Natura acquires Avon products in US$2 billion deal; Field Agent confirms pharmacies as Australia's number one channel for beauty; fragrances and cosmetics account for 50 per cent of Asia/Pacific travel retail purchases; and Oriflame founders to buy back private ownership for AUD$1.34 billion.
Natura acquires Avon products in US$2 billion deal
Natura, the Brazilian beauty giant, has been one of the world's leading personal care companies for years because of its market dominance in its home country. But following the buyout of The Body Shop in 2017 and acquisition of Aesop, Natura revealed its ambitions to climb to the top of the global rankings.
The company has agreed to pay US$2 billion in an all-stock deal to acquire London-based Avon Products, the international-facing division of the cosmetic direct seller. With revenues of US$10 billion, the combined business will create the fourth largest cosmetics company in the world.
Natura also achieved success through direct-selling and the agreement will merge the two largest direct selling cosmetics companies in the world. The stats of the united duo, including The Body Shop, are impressive – 6.3 million sales representatives, 3200 stores and operations in 100 countries. Natura shareholders will own 76 per cent of the integrated company and Avon's shareholders the remaining 24 per cent.
Natura has been very pro-active in the past two years, introducing direct sales to The Body Shop and expanding rapidly in other parts of South America. Hannah Symons, Global Beauty Industry Manager at Euromonitor, believes that Avon could re-enter bricks-and-mortar stores as it did in the early Noughties because of Natura's experience with Aesop and The Body Shop.
Field Agent confirms pharmacies as Australia's number one channel for beauty
Last week we reported that Roy Morgan Research again named pharmacy chains as Australia's leading beauty destination. Field Agent Australia, the international information provider, surveyed 500 women nationwide and not only confirmed the researcher's findings, but dug even deeper on consumer habits and brands.
Over 70 per cent of respondents have bought makeup at pharmacies, followed by department stores ( 29%), speciality beauty (Mecca, Sephora etc; 27%), supermarkets (26%), mass merchandisers (Kmart, Target etc: 14%), online only (10%) and direct selling (4%).
On an individual retailer level, a hefty 32 per cent chose Priceline as their number one makeup provider because of the range of products on offer, price and convenience. Chemist Warehouse ranked second with 18 per cent nominating the chain as their number one choice, followed by Mecca (11%), Myer (7%) and Sephora (4%).
The five leading makeup brands in the Field Agent Australia survey were: M.A.C (16%), Maybelline New York (12%), Revlon (10%), L'Oréal Paris (9%) and a joint tie between Rimmel London and Estée Lauder on 8 per cent.
The average monthly spend of respondents was $43. No prizes for guessing, though, that Australian women are very motivated by bargains when it comes to buying makeup. Forty two percent of those surveyed cited discounts as a major incentive when it comes to beauty buys, 41 per cent were prepared to pay full price and 18 per cent were keen on special deals.
Fragrances and cosmetics account for 50 per cent of Asia/Pacific travel retail purchases
2018 was a boom year for travel retail. Worldwide sales reached US$75 billion – a 9.3 per cent increase that smashed the US$70 billion barrier for the first time. The Asia/Pacific region (APAC) was the major engine of growth with sales climbing 14.2 per cent to US$35.2 billion. By contrast, revenues in Europe and the Americas slowed last year.
APAC was also a star in the numbers game. Total international tourism rose 2.9 per cent worldwide, reports business intelligence agency, ForwardKeys, but the Asia/Pacific region experienced a jump of 6 per cent. The major takeaway for the beauty industry was that over 50 cents in every dollar spent in travel retail and duty-free in the APAC area went to fragrances and cosmetics. The category pulled in US$18 billion in 2018 – a massive hike of 20 per cent over the previous year.
Oriflame founders to buy back private ownership for AUD$1.34 billion
Direct selling remains a huge business with worldwide retail sales of US$189 billion. The Asia/Pacific region is the largest regional market, accounting for 46 per cent of global revenues. In Australia, direct selling companies pull in AUD$1.6 billion a year, reports Direct Selling Australia, and cosmetic, personal care and wellness products combined represent 46 per cent of total sales.
Direct to Consumer (DTC) sales have also increased massively over the past few years as major multinationals in beauty and other industries have created an important retail channel by selling directly to consumers through their own dedicated websites. A strategy which allows them to control their own brand stories and collect data on their customers and their behaviour.
Oriflame, the Swedish rival to Avon, offers a wide range of products from makeup through to skincare, haircare and accessories. The brand is available through online websites in Australia and is sold in 60 countries. The af Jochnick family, who founded the company in the 1960s, have made a cash offer of AUD$1.34 billion to buy out the other shareholders to return the business to private ownership. The major goals are to re-position the business and expand into new markets. Oriflame's share price soared on the news and the offer values the company at AUD$1.94 billion.
Snippets from the Wires
- It's never been easier to start a makeup or skincare brand. Just find a contract cosmetics manufacturer, brand the products and use social media to amplify the message. A flood of new brands from countries all over the world, including Australia, has created a hyper-competitive market. A new European report reveals that only 20 per cent of new indie brands last for three years. A clear warning that the key to lasting success is validity and a strong point-of-difference.
- The Paco Rabanne fragrance franchise has become a major moneyspinner for Puig, the Spanish fragrance and fashion multinational. Scents such as Paco Rabanne 1 Million and Lady Million are global blockbusters. In mid-June, the brand will begin the global roll-out of the Pacollection, housed in groundbreaking soft packaging and promoted solely through digital communication. The five SKU lineup – Genius Me, Dangerous Me, Erotic Me, Strong Me and Crazy Me – is the first release under the auspices of the fashion label's new creative director, Julian Dossena.
- Facebook is far and away the nation's number one social media platform with 17.1 million Aussies paying a visit in an average four week period, reports Roy Morgan Research. YouTube ranks second with an estimated 15.3 million visitors in the same timeframe. Instagram is growing fast but has only about half the visitors of the two leaders – 8 million – up from 5.6 million four years ago. Pinterest is closing fast with 7.3 million visitors. Twitter is still a force to be reckoned with and scores over 6.6 million visitors, as is LinkedIn with 4.9 million visitors.