Feb 10, 2020: Elisabeth King reports on this week’s business news

Beiersdorf buys sustainable skincare brand; L'Oréal's sales growth in 2019 breaks another record; Estée Lauder delivers double-digit growth in Q2; and Roger & Gallet on the block.

Beiersdorf buys sustainable skincare brand

The German parent company of Nivea and La Prairie didn't have to look far for its latest acquisition. Beiersdorf and - Stop The Water While Using Me! - are both based in Hamburg. The sustainable skincare brand's product range features biodegradable, solid and waterless body and haircare SKUs such as Moroccan Mint Lip Balm and Cucumber Lime Hand Balm.

Founded in 2011, Stop The Water While Using Me! has a strong emphasis on refillables and offers climate neutral shipping. The company launched its Good Water Projects initiative in 2014 and donates part of its profits to help communities around the world gain access to fresh water. It also has a growing business in the hospitality industry for its refillable pump dispensers of shampoos and body washes, especially in hotels with an eco focus, as people tend to use 10 times more water in hotels than they do at home.

Financial details were not disclosed and Stop The Water While Using Me! will be operated as an independent business. But the two companies will work together to develop joint ventures and create high-impact solutions for more sustainable products.

L'Oréal's sales growth in 2019 breaks another record

2019 was a spectacular year for L'Oréal with group revenues jumping 8 per cent to 29.87 billion euros (US$32.79 billion). According to Jean-Paul Agon, Chairman and CEO, the world's number one beauty player enjoyed its best sales growth since 2007 and the global beauty market remains very dynamic.

L'Oréal Luxe was again a standout performer with sales in excess of 11 billion euros (US$12.07 billion). The big four brands - Lancôme, Yves Saint Laurent Beaute, Giorgio Armani and Kiehl's - all posted double-digit surges last year. Overall, the division enjoyed 13.8 per cent like-for-like growth.

The Active Cosmetics arm, including SkinCeuticals, La Roche-Posay and Vichy, reported a like-for-like increase of 15.5 per cent to 2.66 billion euros (US$2.92 billion). The dermo-cosmetics category was on fire last year and La Roche-Posay's global sales reached one billion euros (US$1.09 billion) for the first time.

The Consumer Products Division, including L'Oréal Paris, Maybelline and Garnier, remains the multinational's largest portfolio, with sales of 12.748 billion euros (US$13.99 billion) in 2019 - up 3.3 per cent like-for-like. The star of the Professional Products stable was Kerastase which turned in double-digit growth to fuel overall sales of 3.44 billion (US$3.77 billion). L'Oréal's e-commerce sales were a major hotspot, increasing 52.4 per cent to account for 15.6 per cent of total worldwide sales last year. Travel retail was another moneyspinner with global sales up 25.3 per cent.

Estée Lauder delivers double-digit growth in Q2

Fabrizio Freda, President and CEO of the Estée Lauder Group, was full of superlatives such as exceptional and superb for the multinational's second quarter performance. The company's net sales spiked 15 per cent to US$4.62 billion, taking second half revenues in 2019 to US$8.52 billion. Skincare was the runaway winner with sales soaring 27 per cent over the same period in 2018 to US$2.205 billion.

All of Estée Lauder's key divisions enjoyed growth. Makeup revenues were up 6 per cent to US$1.66 billion. Fragrance sales rose 8 per cent to US$581 million and haircare posted an increase of 5 per cent to US$162 million during Q2.

Strong double digit growth in travel retail in Europe, the Middle East and Africa, the number one region for the Estée Lauder Group, helped to push the region's sales to US$2.079 billion in the three months to December 31st. The Asia/Pacific enjoyed the highest growth of 29 per cent to US$1.319 billion. While revenues in the Americas inched up by 1 per cent to US$1.226 billion as prestige makeup sales declined.

Unlike L'Oréal, which believes that the current coronavirus flare-up will have only a temporary impact on sales in the APAC region, similar to the SARS and MERS outbreaks. Estée Lauder has reduced its forecast for 2020, but remains optimistic that growth will be in line with its longterm goals for the full year.

Roger & Gallet on the block

The trademarks of a classic cologne are simplicity and a pungent blend of citrus notes. Over the past few years, there has been a revival of interest in the refreshing spritzes of some of the oldest names in the business, particularly in Asia.

Where there's money, you'll find the major players. LVMH, the world's largest luxury goods group, owns Italian stalwart Acqua di Parma. L'Oréal bought Roger & Gallet, which traces its roots to the Farina family who invented the original eau de cologne, in 2008. Maurer & Wirtz, the owner of 4711, turns over more than $250 million a year, while Puig, the Spanish perfume giant, bought storied Brit brand Penhaligon's in 2015 to extend its chops in the high-end fragrance market.

Roger & Gallet brings in just over US$57 million in annual sales, but that's small beer for L'Oréal. The multinational has entered exclusive negotiations to sell the iconic brand to French investment firm Impala, which boasts over US$2 billion in assets. Impala is also an investor in Augustinus Bader, the cell rejuvenation skincare brand helmed by the German professor of the same name, who is one of the world's leading experts in stem cell research. An on-trend favourite with celebs and makeup artists, Victoria Beckham teamed with the company for her first skincare release recently - The Victoria Beckham Beauty by Augustinus Bader Cell Rejuvenation Power Serum.

Snippets from the Wires

  • Meal delivery services such as UberEATS, the market leader, have ushered in  a new era for takeaway food. According to Roy Morgan Research, nearly 4 million Aussies now use meal delivery services - double the 1.98 million figure of mid-2018. The biggest increases centre on Millennials (+29.7%) and Gen Xers (+28.7%). Gen Xers posted the third highest growth at 17.3 per cent.
  • Prestige beauty sales in the US reached US$18.8 billion in 2019, reports the NPD Group. A flatline performance caused by an overall decline in makeup use, says the data tracker. Makeup is still the largest category in prestige beauty after suffering a 7 per cent plunge in sales to US$7.6 billion. Other major sectors weathered the slump with skincare enjoying a 5 per cent rise in revenues to US$5.9 billion and fragrance edging up 2 per cent to US$4.5 billion.
  • BIC is best known for its disposable razors, pens and stationery. The French multinational has launched a unisex skincare line. The three products - shave cream, body cream and face lotion - will be sold online only under the company's Made For You brand.