April 8, 2019: Elisabeth King reports on this week’s business news

Colgate enters race for multi-billion dollar Nestle Skin Health business; Nutrafol attracts US$35 million from LVMH's investor arm; Lululemon to launch personal care range; and L'Oréal gears up to become world number one in prestige fragrance.

Colgate enters race for multi-billion dollar Nestle Skin Health business
L'Oréal may have dropped out of the battle to buy Nestle's Skin Health business, but there's plenty of other bidders lined up to take part in the auction. Valued at between US$8 billion and US$10 billion, the Swiss multinational's hybrid consumer/medical division includes the Cetaphil, Proactiv and Benzac anti-acne brands and injectables such as the dermal filler Restylane and Dysport, the major European challenger to Botox. Unilever was the leading player from the personal care industry to remain in contention, but Colgate-Palmolive has announced it will raise its corporate hand.

Although mainly known for oral care, Colgate-Palmolive has a long history in skincare sales and acquired the US professional brands PCA and EltaMD in late 2017 – both sold online in Australia. The multinationals will be up against stiff competition, though. Colgate-Palmolive and Unilever are more interested in Nestle's skincare brands rather than the whole division. Some of the world's biggest private equity firms are making offers for the entire unit and that is Nestle's preference.

Major heavyweights circling the Nestle deal include a consortium led by Advent International, the former owner of Douglas, Europe's largest perfumery chain, KKR & Co, who sold the Alliance Boots health and beauty group to Walgreens, and Carlyle Group, who have just invested in Tokiwa Corporation, one of Japan's largest contract cosmetic manufacturers.

Nutrafol attracts US$35 million from LVMH's investor arm
Sales of hair thinning supplements and products are booming. Companies such as Viviscal, Evolis, Kerastase, Johnson & Johnson through Rogaine/Regaine and Hims/Hers in the US have significantly accelerated production to meet global demand. Forty per cent of all people suffering from hair loss are women and Nutrafol caused a sensation when it launched in the US in 2016 as a botanical ingestible to restore hair growth.

Today, Nutrafol is sold through 1300 dermatologists, clinics and stylists in the US and has tripled revenues year-on-year. In partnership with pre-existing investor, Unilever Ventures, L Catterton, the investment arm of LVMH, the world's largest luxury goods group, has made a US$35 million investment in Nutrafol through Series B funding.

Nutrafol's best-selling supplement contains a proprietary blend of naturally-based ingredients, including Vitamin E, biocurcumin, keratin and the antioxidant resveratrol. It claims to re-balance stress and androgen hormonal activity, neutralising free radicals and inflammatory molecules that change hair growth signalling. The new investment will help further R&D, increase brand awareness and jumpstart Nutrafol's global expansion.

Lululemon to launch personal care range
Athleisure beauty has become a major trend, but not without criticism from likes of Vogue UK and leading US websites. Quartz, the hard-hitting trend and news website, got the argument right earlier this year after the Maybelline/Puma collaboration. Yes, the craze is mostly marketing, but if you like working out in lipstick, go for it.

Many brands have released gym-friendly makeup from Tarte to Clinique. Yet even though workout gear doubling as streetwear is a global fashion movement, they don't have finger-on-the-pulse credibility. An accusation that can't be leveled at Lululemon.

In its aim to become a true lifestyle brand, the Canadian athleisure wear brand with annual worldwide sales of US$2.65 billion is launching a personal care range. There's not a makeup SKU in sight and the emphasis is very much on clean beauty in the short-and-sweet lineup of deodorant, dry shampoo, basic balm and face moisturiser. According to Patricia Hong, head of the beauty and luxury division at global management consulting firm, A.T. Kearney, the launch fits into Lululemon's overall brand equity. "They can leverage existing distribution channels, tapping into a niche category of gym/exercise related makeup and skincare, which I believe we'll see more brands target".

L'Oréal gears up to become world number one in prestige fragrance
Already one of the world's leading fine fragrance makers, L'Oréal has designs on becoming number one ahead of Coty. Its stellar stable of prestige juices from Giorgio Armani, Lancôme, Cacherel, Yves Saint Laurent, Ralph Lauren, Viktor & Rolf, Diesel, Guy Laroche, Maison Margiela and Atelier Cologne include some of the world's best-selling perfumes. The French multinational also acquired the Valentino fragrance license from Puig last May. It is also a forerunner – along with Coty – to become the licensee for Prada, which is ending its agreement with Puig at the end of the year.

L'Oréal has 40 factories worldwide, but 26.5 per cent of global production comes from its 11 facilities in France. The company is investing AUD$23.6 million in its manufacturing base in Aulnay-sous-Bois near Paris to shift its focus to a specialist high-end fragrance maker for the Luxe division.

Across the Pond, L'Oréal has announced the promotion of Alexandre Choueiri to Global President of Ralph Lauren fragrances. Currently President of the International Designer Collections business in the US, he was General Manager Designer Brands and Kiehls in Australia from 2006 to 2008. His brief is to double global sales of Ralph Lauren fragrances over the next few years with a major focus on growing the Chinese market.

Snippets from the Wires

  • Retailers received good news in the February trade figures from the Australian Bureau of Statistics. Year-on-year growth spiked 3.7 per cent with new season's fashions enjoying an 1.98 per cent uptick.
  • Bobbi Brown has changed tack product and price-wise with her latest venture. The veteran makeup artist and entrepreneur has launched Evolution, a skincare ingestible beauty range, in 1500 Walmart stores in the US and on walmart.com. Priced between US$10 and US$20, key products include Beauty Superfood, a nutrient-rich powder with collagen, and Beauty Probiotic.
  • L'Occitane acquired Elemis in January for US$900 million. The prestige UK luxury skincare range has kicked off a global expansion across Asia and the US. CEO Sean Harrington is relocating to Hong Kong to build sales in the APAC region. Fellow co-founder, Noelle Gabriel, will take on the role of President of the US business and will be based in New York.
  • Tokiwa Corporation is one of Japan's leading contract cosmetic companies. The company has just opened a US division to deliver turnkey solutions to American and European cosmetic brands. Carlyle Group, the world's largest investment group, has invested Tokiwa's third buyout fund to springboard further growth in Japan and globally.