Mar 9, 2020: Elisabeth King reports on this week’s business news

Nivea and Sukin: Top two skincare brands for Aussie millennials; Estée Lauder enjoys highest revenue growth among the major players; Melbourne's St Collins Lane up for sale; One of the world's largest custom formulators acquires Cosmetic Laboratories of America.

Nivea and Sukin: Top two skincare brands for Aussie millennials

It's easy to make skewed assumptions when you live and work inside the beauty bubble. According to Roy Morgan Research, 2.1 million Australian female Millennials (69%) and one million of their male counterparts (34%) use and buy skincare products in the average six month period.

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But a hefty 60 per cent are buying five brands in supermarkets and pharmacies. Nivea is the clear market leader with a market share of 25 per cent, followed by Sukin at 12 per cent, says the researcher. L'Oréal Paris comes in third with 8 per cent, trailed by Olay (6%), Dove (5%) and Garnier (4%).

But the playing field is still wide open with a nearly a third of Millennials choosing non-major brands for their facial moisturiser and facial cleansing, says Michele Levine, CEO of Roy Morgan Research. "The trend for Millennials to choose independent and niche brands for their skincare products represents a significant challenge for the major brands and some are handling the test better than others", she notes. "Nivea retains a significant lead as the major skincare brand for Millennials and proves that meeting the needs of young consumers can certainly pay off for the major brands despite increasing competition".

Estée Lauder enjoys highest revenue growth among the major players

Analysts are predicting that the Estée Lauder Companies could account for more than 20 per cent of the global beauty market by 2025. Estimates linked to the multinational's performance against the other leading players. Over the period 2015 to 2019, Estée Lauder's total revenues increased 37.9 per cent, by contrast to L'Oréal's sales growth of 24.1 per cent and Unilever's 12.4 per cent.

Over the four year period, the top global players collective revenues grew from US$72.2 billion in 2015 to US$85.7 billion last year. L'Oréal is far and away the world's largest beauty and personal care multinational with revenues of US$33.4 billion last year, followed by Unilever at US$24.5 billion. P&G, who sold off a large tranche of its beauty brands to Coty in 2015/2016, ranks third with revenues of US$14.9 billion, followed by the Estée Lauder Companies at US$12.9 billion.

Drilling down, Estée Lauder's revenues have grown at three times the rate of L'Oréal over the past five years. With the worldwide beauty and cosmetics market on track to grow 32 per cent through to 2025 to reach US$113.4 billion, market watchers estimate that Estée Lauder's slice of the market will rise from 17.4 per cent to 20.7 per cent through more acquisitions and strong growth in emerging markets.

Melbourne's St Collins Lane up for sale

Opened in 2016 in the wake of a $30 million redevelopment of Australia on Collins, the 9000 square metre-plus St Collins Lane shopping centre was chosen as the home of the first Debenhams outlet in Australia. The Brit department store stalwart opened its doors in September 2017 and announced it would roll out 10 stores nationwide. Late last year, the flagship store with a strong focus on beauty, shuttered the premises and Debenhams exited the Australian market.

But St Collins Lane still has plenty to offer, housing luxury brands such as TAG Heuer, Furla and Coach alongside middle market fashion chains such as Cue and Kookai. According to Simon Rooney, Head of Retail Capital Markets for CBRE, the largest commercial real estate services company in the world, the centre is situated in Melbourne's "Golden Mile", which is one of the city's most trafficked retail locations and one of the most sought-after shopping precincts in the country.

At the heart of one of the largest retail catchments in Australia with an annual retail expenditure pool of $67.9 billion, St Collins Lane has been put on the block and is expected to attract an eager crowd of local and international buyers keen to re-position the prime space after the departure of Debenhams.

One of the world's largest custom formulators acquires Cosmetic Laboratories of America

If the monicker Cosmetic Laboratories of America (CLA) draws a blank, the company's products have household name recognition. CLA developed and launched the St Ives skincare range in the late 1980s and the brand is sold in more than 100 countries, including Australia. The iconic Apricot Scrub is the number one selling face scrub in the UK and a favourite of supermodel Gigi Hadid.

CLA, who also make the NEXXUS haircare brand, are a one-stop shop for private label skincare, haircare, fragrance and body care for some of the world's leading beauty and personal care multinationals. The Canadian company, KDC/One, has acquired CLA for an undisclosed sum to bolster its prestige beauty chops in the US, with a focus on skincare, hair products, colour cosmetics and emerging indie brands.

Founded in 2002, KDC/One has extended its footprint through organic growth and acquisitions to become North America's largest custom formulator. The company was acquired by Cornell Capital, the private equity firm with investments in the Frederic Fekkai and Bastide brands, in December 2018. KDC/One has enjoyed explosive growth over the past year, doubling its size through buyouts. Since July last year, the company has acquired Alkos, a leading French manufacturer of cosmetics, Swallowfields, a British maker of personal care products, China's Shanghai Paristy and Italy's Zobele Group. one of the world's leading manufacturers of air fresheners.

Snippets from the Wires

Large parts of China remain in lockdown but, the Chinese e-commerce giant, has posted strong growth and record earnings for Q4 2019. Revenues over the three month period rose 26.6 per cent to RMB 170.7 billion (AUD$37.07 billion). In spite of the on-going corona virus outbreak, CEO Richard Liu has predicted a 10 per cent rise in sales for Q1 2020.
Pola Orbis, the Japanese multinational and owner of Jurlique, launched Defencera, a beauty supplement containing ceramides to prevent the skin losing moisture, just over a year ago. Sales in Japan, China, Singapore and Taiwan have passed one million units, earning US$264 million in sales over the first 12 months.
Beiersdorf, the owner of Nivea and La Prairie, confirmed that global total sales rose 4.1 per cent in 2019 to 7.653 billion euros ( AUD$13.02 billion). Revenues rose even higher for the consumer products division, including skincare, with growth of 4.8 per cent to 6.274 billion euros (AUD$10.67 billion) The German multinational estimates sales growth of 3 to 5 per cent for fiscal 2020.

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