Feb 3, 2020: Elisabeth King reports on this week’s business news

US consumer packaging giant buys Albea's dispensing business for US$900 million; LVMH perfume and cosmetics surge 12 per cent to fuel record results; Unilever's prestige beauty business on track to reach US$1 billion; and Inter Parfums exceeds US$700 million milestone for 2019.

US consumer packaging giant buys Albea's dispensing business for US$900 million

The French company Albea claims to offer the world's largest range of cosmetic packaging and is a global leader in the category. The multinational's latest breakthrough, working in collaboration with L'Oréal, is the development of the first paper-based cosmetic tube. To be rolled out later this year, L'Oréal is committed to replacing the majority of the plastic used in tubes across its portfolio of brands with certified paper-like material such as the Albea breakthrough.

Formerly Alcan Packaging Beauty, Albea has hit the financial headlines several times over the past decade. The company was bought by private equity firm, Sun Capital, in 2010 and productivity surged 80 per cent. In early 2018, Albea was acquired by French private equity player, PAI Partners. With total revenues of US$1.5 billion, the company has 39 manufacturing sites in Europe, the Americas and Asia, supplying cosmetic brands in more than 60 countries.

Silgan Holdings, the US consumer packaging giant with revenues of US$4.5 billion, has acquired Albea's dispensing business for US$900 million. The buyout will access Alebea's closure technology and allows Silgan to greatly expand its reach in the cosmetic and personal care market with foam and fine mist pumps, lotion dispensers, samples and fragrance caps. The dispensing business operates 10 manufacturing plants in North America, Europe, South America and Asia and generates annual sales of US$383 million.

LVMH perfume and cosmetics surge 12 per cent to fuel record results

2019 was a landmark year for LVMH. The world's largest luxury goods group acquired US jeweller, Tiffany & Co, for US$16.2 billion in cash and opened two new factories in France and the US to meet growing demand. But even the upheavals in Hong Kong didn't dent the conglomerate's global success and revenues spiked 15 per cent to a record 53.7 billion euros (US$59.56 billion).

LVMH owns 75 of the most storied fashion, watch, beverage and beauty brands, including Christian Dior, Louis Vuitton, Givenchy, Guerlain, Veuve Clicquot and Sephora. The company's largest division - Fashion & Leathergoods - enjoyed sales growth of 20 per cent to 18.45 billion euros (US$20.46 billion). Perfumes and Cosmetics also had a dream run with revenues rising 12 per cent to 6.09 billion euros ( US$6.75 billion). Selective Retailing, the division which includes Sephora, is LVMH's second largest division and logged another record-busting sales performance of 13.64 billion euros (US$15.12 billion).

Bernard Arnault, chairman and majority shareholder of LVMH, singled out Dior's excellent momentum in perfumes and cosmetics and the rapid progress of prestige skincare across brands, including Guerlain.

Unilever's prestige beauty business on track to reach US$1 billion

Unilever's largest money spinner is its beauty and personal care division. The multinational's turnover for 2019 topped US$59.96 billion - up 2 per cent - and beauty and personal care contributed nearly 50 per cent at US$24.3 billion. But net profit plummeted 38.4 per cent for the Euro-centric titan at US$6.65 billion, as the multinational experienced a significant slowdown in North Africa, the Middle East and Turkey.

Deodorants, including Rexona's Clinical range, turned in a strong performance in Europe and North America. But prestige beauty brands, including Dermalogica, Murad, Kate Somerville and Hourglass, enjoyed double digit growth. In June last year, Unilever acquired Tatcha, the US brand inspired by Japanese skincare science, for US$500 million, only a few months after buying the French dermocosmetic player, Garancia. Both acquisitions contributed to the prestige division's revenues of more than US$665 million in 2019.

Alan Jope, CEO of Unilever, believes that luxury beauty, particularly skincare, will continue to be a sweet spot in 2020. "We've been building up a prestige portfolio and its on track for its 1 billion euro ( US$1.02 billion) ambition. But there is much more opportunity, and we are raising our ambitions, particularly in the high growth area of Asian skin care." The company predicts 3 to 5 per cent overall growth for 2020.

Inter Parfums exceeds US$700 million milestone for 2019

Fewer launches and a stronger US dollar did little to dampen Inter Parfums sales last year. The fragrance maker with an enviable portfolio of high-end licenses, including Coach, Montblanc, Oscar de la Renta and Guess, reported a 5.6 per cent sales increase in 2019 to US$713.5 million - up from US675.8 million in 2018.

Montblanc, the largest brand for Inter Parfums, posted a jump of 22.7 per cent on the back of the new Explorer launch and the continued success of the Legend franchise for men. Jimmy Choo flatlined and Coach held its ground following a massive 73.7 per cent increase in 2018. The mid-sized brands, Karl Lagerfeld and Van Cleef & Arpels, were also tidy earners with sales rises of 5 per cent and 6.8 per cent, respectively.

In the lifestyle fragrance sector, Guess performed strongly with the launch of 1981 Los Angeles and Seductive Noir. Abercrombie & Fitch and Hollister fragrances achieved substantial top line growth of 24 per cent in the US, while Oscar de la Renta revenues inched up slightly.

There's plenty on the launchpad for 2020. Inter Parfums first fragrance for Graff, the London-based luxury jeweller,  debuts in Harrods for a six month exclusive in the Northern Hemisphere spring before rolling out in equally selective outlets globally. The first Kate Spade scent under the Inter Parfums banner will also debut in the first quarter, as will the new women's juice from Montblanc.  New lifestyle fragrances from Guess and Hollister are also anticipated to considerably lift the bottom line. We expect 2020 sales to reach US$742 million, says Jean Mader, Chairman and CEO of Inter Parfums.

Snippets from the Wires

  • Revlon is poised to debut Total Color, a new vegan hair colourant, which claims to be the brand's first permanent hair colour to offer total coverage. The range is free from ammonia, silicones, mineral oils and pthalates and rich in botanicals and oils. According to Silvia Galfo, Revlon Brands president, Total Color represents a significant milestone in clean beauty with real innovation in the hair colour category.
  • Being owned by the same parent company can offer synergies if the right opportunity presents itself. Starboard Cruise Services and Sephora are both owned by LVMH. The beauty retailer will launch its own brand Sephora Collection in duty-free shops on several of Starboard's ships as its first step in travel retail.
  • It's often much easier for a major multinational to enter a category through acquisition instead of launching a new brand under its own name. Colgate-Palmolive bought Tom's of Maine, a naturally-derived oral care company in 2006, and it is now sold in 40,000 locations worldwide. The multinational has taken another step into the natural oral care sector with the buyout of Hello Products, which is popular with younger demographics in the US.