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The big news over the past week has been reports that Coty is to take over P&G’s beauty business. The deal, if

it goes ahead, would be the biggest acquisition the beauty industry has seen in the past decade and has been described as transformational for Coty. US-based Coty has been looking to gain scale through

acquisitions for some time and this transaction would more than double its sales and provide it with a number-one position in the global fragrance market and a number-five ranking in color cosmetics. It is also hoped that the deal would help revive

the group’s flagging sales. However, while such a deal would make Coty bigger, some analysts are not

convinced that it would make the group better. Industry watchers question how Coty will be able to absorb such a large acquisition, especially as the group is going through a major restructuring effort of its own. Indeed, in a U-turn that is thought to be linked to a possible takeover of P&G’s beauty business, Coty announced that Elio Leoni Sceti who was supposed to take on the role of ceo in July will not join the group. Analysts say the group preferred to maintain some continuity by keeping Bart Becht as interim ceo in light of the size of the acquisition. Others ask whether Coty will be able to make a success of P&G’s brands, many of which have been under-performing in recent years. This is the case with some of P&G’s fragrance brands, but also with haircare brand Wella, which for Coty would also be a completely new category and one that is quite particular to manage.

Size matters The buzz 2News roundup

Netwatch 7Social media monitor

Interview 8Shiseido travel retail Americas md Michael Gebrael

Insight 10Private label in prestige

Show review 12Beautyworld Middle East

Store visit 14The Beauty Box at C&A, Brazil

Oonagh PhillipsEditor in [email protected]

www.bwconfidential.com The inside view on the international beauty industry June 25 - July 8, 2015 #114

News headlines daily on www.bwconfidential.com @BWCbeautynews

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l Cosmoprof North America, Las Vegas, July 12-14l MakeUp in New York, Sept 9-10l Beyond Beauty Paris, Sept 15-17l Cosmopack New York, Sept 16-17


www.bwconfidential.com - June 25 - July 8, 2015 #114 - CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL

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At a glance...

Strategy

News emerged that Coty had won the auction to buy P&G’s beauty business for $12bn. It is thought that the deal includes make-up brands Cover Girl and Max Factor, haircare company Wella and P&G’s fragrance business. If the deal goes through it would significantly change Coty’s position in the beauty market, more than doubling its sales from $4.4bn today to $11bn. Coty would become the number-one player in fragrance with $7.03bn in sales in the category, ahead of L’Oréal, whose fragrance sales come in at $3.9bn. In addition, Coty, currently number-five in color cosmetics, would become the number-two player in this category, according to Euromonitor International. Coty’s color business would be significantly strengthened in the US. The deal would also furnish Coty with an entry into the haircare market with Wella. It is thought that the deal will be completed through a Reverse Morris Trust, which

means P&G would spin off its beauty business into a separate company that would then absorb Coty. As reported, P&G is looking to sell up to 100 brands to focus on its core business. In a U-turn that is thought to be linked to a possible takeover of P&G’s beauty

business, Coty announced that Elio Leoni Sceti who was supposed to take on the role of ceo in July will not join the group. Coty chairman Bart Becht is to remain as interim ceo of the group. It is thought that in light of the size of the acquisition that Coty preferred to keep some continuity with Becht as ceo.

Packaging group Ileos plans to sell its carton printing business to folding cartons company Mayr-Melnhof Packaging. Ileos has received a binding offer for the printing activities of its graphic division comprising Alliora (with the exception of the setup boxes assembly business) and Packetis. The setup boxes assembly business will remain part of the Ileos Group with Paul Quéveau as its managing director. The Ileos Group is owned by funds managed by Oaktree Capital Management.

US-based make-up brand, Mallygirl, which had filed for bankruptcy, has been sold to Beauty Visions. The sale was made through a Chapter 11 Section 363 process. Mallygirl was founded in 2005 and had sales of more than $30m in 2014. The brand is sold on home shopping network QVC, in specialty retailer Ulta and online. In recent years Mallygirl has experienced financial difficulties and was unable to pay debt, resulting in a sale of the company.

Stay informed with our daily news headlines on www.bwconfidential.com

n Coty said to buy P&G’s beauty business

n IFF to acquire Lucas Meyer Cosmetics

n Unilever launches flagship store on China’s JD.com

n Hudson’s Bay Company to acquire Galeria Kaufhof

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US-based flavor and fragrance firm IFF is to acquire Lucas Meyer Cosmetics, part of

the Unipex Group, for €238m. Lucas Meyer Cosmetics, headquartered in Canada with operations in France and Australia, develops, manufactures and markets cosmetics and personal-care ingredients. The company offers proprietary active ingredients, functional ingredients and delivery systems. The deal will add annual revenues of €40m for IFF.

Anglo-Dutch group Unilever is to launch a flagship store on Chinese website JD Worldwide, JD.com’s cross-border e-commerce platform. The flagship store will feature products from a range of the group’s brands, some of which will launch in China for the first time. Brands featured on the new flagship will include Ponds, Dove, Vaseline and Lux. In the next few months, the range will be extended to include some of Unilever’s premium personal-care brands. Unilever has sold some of its brands on JD.com since 2013, and says that the website is its fastest growing e-commerce sales channel in China.

L’Oréal voted Team Italy the winner of its annual competition Brandstorm, which asks students from around the world to come up with a strategy for a part of its business. Some 13,000 students from 46 countries took part in this year’s competition, which was devoted to travel retail. Students were asked to create an “unforgettable retail experience” for the Lancôme brand in the channel. The team from India came second, while France came third. Finland was awarded a special digital innovation prize. Through Brandstorm, L’Oréal recruits some 150 to 200 students a year.

Retail

Canada-based retail group Hudson’s Bay Company (HBC) is to acquire German department store company Galeria Kaufhof from the Metro Group for €2.83bn. The acquisition marks HBC’s entry into Europe. The deal will include 103 Galeria Kaufhof stores in Germany, 16 Sportarena stores and 16 Galeria Inno department stores in Belgium. When combined with HBC’s current portfolio, which includes Hudson’s Bay, Lord & Taylor, Saks Fifth Avenue, Saks OFF 5TH and Home Outfitters, HBC will operate 464 stores under eight nameplates, with 44% of sales generated in the US, 31% in Germany, 23% in Canada and 2% in Belgium. HBC says it plans to grow Galeria Kaufhof’s e-commerce business and introduce the Saks Fifth Avenue and the Saks OFF 5TH nameplates to Germany and Belgium. French department store Le Bon Marché has opened a new beauty area at its Paris store. The 300m2 (3,229ft2) area located on the first floor fashion department aims to provide an alternative beauty offer with a range of niche and organic or natural brands, mainly in skincare and haircare. For a full report on the area, see our next issue.

LVMH has been given the green light from France’s Conseil d’Etat to renovate the La Samaritaine department-store building in Paris. The building permit for the Seine-facing side of La Samaritaine was issued in December 2012 by the Paris town hall and approved in April 2014 by the Tribunal Administratif de Paris. La Samaritaine was closed 10 years ago for safety reasons and LVMH has been

embroiled in litigation related to the renovation of the site. The Conseil d’Etat’s decision means that permits to renovate the building are now irrevocable. n n n

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Sales of men’s prestige fragrances in the US rose 6% in the first quarter of 2015, according to market-research company NPD. This compares to a 4% decline in sales for the same period in 2014. NPD said that juices are leading men’s prestige fragrance sales this year—a shift from 2014 when growth was fueled by gift sets. This year, classics, new scents, travel sizes and larger sizes are driving growth. In the January to April period this year, the best-selling men’s prestige fragrance was Bleu de Chanel, followed by Acqua di Giò pour Homme from Armani.

Men’s skincare sales saw mixed results in Europe in May, according to NPD Group. In the UK, sales were up 4.5% for the month, while in Spain the segment rose 3.1%. In Italy, meanwhile, sales were down by 4.8%. In France, men’s skincare saw a decline of 14.1%, primarily due to Mother’s Day (which NPD included in June’s sales as opposed to May’s sales in 2014). Store traffic for Mother’s Day was significant, which had a negative effect on other categories, including men’s skincare.

People

Estée Lauder Companies (ELC) has named Jean-Christophe Jourde president of the group in France. Jourde was previously senior vice president, managing director of Clinique for North America. He replaces Henk van der Mark, who

will become vice president of ELC Europe, Middle East, Africa and India, in charge of emerging markets. This newly created position is part of the group’s reorganization of the EMEA region. ELC has also named Guillaume Jesel senior

vice president, global general manager of Tom Ford Beauty. Jesel has been with ELC for 14 years and his roles have included svp of global and North America marketing at MAC and vp global makeup marketing for the Estée Lauder brand.

Sephora Americas has named Deborah Yeh senior vice president marketing and brand. Yeh joined Sephora in 2012 as vice president marketing and since then has led the company’s integrated marketing, media, PR & events, loyalty, and operations teams. Her new role will include supervision of the creative team. n n n

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Men’s skincare sales* May 2015Country % change May 2015/

May 2014France -14.1Italy -4.8Spain +3.1UK +4.5

Source: NPD BeautyTrends *Value sales

Top-five men’s prestige fragrances in the US Jan-April 2015 Rank Fragrance 1 Bleu de Chanel 2 Acqua di Giò pour Homme 3 L’Homme Yves Saint Laurent 4 Polo Red 5 Gucci Guilty Homme

Source: The NPD Group Inc/BeautyTrends



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Italian fragrance company ITF is launching a new women’s scent for fashion brand DSquared2 this fall. Called Want, the fragrance is an oriental floral created by perfumer Aurelién Guichard of Givaudan. The launch will be supported by an ad campaign shot by Inez and Vinoodh and featuring Dutch model Rianne Ten Haken. DSquared2 Want will launch in October priced at €49 (30ml EdP), €65 (50ml EdP) and €85 (100ml EdP).

LVMH-owned Kenzo is to launch a new fragrance franchise called Totem this summer. The new line comprises three unisex fragrances and targets younger consumers in a bid to bring a new generation to Kenzo fragrances, according to the brand. Totem will be backed by a TV and print ad campaign and have a strong digital push. It has a lower price positioning than Kenzo’s other fragrances. The 30ml EDT retails at €38.50, while the 50ml EDT costs €52.90. The line will launch exclusively at Sephora in August.

French brand Sisley is launching a new women’s fragrance this fall. Called Soir d’Orient, the scent is a new version of L’Eau du Soir, and is inspired by Andalusia in southern Spain. Soir d’Orient is a chypre, floral, oriental perfume created by Givaudan‘s Olivier Pescheux in collaboration with Isabelle d’Ornano. Launching in September (and available on Sisley’s e-boutique from June) it will retail at €130 (50ml EdP) and €192 (100ml EdP).

French brand Annick Goutal (Amore Pacific) is launching a new fragrance collection in October. Created by Camille Goutal and Isabelle Doyen, Les Absolus d’Annick Goutal consists of three, unisex oriental fragrances. This new collection is positioned as a luxury offer for the brand. Each scent is created around a key ingredient: oud, vanilla and amber. The collection will retail at €195 for 75ml; it will be expanded in 2016. Also in October, Annick Goutal is to relaunch its skincare line. The line, which was first

launched in 2005, has been reformulated. Products are based on Rose d’Anjou, which the brand says has anti-oxidant properties. Also on the cards is the expansion of the brand’s standalone store network. The company has 13 standalone stores (10 in France, two in New York and one in Brussels) and hopes to open a boutique in Seoul, Korea.

French brand Clarins has revamped its classic lipstick Joli Rouge. The lipstick has been reformulated and is said to provide more moisturizing benefits thanks to organic marsh samphire extract and mango oil. The lipstick comes in 25 shades and is packaged in a new gold-colored case. Launching in August, it will retail at €24.80.

Trade shows

Trade show Cosmoprof North America is to introduce a string of new features at this year’s event, which will take place in Las Vegas from July 12-14. The show will launch the Discover Scent program in cooperation with fragrance organization Sniffapalooza, which will provide emerging fragrance brands with a dedicated space to showcase their products to buyers. Another new initiative is the Tones of Beauty program, curated with beauty media group love, Aunt Bonnie, which aims to cater to the multicultural market. This program will showcase selected brands across five categories. n

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BW Confidential reports on what’s being said about beauty on social networks

Social media monitor

News of Johnny Depp fronting a fragrance campaign for Dior has swept the media and blogs. The announcement has excited readers, who find the star a good match for the brand; it has also piqued their interest about the upcoming men’s fragrance.

In-shower moisturizers have been gaining traction and in-shower products are now expanding into the after-sun and self-tanning categories. The concept has yet to fully conquer bloggers, however, as they suggest that these products can mislead consumers into thinking they can be used as a showering product.

The opening of Byredo’s first store in New York has delighted fragrance fans. The store’s minimalist interior has been described as inviting. New Yorkers are also happy to find a new door in the city to buy the brand—Byredo is also sold in Barneys.

Fermented skincare, a concept that hails from Korea, is said to be the latest hot new product trend in beauty. Western brands have already come out with products around the concept, such as LVMH-owned Fresh with its Black Tea mask. However, some writers warn that the benefits of the fermented formulas have yet to be proven, and that they can even cause problems for the skin.

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w Shiseido travel retail Americas managing director Michael Gebrael

It is a tough year for travel retail in the Americas. Shiseido travel retail Americas managing director Michael Gebrael talks to BW Confidential about the market and how the group is investing in the channel

Navigating rough waters

Last year you said that the Americas was experiencing the calm before the storm. Has the storm hit? Yes it has, and 2015 is going to be very difficult, much more so than last year. The biggest issue we have as an affiliate is the deterioration of the Brazilian economy due to corruption issues and the devaluation of the real. This has hit us really hard. It’s easier to assess a fluctuating exchange rate once it stabilizes, but we’ve had one swing too many with Brazil. This has big implications for us; not only because of Brazil, but because of the surrounding countries, such as Argentina, Peru and Chile. However, we’re doing much better than the overall trend in these markets, mainly because we were absent from Chile and Peru and only launched there in 2012 and we invested heavily there last year. Another major challenge is the strengthening of the dollar, but I’m betting that the

government will start increasing interest rates by the second half, which should see the currency slightly losing power.

How do you see the decrease in passenger spend in the region?Passenger spend is declining for two reasons. The biggest is the Chinese crackdown on anti-corruption, which is having a major impact on overall spend. The region has also lost its Russian passengers. In Cancun, Mexico, for example, the market is down by 25%. Russians were a very relevant consumer for us, and I don’t see them coming back.

How is Shiseido performing in Americas travel retail compared to the market?We did well last year. In 2014, the market saw constant currency growth of an estimated 2.8% to 2.9%, and based on those results and our preliminary figures Shiseido’s sales grew 69% faster than the trend. We attribute that to two factors: first, we had a difficult second half in 2013 due to internal issues and secondly, we accelerated the presence of some of our specialty brands in the region. Also, Ultimune has been a much bigger success than we had anticipated. This year we’re building the skincare franchise by launching a night-care product and a 100ml travel-retail exclusive.

Apart from currency issues, what other challenges is the industry facing?Our channel is becoming increasingly challenging when it comes to space, so we’ve embarked on a standalone strategy. Some other brands have already taken this route, but we wanted to get the right country, the right location and the right partner.

”Shiseido travel retail Americas md Michael Gebrael

Passenger spend is declining for two reasons: the biggest is the Chinese crackdown on anti-corruption, and the region has also lost its Russian passengers. Russians were a very relevant consumer for us, and I don’t see them coming back

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w Shiseido travel retail Americas managing director Michael Gebraeln n n We found that in Mexico, where we opened a standalone store at Guadalajara airport in January—the third biggest in the nation with close to 10 million passengers per year. This store is the Shiseido brand’s first standalone location in travel retail worldwide in an airport. The initial results are much better than forecast, as we’re nearly 35% above our initial expectations. We’re looking forward to rolling out this initiative in the Americas.In North America, we opened a shop-in-shop in JFK Terminal 1 with International Shops,

with great results so far. This is the first time we’re in this terminal and we’re speaking to a strong consumer profile: Koreans, Chinese and some French passengers.

Are airport operators becoming more open to branded standalone stores?Some are, and some aren’t. When you look at it from their perspective, it’s probably less profitable [than a multi-brand store], but some operators and partners understand the dynamic of being close to the consumer and this is as close as you can get in travel retail. As a brand you invest much more, but we need to have a consistent message with our consumer in domestic markets and in travel retail.

Are you considering travel-retail standalones for other Shiseido brands?We’re hoping there could be similar initiatives for our retail-driven brands like Bare Escentuals—there’s a big white space there.

Will you introduce Serge Lutens into the Americas?We’re in talks about how to bring the brand to the channel. For the moment Serge Lutens is in a few travel-retail markets, including France with Aélia and at Singapore Changi airport. There is a lot of demand from consumers, so we’re looking at different options.

What is your outlook for the rest of this year?I’m very pessimistic for the first three quarters of this year; I hope that the last quarter will put us back in the black as a region and as a category. We’ll have to fight for every bit of market share, but over the last year we’ve built strong partnerships with operators and retailers and we believe that this will pay off. I’m forecasting growth of between +2.2% and +3.2% for the beauty category in the channel, and we aim to be ahead of the market.This year, brands and operators will gear up

for the next five years and we’ll see new players coming in—Korean operators will come in as the US offers growth and it’s still an untapped market for our channel. New brands will enter the channel and some will become more flexible in terms of distribution—brands that used to be very choosy about where to go will have to settle because a lot of them are struggling. Those that grew very fast over the past few years are having a hard time keeping the pace, so I foresee big distribution expansion for some players. This will not be the case for Shiseido as we won’t do anything to compromise the image of our brand. n

”Shiseido travel retail Americas md Michael Gebrael

This year, brands and operators will gear up for the next five years and we’ll see new players coming in—Korean operators will come in as the US offers growth and it’s still an untapped market for our channel. New brands will enter the channel and some will become more flexible when it comes to distribution

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s Shiseido opened a standalone store at Guadalajara airport, Mexico in January this year



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BW Confidential analyzes the evolution of the private-label offer in prestige beauty and what it means for the market

Changing times Private label in prestige

The private-label beauty landscape has changed dramatically in just a few years. Within prestige, especially in the perfumery channel, more players

have sought to emulate Sephora and Boots’ successes in the category, meaning drastic changes in market dynamics. “The private-label market is seeing very strong development at the moment,” says private-label specialist Maesa ceo Julien Saada. “Sephora has shown that it can be done, and Boots did so before them. When other perfumery operators saw this, they asked themselves why they could not do so,” he explains.According to research company Planet Retail, Sephora’s private-label sales

accounted for 50% of its business in 2014, up from previous industry estimates of between 20 to 30%. Alliance Boots’ (in health and beauty combined) private label share was 37%, according to the firm.In the make-up category, one of the strongest for this activity, private label’s

share (mass and prestige combined) grew to 6.2% of the Western European market in 2014, up from 4.4% on 2010, according to Exane BNP Paribas.

Increasing sophisticationIn Europe, perfumery retailers Marionnaud and Nocibé have both extended their private-label offer over the past three years, especially in make-up, and are offering more sophisticated products. “The first step was for retailers to launch copycats, but most players have already gone beyond that level,” says Planet Retail analyst Denise Klug. “They are no longer just producing me-too products, as was the case in the past,” agrees Topline Products-Primapack n n n

s Selective beauty retailers are putting more focus on their private-label lines: (left to right) Sephora with its Sephora and Formula X brands, Nocibé and Marionnaud



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n n n marketing and communication manager Sophie Gaspin, who has worked with both retailers over the past few years. “There is a degree of sophistication in the design, the packaging and the formula that is very significant,” she says. Nocibé is said to have more than doubled its private-label sales over the past

three years. The retailer currently offers 1,400 private-label products, compared with 238 in 2011.Industry sources suggest, however, that management issues at Marionnaud

and questions over Douglas’ ownership (which has now been resolved following the acquisition by private-equity group CVC Capital Partners) have meant that these retailers have been unable to focus resources on building their private-label business like the competition has.

It’s not just about marginsThe reasons for creating a private-label offer are manifold. “The primary reason is to attract consumers with price points and product categories that [retailers ]do not offer otherwise,” says Maesa’s Saada. “It is not just about margin.”But the question of margin remains significant. Industry sources estimate that

for a private-label line, selective beauty retailers have an operating margin of between 70 and 75%, compared with around 50% for a traditional prestige brand. The generally lower price point of such products is compensated by higher volumes—although increasingly, prices can be on a par with branded products as retailers hone their product offer.The major brands are openly critical of this strategy, accusing retailers of

prioritizing their own high-margin products with better placement in stores and greater support from beauty assistants. “Manufacturer brands are afraid they could lose some of their shelf space to private label,” says Planet Retail’s Klug. “Usually the B and C brands are the ones that suffer more from private labels on the shelves, because a retailer won’t delist an important manufacturer’s brand but rather a smaller manufacturer.”But especially in Europe, the fact is that traditional perfumeries are struggling

to draw consumers in with traditional prestige products. “In France, perfumeries are steadily losing market share to mass market, pharmacies and specialized chains like L’Occitane, Yves Rocher and Kiko,” says Saada. He continues: “Prestige brands maintain that the only way to survive is to be more innovative, more unique, and to raise prices, and this works for a certain clientele, but not for everyone. The strategy that perfumeries have found to attract these customers, notably young people, is to offer private-label and exclusive products.” Nocibé private-label brand director Maylis Grand adds: “With a broader offer, we attract a broader clientele; that’s beneficial to everyone.”

The role of exclusivesA significant part of the growth of the segment stems from the multiplication of so-called exclusive brands that are created or owned by the retailer but don’t have store’s name on them. This enables the retailer to offer something different to the stable of leading national brands that can be found almost everywhere.Private label in all but name, such products are becoming more common. It is a

strategy that has been spearheaded by Sephora with its Kendo Brands n n n

”WSL Strategic Retail ceo Wendy Liebmann

The power balance has shifted between the retailer and the manufacturer. The brand on the door is becoming more powerful than the brand on the floor. Retailers are smarter; they have more data about their consumers and the potential to customize their offering

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n n n division, which now operates independently from Sephora and has developed brands including Marc Jacobs Beauty, Kat Von D and Formula X as well as acquiring Ole Henriksen and most recently Bite Beauty.Brands have accused retailers of a lack of transparency on this issue—namely

by deceiving consumers into thinking they are buying branded products. However, some have a different view. “Does it matter that it’s the retailer’s brand? No, it matters that it’s a quality product that’s well supported,” says WSL Strategic Retail ceo Wendy Liebmann. “The power balance has shifted between the retailer and the manufacturer. The brand on the door is becoming more powerful than the brand on the floor. Retailers are smarter; they have more data about their consumers and the potential to customize their offering. That information plus their desire for profitability and differentiation means we’ll see more of this.”With competition for prestige retailers also coming from a growing number

of directions—notably from vertically integrated players—perfumeries are also trying out new strategies. Nocibé, for example, has opened three La Bellista stores dedicated to its private-label products.“These stores allow us to test different offers and gain precious information,”

says Nocibé’s Grand.“It’s a very ambitious, innovative and legitimate strategy, and the stores are well conceived,” says Saada. “But I don’t know if the perfumeries have the resources necessary to develop such concepts, in terms of cash flow and human resources. For me, such concepts stand more of a chance of reaching critical mass if they are backed by pure players than by perfumery players, who are already struggling.” Some also argue that retailers still need the big-brand names to lure consumers.

Fragile balance…or profound mutationFor the moment, both retailers and brands are obliged to preserve the fragile balance based on their interdependency. “[Retailers] are going to have to balance what they are doing very carefully, because you start to alienate the major brands, and then they open more of their own stores,” says Liebmann. “[As a retailer], where does my support come from beyond sales from my national brand manufacturers? It’s a very critical balance that you need to have without shutting the door and saying I’m going to own the brands, the store, then you become vertically integrated, a Bath & Body Works or Kiko.”Some suggest that in the long term, this is essentially exactly what will come

to pass. “National brands will come to the conclusion that they no longer need perfumeries to sell their products, except in smaller cities, and will open vast networks of standalone stores as well as expanding more online,” says Saada.“Perfumeries will be obliged to mutate, and this is why the creation of

private-label and exclusive brands is the beginning of this change; it is to create originality and attract new customers. They are already beginning to compensate for the loss of [revenues] from national brands.”While Saada believes that this mutation may take some 10, 20 or even 30

years, the idea is logical for both retailers and manufacturers. “Everyone will continue to exist if they succeed in evolving their respective business models,” he concludes. n

”Maesa ceo Julien Saada

In France, perfumeries are steadily losing market share to mass market, pharmacies and specialized chains like L’Occitane, Yves Rocher and Kiko. Prestige brands maintain that the only way to survive is be more innovative and raise prices, and this works for a certain clientele, but not for everyone

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If forced to single out one main trend from this year’s Beautyworld Middle East show, it would be the continued strength of the fragrance category in the region. The number

of fragrance houses at this year’s event continued to grow. In addition to the attendance of large global players such as Givaudan, and companies that have a strong business in the region including CPL Aromas, Iberchem and Eurofragance, the show welcomed newcomers like Grasse-based Robertet.

Investment and competitionThis growing number of fragrance houses is reflective of their expanded business and investment in the Middle East. CPL Aromas for example, inaugurated a new fragrance factory in Dubai, UAE in May. The company claims that the facility is the first fragrance manufacturing site to be established by an international fragrance house in the UAE. Meanwhile, Cosmo International Fragrances is to open new offices in Dubai this year, while Iberchem launched a creative center, also in Dubai, in January.Fragrance houses at the show commented that this rash of activity is creating a lot more

competition in the region. They added however, that this is only natural given the growth the market has seen recently. The fragrance market in the Middle East reported sales of $4.91bn in 2014, an increase of 11.5%, according to Euromonitor International. But some warn that the market in 2015 has slowed due to currency fluctuations, a drop in tourism (especially a falloff in Russian travelers) and political difficulties. Industry sources predict that fragrance sales will grow between 4 to 5% in the region this year.

Asian trends Aside from the strength of fragrance, suppliers say that cosmetics trends from Asia are beginning to make their way to the Middle East. France-based cosmetics supplier Strand Cosmetics Europe said that the cushion trend in make-up, which began in Korea and has already come to Europe and the US, is beginning to make headway in the region. Another trend of note is the rise of natural and organic products; this year the show launched a pavilion devoted to these products. As for the show, some exhibitors said the mood was a little more subdued than in

previous years. However, they added that the event continues to be a key meeting place for the Middle East and Africa region. At this 20th edition, the number of exhibitors rose 13.5% to 1,450, and many commented on the growing size and quality of booths. Visitor numbers were up 5% to 29,973. Despite current macro-economic difficulties, Beautyworld Middle East organizers

Messe Frankfurt expect that the show will continue to grow based on the predictions for the beauty market in the region. Euromonitor International estimates that beauty and personal-care sales in the Middle East and Africa reached $25.7bn in 2014, and that the market in the region is expected to see growth of 4.8% between now and 2019. n

BW Confidential reports on what was seen and heard at the Beautyworld Middle East show, which took place in Dubai, UAE from May 26-28

Fragrance forward

Beautyworld Middle East

Show

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Beautyworld Middle East Took place: May 26-28 in Dubai, UAEExhibitors: 1,450, +13.5% vs 2014Visitors: 29,973, +5% vs 2014



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The Beauty Box by C&Al Opened: May 2015

l Location: Six locations (São Paulo, Rio de Janeiro and

Belo Horizonte)l Size: 20m2 (215ft2) l Special features:

best sellers and affordably priced brands; make-up stations with mirror and chair; payment

in up to 10 installments

Brazil’s Grupo Boticário opened a shop-in-shop format of its multibrand retail offer The Beauty Box at fashion retailer C&A in May. The company is in the pilot stage of the

new project and has already opened six units in C&A stores: two in São Paulo, two in Rio de Janeiro and two in Belo Horizonte. The size of the units is around 20m2 (215ft2).The strategy behind the shop-in-shops is to align cosmetics with fashion, according to

Grupo Boticário and to provide C&A’s customers with a new category of products. C&A has been looking to breathe new life into its offer in Brazil recently by partnering with designers and celebrities, such as Kim Kardashian, Stella McCartney, Beyoncé, Fergie and Christina Aguilera and local designers. For The Beauty Box, the units will provide a high-traffic location—C&A’s 290 stores in Brazil attract more than one million customers daily. Analysts have compared the strategy to Sephora’s tie-up with department store JC

Penney in the US. Sephora currently operates more than 500 shop-in-shops in JC Penney. The Beauty Box units offer a range of fragrance, haircare, bath-and-body products and

accessories. The brand offer includes best-sellers such as Carolina Herrera, Paco Rabanne and Antonio Banderas. There is a focus on affordably priced brands. However, not all the brands sold in the retailer’s standalone stores can be found in these new units. Most of the bath and body products are from The Beauty Box’s own brand as well as the Eudora brand, also owned by Grupo Boticário. The units offer product testing areas, such as make-up stations with a chair and mirror for applying products.The shop-in shops’ design is based on the same concept as The Beauty Box’s standalone

stores, with a focus on creating a cozy atmosphere through lighting and wooden fixtures. Grupo Boticário is looking at rolling out additional The Beauty Box shop-in-shops at C&A

based on the results of this pilot project. The Beauty Box, which was created in 2012, now operates 29 stores in Brazil. n

Brazilian company Grupo Boticário is looking at expanding its The Beauty Box concept through fashion retailer C&A

The Beauty Box teams up with C&A in Brazil



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s The Beauty Box units offer a range of fragrance, haircare, bath-and-body products and accessories. However, not all the brands sold in the retailer’s standalone stores can be found at the C&A units

s The C&A units offer a wide range of fragrances and a special personalized mirror for testing make-up

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