The President of LVMH Bernard Arnault
The French group Moet Hennessy Louis Vuitton the businessman Bernard Arnault has consolidated 100% of the network of shops of cosmetics “Ile de Beaute”, completely after buying a stake of the founder of the Russian company Igor Denisov in their joint venture
The French group Moet Hennessy Louis Vuitton (LVMH) in November 2016 consolidated 100% of the Russian network of stores of cosmetics “Ile de Beaute”, follows from the data of SPARK and data of the Cyprus registry, however, it has become known only now. On November 8 last year, 100% of the Cyprus company Galonta Holdings Limited, which owns a network “Ile de Beaute”, belongs to SAS Sephora (part of LVMH). On the recent transition network completely under the control of the French group also knows the source of RBC familiar with the situation.
Information about the transaction, RBC was confirmed by the head of Department of advertising and PR “Ile de Beaute” Svetlana Kryukova. In her words, “begins a new Chapter in the history of the company” and together with the LVMH network “will continue its development on the Russian market, creating trends and innovations in the world of beauty.” The scheme and the details of the transaction she says. The founder of a network Igor Denisov refused to comment. The press service of the headquarters of LVMH to a request to RBC at the time of publication has not responded.
The French in the “United Europe”
Consolidation of shares “Ile de Beauté” — “the logical conclusion of the purchase process, which started in 2008,” says Svetlana Kryukova.
Partnership LVMH and the Russian perfumery-cosmetic network began in 2008. Then the founders of the holding “United Europe” (at the time owned stores), Igor Denisov and Aleksey Gribkov created with the French company joint venture for the development of the retail network, where LVMH received 45% and the option to further increase its stake. The deal at that time could pass upon evaluation of the entire network, consisting of 103 shops (now 140. — RBC), in $167-250 million Interest in a Russian company in the LVMH explained the high potential of the market of perfumery and cosmetics in Russia. In addition, consistent with the international strategy of perfumery and cosmetics “daughter” of the Sephora SAS to expand in emerging markets. In 2011, the Sephora SAS exercised an option and increased its stake to 65% through the share Gribkova. Until November 8, 2016, the remaining 35% in Galonta Holdings Limited owned only Denisov, follows from the data of the Cypriot registry.
An additional part of the deal in 2008 between the partners was the transfer of the company Denisov and Gribkova franchise on the development of the Sephora stores. Prior to that, from 2003, the project in Russia developed the main competitor of “Ile de Beaute” holding “Alkor and Co”, operator of the largest specialized perfumery-cosmetic retail, “L’etoile”. As told sources of the newspaper “Kommersant”, in LVMH were dissatisfied with the policy of his partner towards the brand — “Alkor and Co” opened a Sephora on the principle of “shop in shop”, not individual points. In the 33 countries is about 2.3 thousand individual stores Sephora format full of multi-brand supermarket. But erupted in 2008-2009, the crisis has changed the plans Denisov and his partner, LVMH continued cooperation with “Alkor and Co.” until the end of 2010. In 2011 the right to development still went to the founders of the “United Europe”, but Denisov and Gribkova and failed to create a separate network under the guise of Sephora. In the end, cosmetics Sephora, as it was “L’etoile”, sold in the store “Ile de Beaute”.
What is known is the main seller of luxury goods
LVMH is the largest retailer of luxury products in the world. The group includes 70 brands, the main business areas of the company — production of alcohol, clothing, accessories, cosmetics, perfumes, watches and jewelry. Among the brands LVMH Moet, Hennesy, Christian Dior, Givenchy, Marc Jacobs, Guerlain, Tag Heuer, Bulgari. The LVMH profit in the segment of retail sales decreased the most in the first half of 2016 by another 5%, to €410 million, according to the report of the company. Revenues of the retail division grew by 4%, to €5.4 bn Total sales of the company grew by 4% to €26.3 billion, for the first nine months of 2016, says the report. The main owner of the company is its President Bernard Arnault and his family. Forbes magazine, in 2016 put Arno on the 14th place in the list of richest people in the world ($34 billion).
The market is preening
“Ile de Beaute” is the third largest specialized retailer of cosmetics and perfumes in revenue after “L’etoile” and “Rive Gauche” in Russia, a research of the marketing Agency RBC “Retail chain selling cosmetics and perfumes in 2016.” The revenue of “Ile de Beaute” in 2015 amounted to 17.9 billion rubles., net profit of 413 million rubles, follows from the data of SPARK. The turnover of “L’etoile” in 2015 amounted to 72.5 billion rubles, “Rive Gauche” — 32 billion rubles., estimated by the Agency.
But since LVMH first trade of the Russian perfumery-cosmetic market has changed dramatically. If in 2011, as estimated by Euromonitor International, the three major networks — “Ile de Beaute”, “Rive Gauche” and “L’etoile” — collectively controlled more than 63% of the market, the active development of shopping formats drogerie (in the range of not only cosmetics, but also, for example, household chemicals) changed the structure of consumption. The largest network in this format — “Magnit Kosmetik” (one of the formats JSC “Magnet”). According to the company, at the end of 2016 the network United 3,107 thousand of shops, as the number of buyers over the past year has grown by 49.04% to 207,93 million people. With the General increase of the revenues of all store formats which develops “Magnet” (in addition to the drogerie is “convenience stores”, hypermarkets, “Magnit Family”), by 12.81% cosmetic retail turnover grew much faster — 60,63%, up to 64,449 billion.
Russian cosmetics market (2.2% of global), ranked fourth in the world after Germany, France and the UK, says a Board member of the Russian perfumery-cosmetic Association Anna Dycheva-Smirnov. The attractiveness of the local market is due to demographics: one-third of the population — women aged 20-60 years, the most active consumers of cosmetics, says Dycheva-Smirnov. Their average annual spending on cosmetics is about $192, for personal hygiene and beauty spend up to 30% of salary.
The market of cosmetics and perfumes in Russia promising and one of the fastest growing among all retail segments, confirms Deloitte partner Egor Metelkin. Foreign investor to make transactions in this market, especially now because of the crisis, the asset is much cheaper.
Was the founder of the “Ile de Beaute”
“United Europe” — a diversified holding company. Since the early 1990-ies, long before the appearance in 2001 of the first store “Ile de Beaute”, Denisov and his partner Alexey Gribkov and Valery Volodin — actively promoted the distribution of perfumes and cosmetics. Now, according to own data of group, OAO “Edinaya Evropa-holding” provides distribution, logistics and consulting services in the market of perfumery and cosmetics. Since 1999, the holding company is also developing its own brand of cosmetics and shops I liked. LLC “Gamma Cosmetics”, founded in 2000, owns the plant in Podolsk, engaged in contract manufacturing of cosmetics.
According to SPARK, 90% of “United Europe” now belongs to Denisov, and another 2.5% from minority shareholders — Eugene Gribov, Oleg Dorodnov, Marina Krivenko and Igor Mozhaisk, which became part of shareholders in January 2016.