Dec 2, 2019: Elisabeth King reports on this week’s business news

Priceline launches Click-and-Collect for Christmas; Unilever, Henkel, Colgate-Palmolive and private equity firms shape up for US$7 billion auction to buy Coty Professional Beauty; L'Oréal ramps up global presence of SkinCeuticals; and Givaudan acquires Indena's cosmetics division.

Priceline launches Click-and-Collect for Christmas
Many developments have ripple effects. During an interview with a CEO of a leading beauty company earlier this year, he told me – We love click-and-collect because it's a great driver of in-store visits and once consumers are there they nearly always buy something else. According to a recent US survey by the NPD Group, 20 per cent of online purchases during the upcoming holiday season will be picked up in stores and those who use smartphones to purchase goods are more likely to head for the shops to collect their online buys.

Priceline Pharmacy launched click-and-collect in select Victorian stores last week and will roll out the service across hundreds of stores over the next week or two. According to Andrew Vidler, General Manager of Priceline Pharmacy, customers can order more than 15,000 of their favourite brands and cult products and pick them up in-store two hours later. "We know our customers are enjoying many different ways to shop and the launch of the click-and-collect functionality has already generated strong interest without having it marketed yet".

Unilever, Henkel, Colgate-Palmolive and private equity firms shape up for US$7 billion auction to buy Coty Professional Beauty
The auction bidding process for Coty's Professional Beauty business begins this month. The division includes the Wella, Clairol, ghd and OPI brands and is ranked number three in the global salon haircare category. Pulling in revenues of US$1.8 billion a year, it has a market capitalisation of US$9 billion.

Coty is looking at a price tag of close to US$7 billion to make a major dent in its US$7.7 billion debt load. According to a report from newsagency Reuters, three giant multinationals lead the pack – Unilever, Henkel and Colgate-Palmolive. At least six of the world's leading private equity firms are also in the race – Advent (which recently bought Olaplex), Blackstone, BC Partners, Cinven, CVC Partners and KKR.

The turnaround potential of Coty's Professional Beauty arm is the major reason for the private equity interest. Henkel, currently the global number five in salon haircare, is keen to rise in the rankings. Colgate-Palmolive is looking to diversify from oral care and bought the French skincare company, Laboratoires Filorga, in July. But Unilever may only be interested in acquiring part of the business.

L'Oréal ramps up global presence of SkinCeuticals
L'Oréal bought SkinCeuticals, the US professional skincare brand, in 2005 and largely allowed it to follow its own path. Things changed a couple of years ago when the brand joined the French multinational's Active Cosmetics portfolio alongside La Roche-Posay, Vichy and CeraVe. The division is second only to L'Oréal's Luxe business in terms of annual growth at 9.2 per cent.

L'Oréal has made an investment in Functionalab, a company which operates 15 medical aesthetic clinics in Canada, offering procedures like injectables and other non-invasive rejuvenating treatments and own brand skincare lines such as Dermapure. Apart from the strategic investment, SkinCeuticals will now be available across Functionalab’s network.

Across the Pacific, SkinCeuticals celebrated another debut. The launch of the brand in the travel retail channel through an exclusive collaboration with the China Duty Free Group (CDFG). Owned by the Chinese government, CDFG is one of the world's top three duty-free operators and SkinCeuticals joins La Roche-Posay and Vichy in the fast-growing dermo-cosmetics sector of travel retail.

SkinCeuticals Custom D.O.S.E has also been named in Time's Annual Best Inventions List for 2019. Developed in partnership with L'Oréal's Technology Incubator, the service is key in the personalisation trend by addressing individual skin concerns and treatment. According to Guive Balooch, Head of L'Oréal's Technology Incubator, who will be in Australia this week to attend L'Oréal's Beauty for All event in Melbourne – "We are thrilled to see D.O.S.E scale internationally around the world".

Givaudan acquires Indena's cosmetics division
Givaudan has been dipping into its corporate war chest throughout the year. Recent acquisitions include UK-based Fragrance Oils, Drom and AMSilk in Germany and Naturex and Albert Vieille in France. In 2017, the global fragrance and flavour titan signed a strategic agreement with Draco in China to produce beauty supplements and skincare based on Chinese medicine.

The common thread in most of the acquisitions has been Givaudan's strategy to extend its share of the natural and organic fragrance and beauty markets. To further this aim, the multinational has acquired the cosmetics business of Indena, an Italy-based company with a heritage stretching back over 100 years, which is a world leader in the development and production of high quality botanical ingredients for the pharmaceutical, health and personal care and beauty industries.

Maurizio Volpi, President of Givaudan's Fragrance Division, notes. "The acquisition of the cosmetics division of Indena fits very well with our long term strategy of Active Beauty. It offers an expanded portfolio of plant-based ingredients that nicely complement our current portfolio"

Snippets from the Wires

  • Major Japanese multinationals such as Kao Corporation and Shiseido are making another consolidated effort to extend their global presence. Kanebo, the prestige Kao-owned brand, is re-branding from February on and one of the major initiatives is a new skincare range called Athletia. To be launched in Japan in the first quarter of the new year, the brand is aimed at exercise-loving women and will roll out internationally in 2021. There will be three product ranges – Tune & Charge, a basic skincare lineup, Active & Go, a portable line for active opportunities and Breathe & Sleep which includes calming room mists.
  • The "itch to switch” is chipping away at brand loyalty in Australia, according to the latest Global Consumer Loyalty Survey from Nielsen. Shampoo and conditioner and skincare are among the top 4 highest product categories Australian consumers are disloyal to, says the researcher, at 44 per cent and 43 per cent.
  • Another week, another new initiative from Kylie Cosmetics. The brand has debuted in travel retail through a vending machine in McCurragh International Airport in Las Vegas. Kylie's post on the new development triggered 26,600 comments and 3.5 million likes.
  • L’Oréal is going gangbusters in China and now plans to re-energise its efforts in India. The multinational has been present in India for 25 years and plans to double the size of its Indian revenues over the next two years, says CEO Jean-Paul Agon. "We are targeting 100 million consumers today, and we think we can reach another 100 million".