LVMH strengthens position in cosmetics and perfumes market through acquisitions

29-Mar-2011 - Last updated on 30-Mar-2011 at 09:38 GMT

France-based luxury goods company LVMH has made several acquisitions in 2011 that will enhance its cosmetics and perfumes business segment, which generated sales of €3.1bn in 2010, an increase of 9 per cent.

In 2010, LVMH’s total sales crossed the €20bn mark for the first time, coming in at €20.3bn, a 19 per cent increase on 2009. The company recorded a 29 per cent increase in profit from recurring operations, with a figure of €4.3bn.

In March 2011, LVMH announced an agreement with the Italian company Bulgari, where, as part of a share transfer process, LVMH will become the controlling shareholder in the family-owned company and Bulgari will become the second-largest family shareholder of the LVMH Group.

In addition to watches and jewelry Bulgari commercializes skin care and fragrances, sales of which reached €245.5m in full-year 2010.

LVMH taps into fast-growing skin care segment

According to figures from Euromonitor, the global fragrance market is forecasted to record absolute growth of $5.2bn between 2009-14, and skin care is set to be the fastest growing sector in the beauty and personal care market, with absolute growth of $12bn forecasted between 2009-14.

Further tapping into the strong growth potential of skin care, LVMH announced the acquisition a 70 per cent stake in the UK naturals brand Nude Skincare in February 2011, a transaction which followed the acquisition of the US botanical brand Ole Henriksen earlier the same month.

Leveraging power of Sephora network

LVMH will undoubtedly look to its Sephora distribution channel to strengthen the retail presence of these two brands and capitalize on their growth potential, as Ole Henriksen is currently sold at Sephora outlets across 22 countries and Nude Skincare is stocked in Sephora in the US.

In July 2010, LVMH announced the entry of its Sephora business into Brazil with the acquisition of a 70 per cent controlling stake in the online beauty retailer Sack’s.

Sack’s is said to be a major online cosmetics retailer in Brazil, and its website, which carries over 270 brands, attracts four million unique visitors per month according to LVMH.

Brazil is set to be the second-fastest growing market for cosmetics and personal care (behind China) between 2009-14, with Euromonitor predicting that absolute growth of $8bn will take place in the country over this period.

An LVMH spokesperson told CosmeticsDesign-Europe.com that there was nothing further to report regarding LVMH’s strategy at this stage.