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Rumors continue to circulate about which brands P&G will divest—some prestige fragrance businesses and

major beauty brands are said to be on the block—and about who will buy them. But while speculation heats up, analysts are wondering

whether P&G’s plan to get rid of up to 90 brands is the right strategy. Staff is said to be distracted about which brands may stay and which may go. And the company’s current lackluster performance has some saying that a sale of part of the portfolio will not pay off any time soon.

P&G reported that its third-quarter profit was down 17% to $2.1bn, while its net sales declined 8%. Analysts say that P&G is still losing share on a global basis and that its growth gap versus rivals continues to widen, especially in beauty. RBC Capital Markets said in a research note that compared to L’Oréal, P&G is underperforming by 700 basis points on the top line. P&G however, reiterated that it is happy about the progress it is making in terms of restructuring and said that in the third-quarter it was hit hard by the strong dollar.P&G has stated that it will reveal most, if not all, the brands it plans to sell by

this summer. Whether at this stage it will become clearer how this will impact the group and the new shape the company will take remains to be seen.

More questions over P&G

Oonagh PhillipsEditor in [email protected]

www.bwconfidential.com The inside view on the international beauty industry April 30 - May 27, 2015 #111

News headlines daily on www.bwconfidential.com @BWCbeautynews

The buzz 2News roundup

Netwatch 7Social media monitor

Interview 8Ioma ceo Jean-Michel Karam

Insight 10South Korea’s beauty market

Show review 13Esxence

Store visit 15Herborist, Paris

Meet the BW Confidential

team at:

l TFWA Asia Pacific, Singapore, May 10-14l Luxe Pack New York, May 13-14l China Beauty Expo, Shanghai, May 19-21l Beauty World Middle East, Dubai, May 26-28 l Cosmetic Business, Munich, June 10-11l MakeUp in Paris, June 18-19


www.bwconfidential.com - April 30 - May 27, 2015 #111 - CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL

News roundup

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At a glance...

Results

Japanese group Shiseido’s net sales rose 2.1% to ¥777.69bn ($6.51bn) in fiscal year 2014, while operating profit declined 44% to ¥27.61bn ($231m). The decline in operating profit was due to a fall in domestic sales, an increase in personnel expenses in Japan, increased marketing investment internationally and costs related to the reorganization of inventories in China. However, the group managed to see a 28.8% increase in net profit to ¥33.67bn ($282m), thanks to the sale of Decléor and Carita to L’Oréal. Domestic net sales fell 3.1% to ¥365.62bn ($3.06bn), mainly as a result of a recoil

following a rush in demand ahead of the consumption tax hike in Japan. The group said that in Japan mid-priced and high-priced products are showing recovery, but that sales of low-priced cosmetics, toiletries (such as shampoos), and men’s items were challenged due to a harsh competitive climate. Overseas sales fell 0.9% to ¥412.1bn ($3.45bn) in local currency terms. In the

Americas, Nars and the fragrance business performed well. The Shiseido brand was also singled out for its performance due to the launch of Ultimune in 2014.

L’Oréal’s sales for the first quarter of 2015 rose 14.1% on a reported basis to €6.44bn, driven by a positive currency impact. On a like-for-like basis, sales were up 4%. The Luxe division saw dynamic growth, with sales up 20.1% on a reported basis

(+7.5% like-for-like) to €1.75bn. The group said that Yves Saint Laurent is seeing double-digit growth due to the Black Opium fragrance and make-up launches. Armani, Lancôme, Kiehl’s and Urban Decay also saw strong growth. The Consumer Products division’s sales were up 11.6% (+1.7% on a like-for-like basis) to €3.08bn. The group reported a sales increase of 4% (+1.3% like-for-like) to €2.10bn in Western

Europe. In North America, sales rose 25.2% (+2.4% like-for like) to €1.62bn. Sales in new markets were up 17.4% on a reported basis (+7.5% like-for like) to €2.52bn.

P&G reported an 8% decrease in sales for the third quarter of fiscal 2015 to $18.1bn. Sales in its Beauty, Hair and Personal Care division fell by 11%; the business unit saw significant declines in prestige fragrance and mass skincare sales. The Grooming division saw a 3% decrease in sales for the period. P&G chairman, president and ceo AG Lafley said that group sales continued to be heavily impacted by currency exchange rates. n n n

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

n Shiseido net profit up 28.8% in 2014

n L’Oréal first-quarter sales up 14.1%

n P&G sees sales decline in third quarter

n Puig sales increase 0.6% in 2014

n Coty names Elio Leoni Sceti as ceo



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n n n P&G has revised its forecast for the full fiscal year and is now predicting a decline in net sales growth of 5-6%. In January, the group had said sales would fall between 3 and 4% for the full fiscal year.

Spanish group Puig reported total net sales of €1.51bn in 2014, an increase of just 0.6% over 2013. On a like-for-like basis, sales grew by 4.2% in the period, while net income was up by 0.8% to €177m. Growth in the group’s prestige fragrance sales last year was partially due to the launch of men’s fragrance Valentino Uomo, and the continued success of 1 Million and Invictus from Paco Rabanne. More recent launches Lady Million Eau My Gold and 212 VIP Rosé by Carolina Herrera also contributed to growth. For 2015, Puig is forecasting moderate single-digit growth following the launch of new

women’s scents L’Exstase by Nina Ricci and Olympéa by Paco Rabanne. The integration of the Jean Paul Gaultier business is predicted to have a negative impact on profitability this year and in 2016, with a return to current profitability rates in 2017. By 2017, Puig is predicting sales growth of 33% to reach net sales of €2bn.

French group Interparfums saw its sales fall by 6.4% in the first quarter of the year to €77.2m. In constant currency terms, sales increased by 3.1%. Interparfums said that its Karl Lagerfeld business impacted group sales with the brand’s business declining 77% in the first quarter to €2.2m, compared to the same period in 2014. The Jimmy Choo brand saw the strongest growth in the first quarter at +52% to €19.2m, while Montblanc sales were up by 19% to €24m and Repetto saw sales growth of 72% to €2.7m.

Retail

LS Travel Retail North America, part of Lagardère Services, has acquired assets of Saveria USA, the specialty retail operator at New York’s JFK Terminal 4 airport. The deal provides LS Travel Retail with 20,000ft2 (1,858m2) of specialty retail space at the terminal. Saveria USA was founded by the Sardana family, who will partner with LS in a new

JFK Terminal 4 venture. LS plans to redevelop an additional 9,000ft2 (836m2) into new specialty retail shops at Terminal 4.

UK retailer Fortnum & Mason inaugurated its revamped beauty hall in its London Piccadilly store this month. The new space includes a prestige offer spanning fragrance, color cosmetics, skincare, haircare and bodycare, and will also house treatment rooms for UK brand Bamford.

French brand Hermès is opening a pop-up shop for its fragrance offer at Paris luxury department store Franck & Fils in May. Located on the store’s ground floor, the 70m2 (753ft2) shop will be open for 18 months. It will have a loft aesthetic and feature Hermès’ entire offer of perfumes and colognes, home fragrances and its bath collection.

L’Oréal opened its first point of sale for the Kérastase haircare brand in Americas travel retail in March at Puerto Iguazu Airport, Argentina. The 17m2 (183ft2) counter houses a styling station staffed by a professional hairdresser and also offers hair and scalp analysis using what the company calls a hair and scalp profiler device. n n n

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z News roundupn n n French fragrance company Sabé Masson has opened its first standalone store in Paris. The 36m2 (388ft2) store, located in the Marais district, is the first in a strategy of boutique openings in major cities around the world. “We opened the store as the brand needed its own space to showcase its identity. We plan to open another store in New York next year and probably another in Hong Kong,” explains founder Isabelle Masson-Mandonnaud. The brand will also look to distribution in corners in department stores and in

concept stores. It is currently sold in 50 pos globally (including France, Hong Kong and the UK), and it will finish the year with a distribution of around 150 to 200 doors.

Perfumery chain Marionnaud has donated €100,000 to the French branch of industry association Cosmetic Executive Women (CEW). The donation will go towards dispensing beauty treatments and advice to cancer patients in French hospitals. The sum was raised from the sale of 29,000 soft toys in Marionnaud stores during the Christmas season.

People

Coty has named Elio Leoni Sceti as ceo. Leoni Sceti, who will take on the top job at Coty from July 1, is currently ceo of frozen food company Iglo Group. Bart Becht, Coty’s current interim ceo and chairman, will remain chairman following the transition. Leoni Sceti replaces Michele Scannavini, who left the company in September 2014. Marcel Frydman, founder of French perfumery chain Marionnaud, has died at the age of 83. Frydman sold Marionnaud to AS Watson in 2005.

Data

Beauty and personal-care retail sales in Brazil rose 10.7% to R$101.75bn (US$35.56bn) in 2014, according to figures from Euromonitor International that were announced by Brazilian beauty association ABIHPEC. Fragrance sales were up 12.8% to R$17.06bn (US$5.47bn), while deodorant sales rose 12.8% to R$11.53bn (US$3.68bn). Haircare sales increased by 10.6 % to R$21.23bn (US$6.79bn). ABIHPEC says that the market’s strong

growth in what is a difficult economy is due to the growing number of middle-class consumers. Brazil is the world’s third-largest market for beauty and personal care behind the US and China. n n n

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z News roundupn n n Sales of prestige beauty products in the US rose 5% to $2.6bn in the first quarter of 2015 driven by make-up and fragrance, according to NPD Group. Make-up sales were up 9% to $1.1bn, with strong increases in lip liners (+25%) and eye brow products (+22%). Fragrance sales increased 5% to $547.4m in the period, while skincare sales were flat coming in at $899.6m. However, there was strong growth in some skincare sub-segments, with body devices up 62%, masks up 25% and sales of lip treatment products rising 16%.

Sales of prestige lipstick in Europe in March were up this year, compared to the same period in 2014, according to NPD Europe. The category saw value sales growth of 5.4% in France, 10.4% in Italy, 9.6% in Spain and 14.4% in the UK during the period.

Launches

French skincare brand Sisley is adding to its suncare offer with a new line called Super Soins Solaires Youth Protector. The four-sku collection for face and body features the same sun protection filters as the brand’s Sunleÿa line. The waterproof formulas are said to have an anti-free radical effect thanks to edelweiss and lupin extract and vitamin E. Super Soins Solaires Youth Protector ranges in price from €95 to €150

and launched in April.

French brand Hermès is launching a second flanker fragrance for its Jour d’Hermès line called Jour d’Hermès Gardénia. Created by house perfumer Jean-Claude Ellena, the new EdP, launching in May, has a heart of gardenia and notes of rose, tuberose and jasmine. Jour d’Hermès Gardénia will retail at €94 for 50ml and €129 for 85ml.

Fundraising

The third edition of fundraising day for cancer patients, Une Rose, une Caresse will take place on May 10 at the International Perfume Museum in Mouans-Sartoux near Grasse in France. Funds raised from the event will support the CEW Beauty Centre at Grasse hospital, where CEW beauty therapists provide beautycare treatments free of charge to cancer sufferers. The theme of this year’s fundraising day is the Centifolia rose and the event will include a range of activities, from picking Centifolia roses, creative and olfactory workshops, conferences with perfumers and wellbeing stations. Last year’s event raised €25,000. Une Rose, une Caresse is organized by Grasse’s Atelier Femmes du Territoire du Club des Entrepreneurs. n

Prestige lipstick sales* Europe March 2015 vs March 2014Country % changeFrance +5.4Italy +10.4Spain +9.6UK +14.4

Source: NPD BeautyTrends *Retail sales

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US prestige beauty sales* first quarter 2015Category Sales

$m% change Q1 2015

vs Q1 2014Make-up 1,100 +9Skincare 899.6 0Fragrance 547.4 +5Total beauty

2,600 +5

Source: NPD Group *Retail sales

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

Social media monitor

UK-based Eyeko’s Bespoke Mascara Wardrobe bar at Harvey Nichols has been called a clever way of tapping into the growing trend for personalized make-up. At the bar, a mascara editor helps consumers select a brush and formula from more than 100 options.

Low ShamPoo, a non-foaming cleansing cream by French brand Yves Rocher, which was launched in response to the ‘no poo’ haircare trend, has elicited positive remarks from bloggers. Despite the unusual concept of shampooing with non-foamy products, many were pleased with the results.

Contouring product reviews and tutorials have been sweeping social media. Novel items that have added to the trend’s popularity include Kevyn Aucoin’s The Contour Book - The Art of Sculpting + Defining, a book that features an integrated make-up palette. Other products that have garnered reviews include Cover FX’s Contour Kit and Marc Jacobs Beauty #Instamarc Light Filtering Contour Powder.

US-based Reviva Labs has launched Nasolabial Fold+ Multi-Peptide Cream, conceived to target the folds in the skin that go from the nose to the mouth. The product has struck a chord with bloggers, who say there is little on the market catering to this facial area.

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Ioma in briefl 2014 sales: around €18m, +25% vs 2013

(France makes up 45% of global sales)

l N° of doors: 1,000 l N° of skus: 40

Ioma ceo Jean-Michel Karam

Jean-Michel Karam, ceo of French skincare brand Ioma, talks about his development plans for the company, which was acquired by Unilever in 2013

Prestige ambitions

What is your focus for the brand this year?Our priority is to consolidate our presence in our existing markets. Our main focus will be on France, Spain, Italy, the UK and Russia, which we just opened. In Russia, we did a soft launch in December 2014 in 10 Ile de Beauté doors and now we are set to open another 40, which will then be followed by an additional 40 stores. So far the results have been excellent, despite the uncertain economic context.France is our biggest market, and the brand has around 550 doors there today,

exclusively with Marionnaud and Beauty Success. This year we aim to expand to a total of 700 stores. Spain is currently our number-two market; we are in more than 150 pharmacies there and aim to be in 300 doors by the end of 2015. The brand is already profitable after just two years in the market, when it generally takes an average of four years to turn a profit. The pharmacists there understand the brand and know how to explain the concept. Our diagnostic machines make Ioma a very different brand, and for the pharmacy channel it is a way for them to attract new consumers and boost their income.In Asia, Singapore and Indonesia are our most important markets and are

important launch platforms for the rest of Asia. This year we are consolidating the business there before we move on to the other big markets in the region, like China, South Korea and Japan, where we will begin to roll out in 2016. We’ve opened 15 markets in the space of four years, and from 2016 we aim to

open one new market per year.

You entered travel retail in November 2014 with Nuance in Geneva. What are your plans for the channel?We signed a one-year exclusive with Nuance and our first door in Geneva has been extremely successful so far. We met Nuance’s sales objectives for November through June in the first two months. In light of the tie-up between Nuance and Dufry, we are dealing with the biggest travel-retailer in the world, so we could fast track our expansion in the channel, but I want to spend this year honing our business model, and then we can deploy it on a greater scale.

How are your plans to open standalone stores developing?We opened our first major shop-in-shop in Jakarta at department store Seibu in March last year and it has been very successful. Following this, I thought we needed to open a standalone store in Paris, where the brand is based, n n n

”Ioma ceo Jean-Michel Karam

Unilever is clearly interested in developing its premium business within personal care, and the acquisition of Ioma was a first step in that direction

“



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n n n but I haven’t been able to settle on the right location. Our experience in travel retail has taught me an important lesson: if our brand has traffic, it performs extremely well. So while my first idea was to open a store in a luxury neighborhood in Paris, I’m now thinking that perhaps an upscale mall is the way to go. In any case, we need to be in a high-traffic area. Ioma is only four years old, so although we have done a lot so far, the name isn’t recognizable for everyone. We’ll have to choose between a massive expansion in travel retail or a chain of standalone stores, as we won’t have the means for both.

What is your e-commerce strategy?We’ve succeeded in building our business in department stores, perfumeries, pharmacies and travel retail; e-commerce is the only channel where we don’t have a lot of experience. We have an e-commerce strategy, but we have to make choices—we can’t be everywhere at once. It will be something we’ll focus on in 2017.

What was behind Unilever’s strategy in acquiring Ioma?Unilever is clearly interested in developing its premium business within personal care, and the acquisition of Ioma was a first step in that direction. [In March the group also acquired niche skincare brand Ren]. Unilever is a strong mass player, but the group had no experience in the premium sector.

How do you see today’s skincare market performing?Skincare isn’t doing well because the selective market in general isn’t doing well—there is much less of a gap in product quality between selective and mass today. The price gap, however, has increased as prestige brands simply raise their prices to counter falling unit sales. Consumers see this happening, so they go somewhere other than a perfumery or department store for their skincare purchases. This means there is less traffic in prestige retail, and therefore retailers aren’t as profitable and so invest less. When they don’t invest, the in-store experience becomes less premium, which is an additional reason for consumers to go elsewhere. It’s a vicious circle that needs to be broken. However, some retailers are looking to change. There needs to be a revolution

in retail, and brands have a role to play. It’s time for new concepts in prestige beauty. The consumer will go to a store if there is something to draw her there. n

”Ioma ceo Jean-Michel Karam

Less traffic in prestige retail means retailers aren’t as profitable and so invest less. When they don’t invest, the in-store experience becomes less premium, which is an additional reason for consumers to go elsewhere

“

s Ioma launched Collagen Renew, its first ingestible anti-wrinkle supplement, this year. It entered the travel-retail channel with Nuance in Geneva in November 2014



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South Korea’s economy remains challenged, but its beauty market is still seeing growth. BW Confidential analyzes the state of the country’s beauty business

A checkered market

South Korea

A combination of high household debt and weak exports made for a sluggish economy in South Korea in 2014. This year, the country’s GDP is projected

to grow by 3.4%, according to government bodies, and is expected to increase by around 3.7% between 2015 and 2019. In March, the government said that a recovery in domestic consumption had not yet taken root. However, within this unstable economic environment, the beauty market is

seeing decent growth. According to figures from Euromonitor International, South Korea’s beauty and personal-care market saw a sales increase of 6.3% in 2014 to $10.43bn. Prestige beauty sales rose by 5.6% to $4.56bn, while the mass business reported a more robust increase of 7% to $4.88bn. “Korea’s selective beauty market started to recover from the second half of 2014 and began to stabilize at the beginning of this year,” L’Oréal Korea Luxe division general manager Nicolas Debray tells BW Confidential.

The impact of Chinese tourismIn contrast to the morose local economy, the beauty market’s growth has been fueled by the increasing number of Asian tourists, mainly Chinese shoppers visiting the country. Industry sources say that Chinese shoppers currently account for around one third of all luxury sales in the country. Statistics from the Korea Tourism Organization show that the number of Chinese tourists visiting South Korea rose by 42% in 2014, and Chinese tourist numbers are forecast to increase by around 20% per year until 2020. Beauty is high on these visitors’ shopping

lists—a survey by the tourism board in 2013 reported that beauty topped the list as the product category that tourists most wanted to purchase while in the country. Tourists’ spend on beauty is predicted to double within the next five years.The market’s number-two beauty player, LG

Household & Healthcare (LG H&H), which says that the market was challenged last year due to continued slow consumption on the n n n

South Korea beauty sales* 2014, $bnCategory Sales 2014

$bn% change

2014 vs 2013Skincare 4.65 +6.0Make-up 1.50 +11.0Haircare 1.02 +4.4Men’s grooming 0.99 +8.2Fragrance 0.39 +6.8

Total prestige beauty & personal care

4.56 +5.6

Total mass beauty & personal care

4.88 +7.0

Total beauty & personal care

10.43 +6.3

Source: Euromonitor International *Retail sales price



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n n n domestic front, reports that demand from foreign shoppers, especially the Chinese, had a positive impact on its business in 2014. Sales from its Beautiful cosmetics division, for example, nearly tripled in Korean duty-free shops last year compared to 2013. Korean products are not just attractive due to what is seen as their innovative

formulas, but they are also popular with Asian tourists because they tend to be sold at lower prices than in these shoppers’ home markets, and there is less of a risk of buying counterfeit items in Korea than in China, for example. The popularity of Korean culture—its soap opera and K-pop music stars—continues to boost the renown of local products throughout Asia. Some industry watchers predict that Korea may soon replace Hong Kong as the Chinese tourist’s shopping destination of choice. Given the strength of local beauty brands—Amore Pacific and LG H&H are

thought to account for close to half of the market’s sales—foreign brands are said to be in an uphill battle in gaining market share. “The Korean market is a real test for foreign brands as these consumers are sophisticated and well-educated when it comes to beauty and they are always looking for new things,” says L’Oréal Korea’s Debray. “However, we’re confident that we can accelerate growth while the economy is improving.”

Focus on make-upPrestige beauty sales may be growing, but the segment is up against increased competition from a dynamic mass business. Prestige skincare, the market’s biggest category, is seeing the most pressure, say sources, despite its 6% growth last year. “In terms of prestige, skincare has been the most impacted over the past three years, while make-up has resisted better. However, we expect the total market to be positive this year,” comments Debray. He adds that over the past 12 months, the

make-up category has been particularly dynamic for designer brands, and within L’Oréal Luxe’s portfolio singled out the Yves Saint Laurent brand as seeing a strong performance. The trend for ‘cushion’ products is also contributing strongly to the make-up category’s growth. A spokesperson for number-one Korean beauty group Amore Pacific reports that the company’s main focus remains the cushion category. In 2014, Amore Pacific said it sold 50 million cushion products, and this year it is introducing two new major launches from its brands Sulwhasoo (Perfecting Cushion Brightening) and Mamonde (Cover Powder Cushion).Increased mobility among Korean

consumers is another growth driver in the prestige market. “The Korean consumer is now better traveled, more n n n

L’Oréal Korea Luxe division general manager Nicolas Debray

“In terms of prestige, skincare has been the most impacted over the last three years, while make-up has resisted better. However, we expect the total market to be positive this year

The rise of exports

Korean beauty companies are now exporting more than ever. Singapore-based strategic advisory firm Martin Roll Company ceo Martin Roll explains that this is because Korea continues to be a hotbed of innovation. “The majority of the beauty and personal-care innovations in Asia have come out of Korea, and this culture of innovation, which includes items such as vibrating foundation, massaging eye applicators and heat-enabled mascaras, drives the growth of prestige brands, which generally have a strong innovation-driven portfolio,” Roll says. The popularity of Korean pop culture also continues to attract consumers to local brands. Last year, for the first time, Korea exported more beauty products than it imported—government figures put cosmetics exports in value at $2bn in 2014, an increase of more than 50% on the previous year. Mainland China was the number-one importer of Korean brands, with imports to the country up 89% compared to 2013. The two countries are to sign a free-trade agreement this year, which would mean a further increase in exports to China in the coming years.



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n n n knowledgeable and more exposed to global brands. This translates into a greater interest in premium and high-quality products, both from domestic manufacturers and global brands,” Singapore-based strategic advisory firm Martin Roll Company ceo Martin Roll tells BW Confidential.

New growth driversIn terms of growth avenues of the future, Korean companies say they are looking to mine newer categories, such as the cosmeceuticals sub-segment, which was the reason behind LG H&H’s acquisition last year of Korean brand CNP Cosmetics. L’Oréal’s Debray believes that there are also untapped opportunities in the

make-up segment, as well as in beauty devices and the lifestyle fragrance, bodycare and haircare categories. Men’s grooming also continues to be a strong segment in Korea, showing the strongest growth out of all categories last year with sales up 8.2% over 2013, according to Euromonitor. Figures from Korean department-store retailer Lotte show that men now account for 27% of its shoppers, compared to around 22% five years ago. This increase in male shoppers is in contrast to the number of women who are

opting to buy online or via mobile phones rather than in the department store. Brands are responding to this trend with offers specifically designed for the channel. LG H&H’s Kachet brand is a 22-sku prestige men’s skincare line created specifically for department stores. The company said it aimed to increase its share of the prestige men’s skincare segment from 7% to 10% with the new line. “We introduced Kachet to secure our market position, as the men’s cosmetics market posts double-digit growth every year. We’re seeing growth in the number of consumers between the ages of 20 and 50 and increasing demand for high-end products, despite difficulties in the economy,” commented Kim Byeong-ryeol, director of LG H&H’s promotion team at the time of the launch. However, slower consumer spending due to the sluggish economy and a

dynamic mass retail offer means that consumers continue to trade down. “Every Korean and foreign brand has been facing challenges on the skincare market with the trading down to mass channels,” remarks L’Oréal’s Debray. Both brands’ standalone stores and multi-brand drugstores have been gaining share and growing their footprint in the market to the detriment of department stores, which is the top channel for prestige sales in Korea. LG H&H says it is seeking growth through the premiumization of its masstige offer.Younger consumers are forgoing department stores in favor of online and mobile

shopping, another growth driver for the beauty market. According to the Korean Ministry of Trade, online sales across all consumer-goods categories combined grew by more than 17% in 2014, while shopping via mobile phones increased by nearly 126%. Online cosmetics sales reported growth of more than 26% last year over 2013. Some 5.9% of cosmetics sales in 2014 were done online (compared to 5.5% in 2013), of which 7% were mobile transactions.Industry players predict that the battle between prestige and mass will continue

to be tough in Korea. For the next few years, the market’s performance will depend on whether the government’s economic stimulus plan bears fruit, as well as the influx of Chinese shoppers and what is hoped to be a vibrant product innovation pipeline. n

”Martin Roll Company ceo Martin Roll

“The Korean consumer is now better traveled, more knowledgeable and more exposed to global brands. This translates into a greater interest in premium and high-quality products, both from domestic manufacturers and global brands



The Milan show dedicated to artistic perfumery keeps on growing. This year the show had a new venue at The Mall, covering a bigger space of 5,000m2 (53,820ft2) and

housing a total of 165 brands. The show also saw the launch of a new section devoted to niche skincare brands, called Esxskin. For Esxence co-founder Silvio Levi, Esxence is now well known as a major international

event for niche fragrances, and the addition of Esxskin is intended to further stimulate the development of the niche business. “Some 50% of sales in a traditional perfumery come from skincare and niche retailers cannot ignore that,” he comments. Levi also remarked that there is still much potential for the expansion of the niche business. “In Italy, in 2014, 1.87% of the market’s €9.4bn beauty sales were done with niche brands. The potential is huge on a worldwide scale. Even in countries like Germany, where artistic perfumery accounts for about 1% of the market, in France where it accounts for 0.7%, and in the US, where it represents no more than 0.3%, the growth opportunities are interesting. Niche acts as the R&D for masstige and it is in the interest of the whole industry that it produces exceptional creations.” Exhibitors were on the whole satisfied with the show this year and said there was a

strong turnout of international buyers and distributors.

BW Confidential reports on what was seen and heard at the Esxence trade show, which took place in Milan, Italy from March 26-29

Niche takes center stage

Esxence

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Seen in showDesign duo Chad Murawczyk and Mindy Yang, founders of niche perfume gallery MIN New York showed Scent Stories, their first collection of 11 fragrances, which are intended to be olfactive expressions of emotions and memories, and which first launched in 2014. The scents include Dune Road, a green aquatic inspired by the salty ocean wind, and Moon Dust, a spicy mineral fragrance meant to evoke a lunar smell. Some 1,000 bottles of each fragrance will be produced every year and each edition is hand-signed and numbered. The 75ml EdP retails at $240. Scent Stories is sold at MIN New York, the Jovoy perfumery in Paris, Tsum in Moscow

and launched at Harrods and Liberty in London in April. “Each fragrance is a separate unique construction and we want retailers to be able to tell their story and inspire people to think differently about perfumes,” says Murawczyk. A Volume 2 with five fragrant chapters is set to come out next September.

Italian brand Unum presented its three scents at the show. The brand was created by artist Filippo Sorcinelli, who produces clerical vestments. Sorcinelli worked with perfumer Paolo Terenzi to create the fragrances, which are described as spiritual and mystical and have a Gothic inspiration. They are: Lavs, Opus 1144 and Rosa Nigra; each scent has a corresponding candle. The 100ml Extrait de Parfum retails at €175. Unum is sold in 15 perfumeries and concept stores in Italy, and in Japan and Korea. An additional four scents are being developed around the theme of music. n n n

Esxence Took place: Milan, March 26-29Exhibitors: 165Visitors: 6,490 visitors; 51% from abroad


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n n n Andrea Rubini, a young retailer who manages a perfumery in Verona, showcased his first perfume. Called Fundamental, the fragrance’s craftsmanship approach is the result of a collaboration between Rubini, IFF assistant perfumer Cristiano Canali, designer Francesca Gotti and blogger Ermano Picco. Fundamental will launch in June, and the 50ml EdP will retail at €135.

YS. Uzac, a brand founded by Swiss perfumer Vincent Micotti, introduced two new limited-edition fragrances at the show under the acronym BOM (Blend Of Marvels). “They are my personal vision of the ingredients that I love,” he explains. The fragrances are Incense (50ml extrait costing €185) with oriental and earthy notes and a floral scent called Jasmin (50ml extrait costing €240). The scents will roll out in May to 26 countries, including niche perfumeries in France, Italy, Germany, Switzerland, and department stores such as Harrods and Liberty in London and Tsum in Moscow. YS. Uzac was founded in 2011. The brand offers a collection of six fragrances and regularly launches limited editions.

Mendittorosa Odori d’Anima (Smells from the Soul), a brand that launched two years ago, showcased its seventh fragrance at the show. Called Sogno Reale, the scent is inspired by the sea and was developed with Paris studio Flair. A leather thread holding a brass mandala is tied around the glass bottle, which is topped by a yellow resin cap shaped like a sea urchin. Sogno Reale is rolling out from April to 100 pos worldwide, including Jovoy in Paris, Harvey Nichols in Dubai, Niche in Berlin, Gum in Moscow and Fenwick of Bond Street in London. The 100ml EdP retails at €225.

In the new Esxkin section, high-end French skincare brand Codage launched its Serum Collection, a set of seven facial serums that can be used separately or in combination with each other. Codage president and co-founder Julien Azencott explains: “We are focused on formulation and have our own, exclusive laboratory in Nice where we use the most innovative active principles to create products that offer ideal nutrition to the skin.” The Coffret Sérums Collection (seven 10ml serums) retails at €199.The brand, which has a small distribution in spas, department

stores and niche perfumeries in Europe, Australia and Asia, plans to expand by opening its own stores. The first Codage flagship will open in Paris in the Marais area in the coming months. Other openings will follow in Indonesia and in the US in 2016. A bodycare line is also part of the company’s plans. n



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Herboristl Opened: April 2015

l Location: Paris, Francel Special features:

Test bar to learn about Chinese ingredients; tea tastings and cultural workshops; spa with

two treatment rooms

China-based Shanghai Jahwa-owned beauty brand Herborist has opened its first European flagship store in Paris, France. The 100m2 (1,076ft2) three-

level boutique, which opened in the French capital’s Opéra district in April, aims to convey the brand’s vision of holistic beauty and is based on the same model as the company’s 1,400 stores in China.“This store is intended to be a showcase for the brand in Paris, and due to its location will attract not only local consumers, but also tourists, including Chinese tourists,” Shanghai Jahwa country manager France Lynn Wang told BW Confidential at the end of last year.The store’s predominantly white décor is punctuated by touches of green and features

wooden furniture. It is intended to convey the brand’s aesthetic codes and a mix of contemporary and Chinese design. The ground floor is devoted to skincare and one of the main features is the test bar,

an area where consumers can find out about product benefits and plants from Chinese pharmacopeia. Shoppers are also shown massages that they can do at home by themselves. The space sells the brand’s bestsellers, including its Tai Chi masks. The first floor puts the focus on Chinese culture. Here shoppers can learn about various

aspects of the country’s culture through workshops and special events. The space will also periodically host tea tastings. The store is also home to the Herbal Spa Herborist. The spa comprises two treatment

rooms and offers massages based on a combination of Western and traditional Chinese techniques. A 30-minute treatment costs €45, while a one-hour treatment is around €80. Herborist is currently sold in around 140 Sephora stores in France, and at the beginning

of this year began selling through the country’s Parashop parapharmacies. In Europe, it is also distributed in Germany, Italy and Spain. n

Chinese brand Herborist opens its first European flagship store in Paris

Herborist unveils Paris showcase



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s Herborist’s test bar allows consumers to find out about product benefits and plants from Chinese pharmacopeia

s The store has two treatment rooms (left) and will periodically host tea tastings (right)

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