$699 printmagazine(4issues)+dailynews:€499 www.bwconfidential.com Renata Ashcar, Mayu Saini, Raphaëlle Choël, Choël, Raphaëlle Saini, Mayu Ashcar, Renata 1 year:electronicpublication(20issues)+ permission isstrictlyprohibited. Reproduction inwholeorpartwithout Copyright ©2015.Allrightsreserved. 513 746297RCSNanterre BW ConfidentialispublishedbyNoonMedia [email protected] Advertising [email protected] ISSN Fax: +33(0)153010979 Tel: +33(0)174634961 [email protected] 92600 AsnièressurSeine,France 4 avenuedelaMarne BW Confidential Corinne Blanché,NaomiMarcoulet Sophie Douez,AlexWynne, Contributors: [email protected] Katie Nichol Editorial Coordinator&Assistant: [email protected] Editorial Director:OonaghPhillips Publisher: NicolasGrob : 2104-3302 2014/2013 % change % change +1.6 +2.5 +2.7 +2.8 +3.7 +5.0 +7.1

The views expressed in this section are those of bloggers and do not represent the opinions of BW Confidential Netwatch like LatisseandRevitabrowhavealsobeentrendingonline. Maker, whichgrooms,tamesandtintsthebrows.Productstostimulatebrowgrowth Bloggers arepraisinginnovationsinthebrowcategorylikeDongGongMinnBrow brand’s futuristicvision,describingtheconceptasagame-changer. Paris, hascreatedabuzz.LikenedtoNespressoforbeauty,bloggersadmirethe Figure, anewat-homecustomskincareformulationdevicebyFrenchstart-upRomy perfumed seruminfourdifferentscents. fragrance andhaircareofferseaudeparfum,moisturizinghairmistnourishing New FrenchfragrancebrandMimesishasgarneredpraiseonline.Thecombines packaging andvalue.Formulasaresaidtomeasureupwellwithhigher-pricedbrands. Bloggers havepraisedthenewH&MBeautycollection, hopes thepop-upwouldbeprolongedorotherstoresopen. online. Bloggersreportedhugeinterestinthebrand’smake-upclassesandexpressed News ofanUrbanDecaypop-upopeninginParisgeneratedexcitementamongreaders Social mediamonitor BW Confidential BW reportsonwhat’sbeingsaidaboutbeautysocialnetworks appreciated for its color ranges, appreciated foritscolorranges, www Rituals founder and ceo Raymond Cloosterman International ambitions Raymond Cloosterman, founder and ceo of Netherlands- based brand Rituals, shares his plans for the brand, which Interview recently began expanding outside Europe

How is your business performing? We have come a long way. When I founded the brand in 2000, it took four years to get from one store to two stores. The first five years was survival mode, trying to get the concept right and investing everything in the products. Then it was about creating a healthy footprint in parts of Europe. And now we’re in the process of building a healthy international business. Our growth rate has been around 35% per year for the past three years. Like-for-like sales growth depends on the country, but it is in the double-digits in most markets. By the end of the year, we will have 400 standalone In department stores, stores in 22 countries, and we have about 1,400 doors in leading department stores and we are bringing a perfumeries. Both are growing very fast; at the moment we are opening one to two stores “ per week somewhere in the world. complementary price point, so they can How is your business broken down by distribution channel? Our objective is to build a company based on four pillars. One is standalone stores— serve more of their this is the epicenter of the brand; the second channel is luxury department stores and consumers more often, perfumeries, the third is e-commerce, and the fourth is travel retail. Our objective is for 50% of our sales to come from standalone stores, and 50% from the other three and we are bringing channels, in the next five to 10 years. We are not there yet, but we are on our way. in complementary Standalones [as a proportion of sales] are currently higher, but it depends on the country; in some countries, department stores are more important. With e-commerce, we’re categories, like bath growing very fast, at more than 100% per year. In travel retail, we’re now in 100 airports and body that you and on 15 airlines. We are in 75,000 hotel rooms with our amenities range. We are happy, but we still have a long way to go in all these channels. We continuously reinvest wouldn’t normally buy our profits in the foundation of the company, in stores, innovations and new markets. with them How will you expand outside Europe? For the moment, we are mainly in Europe, and we are growing fast in Sweden, Switzerland, Germany and Spain. We recently went beyond Europe and launched the Rituals founder and ceo Raymond Cloosterman brand in the US at Barneys and opened our first three stores in New York, with five more in the pipeline for the next 12 months. We also have five stores in Brazil, in São Paulo, ” with a partner. We recently launched our first store in Sydney, Australia, with a partner and we are about to open in the Middle East—we hope early next year. At the moment we are traveling a lot to Asia to understand that market. Rituals in brief l Annual retail sales: €400m How easy is it for you to enter department stores and perfumeries as a l Annual growth rate: 35% relatively small, independent brand? l Retail footprint: 400 So far we have been able to get distribution and build healthy partnerships. At the end of standalones in 22 countries; the day, a lot of retailers are looking for innovative new approaches. The whole world 1,400 department-store and starts to look the same—it is hard to tell the difference between airports, shopping n n n perfumery doors

www.bwconfidential.com - November 19 - December 2, 2015 #120 - Page 7 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Rituals founder and ceo Raymond Cloosterman

n n n malls and department stores around the world and consumers are starting to feel that. There is a need for new ideas and for new approaches. In department stores, we are bringing a complementary price point, so they can serve more of their consumers more often, and we are opening new markets for them by bringing in complementary categories like bath, body and home that you wouldn’t Interview normally buy with them. Our biggest challenge What are your expansion plans for the coming months? is building a brand We are opening 20-30 stores next year in Germany, 20-30 stores in the Nordic countries, “ and 10-15 stores in Switzerland. We just opened our first store in the Marais in Paris a without a traditional few months ago, and we’re going to open 10 more stores in France before the end of multi-billion dollar next year. We will be in Sephora for Christmas in France. We have over 50 stores in Spain already, and Spain is showing nice like-for-like growth as well, so we are building that budget […] Our by opening more stores through our partnership with El Corte Inglés. We’re investing all company is built on across Europe. We are not open in Italy or Austria yet. There are a few countries still on our list, but we like to take it step by step. the business for gifts, and at the same time How do you work on building brand awareness? Our biggest challenge is building a brand without a traditional multi-billion dollar budget, on a very loyal fan because one of the reasons we can keep prices fair is that we have lower margins and base—customers we advertise less than is normal in the industry. We follow a discovery strategy. People have to discover the brand, fall in love with it and tell their friends. Our company is built come back every four on the business for gifts, and at the same time on a very loyal fan base—customers come or five weeks back every four or five weeks. The only way to maintain that is to be very innovative and to keep surprising customers by bringing in new ideas and new products. We bring out about 200 new products each year. Rituals also lends itself very well to social media and [we are] building the brand in that respect as well. We only started advertising and Rituals founder and ceo creating campaigns over the past two or three years. Raymond Cloosterman” Would you consider selling the company? It’s not on my agenda. We’ve come a long way and it’s taken many years to become a small, healthy company. We’re now enjoying this stage, we’re growing with new challenges and enjoying it a lot. n

s Rituals is currently opening on average one to two stores per week

www.bwconfidential.com - November 19 - December 2, 2015 #120 - Page 8 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Insight

s While budget cosmetics account for a small percentage of the cosmetics category as a whole, it is a segment to watch

Budget beauty brands When the price is right An analysis of the rise of budget beauty brands and how they are impacting the market

ven if selective brands have their cachet, high-tech claims or stunning packaging to Ewoo consumers, they cannot ignore the growing appeal of budget brands like H&M or Kiko. Earlier this year, mainstream fashion retailer H&M stole the limelight when it announced a massive 700-sku beauty relaunch boasting products priced between $2.99 Masstige brands and $24.99. The high-profile launch is just one of a number of entries in recent years that are likely to bounce have succeeded in turning the image of the budget brand around. “ The figures speak for themselves. According to Cosnova Beauty, owner of German back on the basis cosmetics brands essence and Catrice, essence is the biggest make-up brand in the lower of closer market price-segment globally (based on Euromonitor figures). The company netted €279.3m in sales in 2014, up 13% over 2013, making it a record year. The essence brand is sold segmentation in 80 countries, while Catrice is distributed in 50 markets. The brands sell 95% of their or with more products at the average price of €3.50 (Catrice) and €2 (essence). Italian cosmetics brand Kiko, meanwhile, posted sales of €432m in 2014, a 4% increase on 2013. It now counts sophisticated over 700 directly operated brick-and-mortar stores in 12 countries and has developed product offerings e-commerce business in 35 countries.

Shaking up the market Euromonitor International beauty Clearly Kiko has changed the direction of the category by introducing a visionary approach and personal care senior analyst of selling low-priced cosmetics in its own stores, a strategy that has enhanced the budget Oru Mohiuddin brand’s image and built a connection with consumers—it is also a strategy that n n n ”

www.bwconfidential.com - November 19 - December 2, 2015 #120 - Page 9 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Budget beauty brands

n n n other budget players have adopted. Following a handful of store openings in the US, cult budget brand e.l.f. opened its first boutique in France this year. At the same time, Spanish budget fragrance company Equivalenza is rapidly Insight expanding an own-store franchise network, and has started opening outlets in Brazil this year. Founded in 2011, Equivalenza posted sales of €45m in 2014 and has 821 stores in 30 countries with plans to finish 2015 with 900 stores. The chain sells fragrances that it presents as an equivalent to those from well- known brands at a low price—a practice that has angered many players and has resulted in accusations from industry associations such as France’s Febea that the chain sells counterfeits. Equivalenza boasts that its retail model is a pull for consumers. “Our main success is with the shopping experience we offer to our customers where they Market leadership can choose perfume according to their olfactory preferences. We guide them to the scent that suits their personality and way of life, and even for different “in the lower- occasions. We also adapt our offer to local consumers to fulfill their needs and price segment is preferences,” says an Equivalenza spokesperson. So while budget cosmetics still make up a small percentage of the cosmetics not the ultimate category as a whole, it is a segment to watch as these brands can change the goal of Cosnova industry’s dynamics, comments Euromonitor International beauty and personal care senior analyst Oru Mohiuddin. “What is interesting is that there are many management. The levels of budget brands. In color cosmetics there are brands such as e.l.f., aim is to hold absolute Jordana, and then ranges from discounters [Like Poundworld and Poundland, with the brands Miss Beauty London, launched in 2014, and Make Up Gallery, market leadership per introduced in 2015],” says Mohiuddin. “Each of them occupies a specific niche. unit sold across all e.l.f also sells through its own standalone stores, thereby tapping into a white space involving the crossover between retailing experience and a budget brand. price segments On the other hand, Make Up Gallery and Miss Beauty London are for impulse buying, enabling consumers to try on a range of shades without having to spend too much.” Cosnova Beauty owner and managing director Masstige and prestige take note Christina Oster-Daum” Prestige players cannot afford to be complacent in light of the rise of these brands, which often are not part of large groups and are proving reactive to market trends. Cosnova Beauty, for example, counts on its family-run, lean-sized business to be able to rapidly react to trends and maintain its competitiveness. “This way, we are able to realize our innovative concepts and sell our products at the absolutely best price-performance ratio possible,” says Cosnova Beauty owner and managing director Christina Oster-Daum. The company has a vigorous launch strategy, renewing 50% of the products in the essence and Catrice brands per year, of which 25% are limited editions launched twice a year. Likewise, Kiko regularly introduces limited-edition collections and new products throughout the year. “The brand is growing behind a strong and fast-paced level of product innovation and international expansion in big or growing geographies,” explains a company spokesperson. In addition, many budget brands realize that they cannot survive on the basis of only being affordable and need to inject more innovation in terms of product and marketing into their offer. Mohiuddin says that the success of these budget brands is impacting the n n n

www.bwconfidential.com - November 19 - December 2, 2015 #120 - Page 10 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIA 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 L E verything you need to know about fragrance: Insight

of the global fragrance market Budget beautybrands n all pricesegments.”Itisindeedacategorytowatch. management. Theaimistoholdabsolutemarketleadershipperunitsoldacross leadership inthelower-pricesegmentisnotultimategoalofCosnova Equivalenza’s spokesperson.Cosnova’sOster-Daumgoesfurther:“Market smaller budgetbrandshavebigambitions.“Wearechangingtherules,”says product thrill,”sheadds. cutting-edge technologyandoffersuperiorexperienceintermsofefficacy occupy adifferentsegmentandarethefirstonestolaunchproductsbasedon consumers,” saysMohiuddin.“Premiumbrandsarequitesecuregiventhatthey mature consumers[…]whilethebudgetbrandstendtotargetyounger segmenting onthebasisofconsumeragegroup[...]tappingintoslightlymore way thatmasstigebrandssuchasL’OréalPariscandistinguishthemselvesisby closer marketsegmentationorwithmoresophisticatedproductofferings.One looking totradeup.“Masstigebrandsarelikelybouncebackonthebasisof 9.1% to8.7%duringthesametimeinNorthAmerica,”shecomments. from 10.5%in2012to9.7%2014andCoverGirl’ssharedropped Masstige andprestigewillneedtoremainaheadoftheirgameasthe This dynamicispromptingmasstigebrandstotrycapturemoreconsumers masstige segment especially. “For example, ’s market share fell masstige segmentespecially.“Forexample,Maybelline’smarketsharefell

• • • • Packaging... Sampling New formats Consumer habits www.bwconfidential.com -November 19-December 2,2015 #120-Page 11 • bypost: • byemail:[email protected] Please completethisformandreturnit: n 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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Packs on show BW Confidentialreports on what was seen and heard at packaging show Luxe Pack Monaco, which took place

Show review from October 21-23

uch of the conversation at this year’s Luxe Pack Monaco show centered on Luxe Pack Monaco Mthe slowdown in emerging countries and the challenges it is causing for Took place: October 21-23 brands, which had come to rely on growth there to counter lackluster sales in Exhibitors: 450, including developed markets. 80 newcomers However, there was also much to be positive about, with smaller companies Visitors: 8,651, +2% saying that their flexibility in such a context is allowing them to win projects. Luxe Pack Monaco 2016: In addition, companies with a strong presence in make-up, the fastest-growing September 21-23, 2016 beauty category worldwide, cited brisk sales heading into 2016. “It’s been a good year, with a lot of opportunities,” said Dieter Bakic Design managing director Dominic Bakic. “We are seeing strong growth in Europe, with a lot of companies wanting to get out of China because of rising costs; the price gap is no longer so great.” Quadpack ceo Tim Eaves agreed. “We will finish the year with sales up 20%,” he said. “I’m seeing a lot of optimism for next year. The first quarter will be a little bit slow, but in the second half, there are a lot of big projects. We’re in a position in the market now where the bigger clients are a lot more confident working with us. They’re looking for creativity and flexibility.” In terms of innovation, there was plenty to see at the show. Several players revealed true breakthroughs in application methods and processes, including Geka, Aptar and Cosmogen. In glass, as well as focusing on decoration techniques, suppliers said that they were increasingly looking for new ways to mold the glass itself. Smart packaging was also a buzzword. Cosfibel Premium, for example, has developed packs that open from a distance, while Seram showed laser engraving techniques integrating QR codes. Consolidation was once again a talking point. During the show, it was revealed that Topline Products would be taken over by PSB Industries and integrated into its Texen subsidiary; that Groupe Pochet would sell off its Qualiform activity to Certina Holding, and that Arcade Beauty had acquired a stake in Italian startup Easysnap. At the same time, companies are teaming up to combine their different strengths. Axilone, Arcade Beauty and Albéa collaborated to introduce Reload, a rechargeable mini-spray, while Groupe Pochet and South Korean company Samhwa have come together to create Pure Drop airless packaging, and Quadpack has joined with Italian skincare manufacturer Singerga to offer full- service capabilities. n n n

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n n n Seen in show Aptar Beauty + Home unveiled Note, a new, more intimate way of applying fragrance inspired by the way the cap was used in the past to put scent directly on the skin. Its transparent applicator, within the cap, draws up a few drops of scent when screwed onto the airtight collar. These are released when the applicator touches the skin. In skincare, the company revealed Skin Master, a new generation of skincare pens, with three different types of applicator for different effects Show review and formulas: Velvet Touch, made of elastomer, Cool Touch, made of zamak, and Icy Touch, with a ceramic tip. Each tip pivots for ease of application, while the pen itself is equipped with a new type of pump technology through which the product is released in the desired quantity by pressing a flexible membrane. Multiple customization possibilities are available. In sampling, meanwhile, the company showed new possibilities for its Easy Clip Card that allow the promotional card to be made from laser-cut metal, for example, offering new differentiation options.

Cosmogen revealed the patented Attract One applicator, which features a roller ball that is held into its applicator with a magnet. A broader surface of the roller ball is exposed using this technique, and it allows for vertical or lateral massage techniques. The roller ball can also be removed to allow cleaning of the separate elements, which is more hygienic than other such products, and can be run under hot or cold water to allow varying temperature effects according to the type of product or the desired result. The roller ball can be colored in various shades, while its handle, which also serves as a spatula for applying the product, can be customized.

Groupe Pochet and South Korea’s Samhwa Plastic have joined forces to create Pure Drop, a high-end airless container with a wide range of differentiation possibilities. The two companies have created a joint venture to commercialize the offer. The packaging is intended to fill a gap in the market for high-end airless containers. The companies say that although such packs offer a solution for today’s complex and fragile formulas, they have until now been relatively limited in terms of aesthetics. Samhwa creates the plastic airless inner parts, while Pochet’s possibilities in customization of both glass and plastic packaging will come into play for the visible outer packaging. The move should also allow the French group to grow its business in skincare and make-up.

DuPont’s Maison Surlyn presented a new prototype integrating light redirection technology in partnership with startup Rayform, a spin-off of the Swiss Federal Institute of Technology in Lausanne. The technology can be used to create an image or text within the Surlyn that is only visible when a light is shone on the pack. The concept offers new avenues for differentiation, but will also be useful in n n n

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L Show review Luxe PackMonaco transport costs by50%. friendly thanregularglassjars astheglassis60%lighter,reducing make-up jars,hastheadded advantageofbeingmoreenvironmentally from itstablewareactivity. This technology,adaptedforskincareand a specialcoatingthatmakes themlessfragile,atechnologytransferred n heated. Allpartsarecompatiblewithalcoholcontent. assembled togetherwithaspecialgluemadeofglass thatvitrifieswhen parts madewithblow-blow,press-blowandpressedtechniques canbe technique allowingtheassemblyofdifferentglassparts. Differing techniques. ThefirstoftheseisdubbedForme,aglass-on-glass gluing Italian glassmakerBormioliLuigiisworkingtooffernewglassshaping bottle. Itisavailableforproductionrunsstartingat5,000 pieces. with asilverorgoldcoloredmagneticringthatfitsovertheneckof to fitstandardFEA15sizebottlenecks,andisavailableinblackorwhite brands toaccesssuchproducts.DubbedAttraction,thecapisdesigned market, thecompanydecidedtoofferastandardsolutionallowmore cap. Facedwithgrowingdemandformagneticcapsintheperfumery packaging, debutedwhatitclaimsisthemarket’sfirststandardmagnetic France-based Technicaps,oneoffewcompaniesspecializinginbakelite core. Theresultisastablecorewithsoftbristlesthatdonothurttheeyelid. different plasticmaterials,asoftoneforthebristlesandharder exclusive toL’Oréal,whichprovidesmoldedbrushesmadewithtwo allow shorterdevelopmenttimes,accordingtothecompany. make modificationstothedesignearlyoninprocess,andwillultimately to betestedwithproductasanormalbrushwould.Thismakesiteasier brushes forthefirsttime,new3Dareflexible,allowingthem before investinginaprototypetool.Usingsimilarmaterialsasformolded allows customerstotestnewbrushshapesataveryearlyprojectstage, Germany’s Gekashowcasedanewtechnologyfor3Dprintedbrushesthat was showcasingaspeciallycreatedpoint-of-saledisplayfortheconcept. Givenchy, KenzoandIsseyMiyakebrands,onitsstand,ArcadeBeauty when buyingafull-sizefragrance.ReloadhasalreadyrecruitedtheHugoBoss, a cardinsidethepackagingsoconsumerscanredeemcostofsample to sellspeciallyadapted5mlcartridgesforsamplingalongsidethespray,with use onthego.Ontopofthis,however,Reloadoffersbrandspossibility market, themini-spraycanbefilledwithconsumer’sregularfragrancefor rechargeable mini-spraythatcanbepersonalized.Likeotherproductsonthe Arcade Beauty,AxiloneandAlbéaworkedtogethertodevelopReload,a previous versionsandwillthereforeopenupnewpossibilitiesinovermolding. launched anewSurlyngrade,PC2200,whichisthreetimesmorefluidthan The company’sEcojars,meanwhile,aremadeofultra-light glasswith Geka alsopresenteditspatentedSandwichTechnology,previously anti-counterfeiting, accordingtoDuPont.Inaddition,thecompany n www.bwconfidential.com -November 19-December 2,2015 #120-Page 14

Cosmetic 360

Showcasing innovation BW Confidentialreports on what was seen and heard at new industry event Cosmetic 360, which was held in Paris from October 15-16 Show review ith its focus on innovation and the backing of industry organization Cosmetic Valley, Cosmetic 360 Wthe first edition of Cosmetic 360 attracted a crowd of curious visitors—4,043 Took place: Paris, people attended the event, in line with expectations. October 15-16 “We had to create a trade show that showed that France is a leader in cosmetics,” said Exhibitors: 150 Cosmetic Valley president Marc Antoine Jamet. “Cosmetics are France’s second trade Visitors: 4,043 surplus, yet I sometimes get the impression the industry isn’t taken seriously,” he added, emphasizing the importance of the sector in creating jobs and keeping industry in France. As testimony to this, the event was inaugurated by French minister of the economy, industry and digital affairs Emmanuel Macron. Exhibitors stemmed from a range of fields, from finished products manufacturers and ingredients suppliers to packaging and tech firms. Signage on each stand highlighting what was innovative about each company helped visitors to navigate the show. It also allowed them to see at a glance the exhibitor’s positioning or if it was showing a new product. “The organization has been excellent and all the major brands have visited,” said Sylvain de Backer, French sales engineer for ingredients supplier and formulator Alban Muller. Many key players visited the show. “We have seen all the major French cosmetics and fragrance brands,” said fragrance creation agency Perfrance director Matthieu Reumaux. The event included an Open Innovation area where startups and project leaders could share their ideas with decision makers from leading industry players including Boots, Chanel, Johnson & Johnson, LVMH Recherche, Puig and Shiseido during pre-booked meetings. According to the organizers, some 180 meetings took place over the two days, many of which should result in new partnerships between brands and innovators. A second edition of the event is already set for next year, and will take place in Paris from October 13-14.

Seen in Show French fragrance creation agency Perfrance attracted attention for its Inaway aluminum pouch fragrance container inspired by food packaging and housed in a rigid plastic container, which it was showing for the first time.

Italian packaging firm Lumson presented its first airless jar, Envers. The 50ml plastic pot is designed to be used with one hand. Its lid is pressed down to release the product through a small nozzle at the top, meaning there is no need to remove it. The actuator is molded into the main body of the pack, covering the airless jar, which offers all the advantages of existing airless packaging. Envers is available with a range of decoration possibilities and will soon be made available in smaller versions. n n n

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n n n Alban Muller showcased its full-service offer, and introduced Sorbet Cream, a ready-to-market product with a new texture. “Often, standard products are not very innovative,” said Sylvain de Backer, French sales engineer for the company. The cream is made of more than 97% natural actives, including blackcurrant extract and madder extract stabilized as a pigment, which the company claims is a world first. It is designed to have a weightless texture, a velvety feel on the skin, and leave a matte, blurring finish.

French contract manufacturer Alkos highlighted its skincare offer. Innovations included Show review Beauty Secret Correcting Cream, a powder-enriched cream for a soft-focus finish; Anti Dark Spot Face Therapy, a serum to reduce dark spots and brighten skin tone; Fresh Milk, a spray body that the company also plans to roll out for sun care applications, and Lip Scrub, an exfoliator based on natural ingredients including crushed apricot kernels and sugar.

French company Royer Cosmétique has been farming snails for 25 years, and has been organic for seven of them. Three years ago, the company began making cosmetics, using 30% snail slime. Its products are now available in some 300 French pharmacies. While they are not the only products on the market based on snail mucin, most of these products are made in Asia. Producing in France is a distinct competitive advantage for the company, according to manager Sébastien Royer, as it reassures consumers concerned about transparency.

French company Glass Surface Technology focuses on coatings that protect the inner surface of glass and plastic packaging, avoiding problems of compatibility with formulas and offering options like an anti-UV surface, as well as decoration possibilities. The company was founded in 2013, and has just begun industrial production.

Instrumental beauty firm Feeligreen showcased its i-feel product, which it claims is the first cosmetic product connected to a mobile device. The device combines LED light therapy with the use of targeted cosmetics products, and is piloted via a mobile app. In addition to selling the concept direct to consumers via its own brand, Feeligreen is open to offering the device and concept to brands, and is already in talks with companies, a spokesperson said. Feeligreen won the jury’s prize at the Cosmetic 360 Awards.

Tech startup Smartpixels showcased its augmented reality design prototype Shiine, which can project digital images in 3D onto a product or packaging. The technology is also useful for visualizing products that can be personalized in stores. The company has already partnered with L’Oréal, and its system is compatible with all design software. Using the technology reduces both costs and lead times in packaging design, said a spokesperson for the firm. “Visual mapping already exists, but it is fixed,” he explained, whereas SmartPixels technology is mobile, mapping elements like textures, colors, and texts onto blank packaging.

Italian contract manufacturer Omnicos Group SRL showed a pressed powder technique that allows the formation of different layers of product in a visually striking pattern without the need for separate molds. The company uses a pdf image as its starting point for the design, which provides differentiation possibilities for color cosmetics products. n

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Doing digital in-store

L’Oréal-owned make-up brand NYX launches its first flagship store with strong digital components

olor cosmetics brand NYX Professional Makeup has embarked on a retail strategy Cwith the opening of its first flagship store in October at the Westfield Santa Anita Mall in Arcadia, California. The brand, which was acquired by L’Oréal in 2014, says the store is the first in a series of openings that will take place in the US and internationally through 2016. NYX, which has developed a reputation as a trail-blazer on social media, says the stores aim to “bring the passion of the online beauty world into a retail environment”. The stores will offer the full line of NYX products alongside digital features designed to create a hands-on, self-learning environment and capitalize on the brand’s social media following. Features include an interactive beauty bar to highlight new trends and offer video tutorials from social media influencers on iPads. Products highlighted in tutorials will be available for testing at the beauty bar. Customers posting on key social media sites like Instagram will be invited to add a specific store hashtag and be featured on a digital community wall in the store. Selected social media beauty influencers will also be recruited to partner with NYX to create content for monthly in-store events. The NYX décor also features artwork by renowned female street artist HUEMAN. “Our stores l Opened: October 2015 will celebrate the new generation of beauty influencers, and their dedicated followers, l Location: Arcadia, by highlighting the creativity and artistry of these real-world make-up lovers,” said California, US NYX Cosmetics svp of global marketing and development Nathalie Kristo. l Size: 1,000ft2 (93m2) To date, NYX has opened three stores in California, as well as stores in Madrid l Special features: and Toronto. The brand says that the stores will serve as an extension of its current interactive beauty bar, digital retailing strategy. n community wall

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s The brand says that the store focuses on creating a hands-on, self-learning environment, with displays devoted to professional tips

s Customers posting on social media sites will be invited to add a specific store hashtag and be featured on a digital community wall in the store

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