Pfizer in Botox talks, contouring and sculpting fastest-growing category in prestige, Walgreens Boots Alliance in multi-billion pharmacy deal, and a weak Euro maintains double digit growth for L'Oréal.
Biggest deal of the year - Pfizer in Botox talks
Allergan, the maker of Botox, is no stranger to big buck deals. Actavis took over the company in a US$70.5 billion buy-out in March this year, but adopted its target's name to create one of the world's top 10 pharmaceutical companies with combined revenues of US$23 billion. Only seven months after the completion of that mega-merger, Allergan has confirmed it is in preliminary talks with giant drugmaker Pfizer in a takeover valued at US$113 billion.
Allergan's HQ is in Dublin and it's a big atttraction for Pfizer to operate in a low tax rate company like Ireland. But the other major appeal of the multi-billion dollar deal is in line with a major consolidation strategy across the global pharmaceutical industry. It's early days yet but Allergan's shares soared on the news of the massive purchase.
Not only does the future of cosmetic injections look glittering as more women choose soft options such as Botox and fillers as their preferred rejuvenation treatments. The American Heart Association released the results of a landmark study recently. Botox injections into the heart reduce the chance of an irregular heart rhythm - the most common complication of by-pass surgery.
Contouring and sculpting fastest-growing category in prestige
It seems an age since we were all wondering where the alphabet craze would end - from BB through EE Creams. Don't hold your breath for renewed vigour in the category. The selfie craze has pushed the photo-finish to new heights, says the NPD Group, and contouring and sculpting products have morphed from a fad to an on-going trend.
In 2014, sales of contour and sculpting products designed to achieve a slimmer, more model-like face reached US$8.5 million in the US reports the researcher. In the past eight months, US sales of products offering shading and highlighting have tripled to US$29 million and show no signs of slowing.
"Thanks in large part to celebrity influences, endorsements, and the Internet, contouring and strobing are redefining the makeup industry," says Karen Grant, global beauty analyst, the NPD Group. "One doesn't need to be a professional make-up artist to use high-definition or camera-ready products, and after some searches on YouTube or social media anyone can potentially learn the techniques for themselves".
Brands, retailers and manufacturers need to be aware how fast things are changing notes Grant. Sales of face make-up products in prestige soared 15 per cent from January to August, in contrast to a 13 per cent lift in total prestige. "Other face" - the category including primers, contour, highlighting and sculpting products - has risen to become the second largest face category in the US after foundation. Concealers have overtaken blushes as the third largest face category in the US, with sales increasing 19 per cent says NPD. "Buildable" concealers, designed for layering rather than coverage, are driving the current trend.
Walgreens Boots Alliance in multi-billion pharmacy deal
The US/European pharmacy giant continues to fulfill its ambition to become the biggest and the best retailer in the global health, wellness and beauty industry. The company will acquire all outstanding shares of Rite Aid, the third largest US pharmacy chain, for a purchase price of US$9.4 billion.
On completion of the deal, Rite Aid will retain its name but will become a wholly-owned subsidiary of Walgreens Boots Alliance. The buy-out is subject to anti-trust scrutiny because it involves the merger of two out of the top three pharmacy chains in the US. The Rite Aid network will add 4600 stores to Walgreen's already huge 8200 store reach. The other big player is CVS, which has also extended its presence in the US market. Following the purchase of Medicine Chest, Long's Drugs and Navarro Discount Pharmacy, CVS now boasts 7800 stores.
According to Walgreens Boots Alliance CEO, Stefano Pessina: "The announcement is another step in Walgreen's Boots Alliance's global development and continues our profitable growth strategy".
Weak Euro maintains double digit growth for L'Oréal
A slowdown in China and Brazil has impacted L'Oréal's last quarter sales. The French beauty juggernaut has reported a 10.1 per cent rise in sales to 5.94 billion euros (AUD$9.16 billion) for the period, a shade under analysts' expectations.
Accoding to CEO Jean-Paul Agon: "This year in Brazil has been very difficult so it has impacted growth. The market in China is holding up pretty well, but of course it's not what it was three or four years ago".
Fortunately for L'Oréal, a weak euro helped to boost revenue in its largest market - the US - where sales for the last quarter jumped 22.5 per cent. Western Europe, the multinational's second largest regional market, also performed well with a 4.5 per cent hike in sales and a strong performance from the luxury division.
Emerging markets remain crucial to L'Oréal's longterm growth. Many luxury brands are suffering from slowing growth in Hong Kong because of the downturn in the number of Mainland Chinese tourists and L'Oréal brands such as Giorgio Armani and Ralph Lauren have also felt the chill. Travel retail has also come off the boil to deliver a worse-than-expected performance for L'Oréal's luxury division. But Mr Agon remains confident about the next quarter's performance in spite of volatility in emerging markets.
Snippets from the wires
- Natura's provision to acquire the remaining 29 per cent stake in Aesop, increased taxes and a drop in demand has hammered the Brazilian giant's bottom line in the third quarter of 2015. Profits nosedived 39 per cent and net revenues slid 10 per cent at South America's largest beauty multinational.
- A new report from Transparency Market Research predicts that the combined global beauty and personal care industries will enjoy annual growth of 3.5 to 4.5 per cent over the next five years to reach US$500 billion by 2020. Natural/ organic and anti-ageing products will be the main engines of growth.
- Over the next few years, we will be seeing more channel crossovers in cosmetic and general retailing. Digital pure-plays opening bricks-and-mortar stores and professional skincare brands reaching beyond salon sales. German skincare icon launched a spa-cum-shop in Hamburg in March and has followed up with a "flagship institute" in Berlin close to the Gendarmenmarkt, a major tourist and retail hub.
- As the longtime grooming editor of Men's Style magazine, one of this week's stats came as no surprise to me. According to Google, for the first time ever the search engine registered more queries about men's haircare than women's - about 6 per cent to be precise. The man bun and Don Draper short-back-and-sides proved the most popular searches.
- Mobile revenue more than doubled for Alibaba in the second quarter to US$1.66 billion - 61 per cent of the Chinese e-commerce mammoth's total retail revenue of US$3.49 billion.
- 23 Stories, Conde Nast's new branded content studio in the US, has scored its first major client - Cadillac. A year-long digital campaign starts in November and will include 55 pieces of content from short-form videos to articles across eight major magazines, including Vanity Fair, GQ, W, Details and Bon Appetit. Titled "Dare Greatly", the upscale campaign is designed to rejuvenate the auto-maker's image among affluent Millennials. Cadillac has been targeting lifestyle and fashion events such as its recent airlift stunt at New York Fashion Week in September.
