Aug 26, 2019: Elisabeth King reports on this week’s business news

Net sales at Estée Lauder reach US$14.86 billion; Givaudan continues shopping spree with buyout of Fragrance Oils; high percentages of young Australians suffer from stress, anxiety and panic attacks; and South Korean beauty device market to hit US$1.43 billion.

Net sales at Estée Lauder reach US$14.86 billion
The Estée Lauder Companies enjoyed a sizzling upsurge in Q4 to push net sales for fiscal 2019 to US$14.86 billion. The main drivers were travel retail, the Asia/Pacific area, skincare in every region and e-commerce. Total net sales across Asia/Pacific spiked 25 per cent and Europe, the Middle East and Africa (EMEA) also saw a double digit increase of 18 per cent.

Skincare sales from leading brands such as the Estée Lauder core brand, La Mer and Clinique soared 17 per cent to US$6.55 billion in fiscal 2019. Makeup sales rose 4 per cent to US$5.86 billion, spurred by Estée Lauder, M.A.C, Tom Ford Beauty and La Mer. Fragrance sales dropped 1 per cent to US$1.8 billion, but luxury niche brands such as By Kilian and Le Labo performed well. Core brands such as Aveda and Bumble & Bumble propelled the growth of the haircare division by 2 per cent to US$584 million.

Givaudan continues shopping spree with buyout of Fragrance Oils
Givaudan, the world's largest multinational in the fragrance and flavours industries, has been opening its corporate wallet with increasing regularity recently. There has been a distinct move to expand into natural and organic fragrances with the acquisitions of two Grasse-based companies – Expression Parfumees and Albert Vieille – over the past 18 months. Givaudan also extended its global reach in July with the buyout of Munich-based Drom, with manufacturing facilities in China, Germany, the US and Brazil.

Givaudan has now acquired Fragrance Oils, the UK's leading supplier to the home fragrance and luxury candle market. The British company was founded in 1967 and its products are sold in more than 90 countries, notably in the Asia/Pacific region, North and South America, the Middle East and Africa. Many products are paraben-free and vegan-friendly, continuing Givaudan's focus on the natural fragrance market.

High percentages of young Australians suffer from stress, anxiety and panic attacks
Australia's laidback national image is upended by the latest Roy Morgan survey. The number of Australians suffering from mental health conditions has increased from 2.5 million in 2009 to 7.9 million in just 10 years. The leading condition is stress – suffered by 5.8 million Aussies (28%) – followed by anxiety at over 4.3 million (21.1%), depression at 3.3 million (16.1%) and panic attacks reported by 1.3 million (6.2%).

According to the researcher, stress peaks in the mid-40s but is generally over 30 per cent for 18 to 28 year olds. Many Gen Zers and Millennials  suffer from anxiety, ranging from 20 per cent of those aged 20 to 27 and reaching 27.9 per cent at the age of 28. Panic attacks are one of the most common conditions among teens, peaking at the age of 18 (9%).

The comprehensive health data tracked over 50,000 Australians and revealed a huge increase in the percentages of the four major mental health conditions among young Australians over the past decade, with 47 per cent of those aged 18 to 24 reporting that they have suffered from stress, anxiety, depression and panic attacks.

South Korean beauty device market to hit US$1.43 billion
The global beauty devices market reached US$39.1 billion last year and is expected to hit US$107.2 billion by 2024, reports VynZ Research, the global market intelligence company. North America accounted for the largest market share of hair removal, anti-acne, light/LED, skin dermal rollers and photo rejuvenation devices. But demand in Asia is also huge, especially in China, India and South Korea, with sales expected to reach US$36.9 billion across the region by 2024 to surpass North America.

Koreans are at the forefront of product development in a bid to bolster their global beauty exports, particularly to China. Cult devices include LG Pra.L Derma LED Mask, Medicon Cleane Peeling 2 and ReFa for Body. According to analysts, the Korean domestic market for beauty advices is expected to hit US$1.43 billion over the next two years. Traditionally, the target market for beauty devices was the over-40s, but the boom is being led by people in their 20s and 30s looking for solutions for hormonal imbalances and other skin issues.

Snippets from the Wires

  • The five finger discount habit is rife in Australia and New Zealand, reveals the first dedicated retail crime survey for ANZ retailing. Customer theft is responsible for 57 per cent of lost revenue – an increase of 16 per cent over the past five years. A direct cost of US$3.37 billion in the 2018 financial year. Telecommunications stores suffer the highest value losses over $1000. Baby milk formula, meat and facial moisturisers are the top three most stolen items from supermarkets.
  • US fashion brand, Rebecca Minkoff, famed for its handbags, fashions, jewellery and footwear, has signed a deal with The Premiere Group, whose fragrance portfolio includes Carven, Trussardi, Hanae Mori and Derek Lam. The first fragrance under the Rebecca Minkoff label will debut next year and the multi-year license is expected to extend to cosmetics and more.
  • BlackRock, the world's largest asset manager with US$6.84 trillion in assets under management, has become the largest investor in Authentic Brands Group. The company's stable of 50 brands includes Juicy Couture and Sports Illustrated. The new investment injects US$875 million and values Authentic Brands at US$4 billion. Elizabeth Arden is the fragrance licensee for Juicy Couture.