Charles de Montalivet, Shiseido

0:03Hello and welcome to the Monaco Weekly. For today's show I speak with Charles de Montalivet, UK Managing Director of Japanese beauty group Shiseido. We discuss the current landscape of the beauty and wellness market and Shiseido's plans for growth.

0:26Charles de Montalivet, welcome to Monaco Radio to talk about Shiseido, talk about beauty and so many other topics as well. But if you don't mind, Charles, let's talk about Shiseido as a company. is incredibly traditional. It's been 150 years that's been going on since it started in Japan. Yes. Hi, Fernando. First, thank you for having me. I'm delighted to be here today. Yes, indeed, actually. Shiseido is one of the oldest beauty companies in the world. And we just celebrated the 150 years old. Actually, very interestingly, it started as a pharmacy in Ginsa, Tokyo. and it was a pharmacy who was bringing, importing like some Western medicine, which at the time wasn't accessible to populations.

1:14So there was very much an intention at the time to really bring modernity to a quite traditional Japan, which we still have, but also the true belief in like curing people, helping people and improving the hygiene standards. And that is very rooted in the company. then they faced all kind of like ups and downs like from like earthquake twice where they had to relocate the office they had the second world war bombing um so it's a company that's overcome a lot and actually all that story of like restarting uh looking at the positive future but always with the idea of like helping people and now one of our core values people first is what has actually seduced me when I joined Shiseido five years ago now.

2:02I was going to ask you, what has been your experience with Shiseido? Were you always in this beauty market before you joined then? No, not always. I've been in the last probably 20 years in the beauty, but myself, I started more in innovation consulting. And my very first year I spent then between Paris and Brussels as managing a team of consultants for quite high-tech projects. And after that, I just wanted to change things. There was before I joined Beauty. I went by myself for one year around the world, and that's been a cornerstone in who I am today in my personality. And then I joined L 'Oreal.

2:42And Beauty, if I'm honest, actually was not something that I was partly interested in. I was a story of like a product. I liked the emotions that beauty procures. But also it was a story of people. I met some great people. They said like, wow, you're just back from one year around the world. You have a lot to tell. You're very passionate. And we would very much see you. So I started with L 'Oreal. I spent 15 years there. I worked in the UK. I worked in France. I headed twice the European region for different divisions. And five years ago, I decided to take a big bet, change culture, joined a Japanese group, very different mindset, very different organization, and come back to a country which I had left and I'd loved, which is UK and Ireland.

3:29So that's a project, was the project to really accelerate Shiseido in the UK, which is a big market. UK is the number fourth market worldwide in terms of cosmetics. Fourth already? That's impressive. US, China, Japan and UK. So a massive market, not an easy market because it's quite complex, very fragmented, lots of distributors, retailers of product, lots of brands. It's the landing platform of many American brands and groups. So tough competition. But at the same time, it's really a place where a lot happens. Lots of brands are being imported, created. There is a buzz. There is lots of like innovation, creativity in London, which makes it a very interesting market.

4:13Also, it's one of the most digital markets in the world, which I very much like as well. So when I was approached to say, we want to relaunch our UK business, we want to accelerate, we want to reinvest in that country, this was like a Japanese mindset, an Asian culture, which I didn't know at the time. I found this idea quite selective. It's interesting you mentioned how the UK is a very digital market because being Brazilian, that surprises me as well. I mean, it's so kind of developed in that sense. Is there any challenges being digital when you deal with beauty? Because for me, it's quite an interesting concept, but clearly it works here in the UK.

4:52Yeah, it's always been the case. I mean, the penetration of online is as big in the UK that it is in China, for example. And I can't tell you exactly why. I mean, we've looked into some options. And is it because we're in Ireland? Is it because there's a high tech here? And it's just a matter of fact. Amazon penetration, for example, is one of the highest compared to the other European market. So is it an advantage or not? I would say yes, in the sense that online sales is convenient. You give access to more people. You don't have to have a shop next to your home. Also now, and especially since COVID, online has been a way to educate more.

5:32I mean, there's a lot you can find there, which we see that our consumers are very savvy. They know a lot about the product, the ingredients, about safety. So it's great. But also it's important to say like British like shopping and they like the high street. And so the like of department store, the like of chains, they're very much attached to that. So it's about like 60 % high street and 40 % online for the market. But we are much more online than the market. And Charles, I'm curious as well. But we're talking here about, as you said, of course, the traditional brand that we all know because it's an iconic brand.

6:11But there's so many brands within the group. And I would like to know more about this because there are some incredibly newer brands as well that's coming out, which is super exciting. You don't need to mention maybe every single one of them because I know it's a large group. But can you give us an idea of what different companies, what are you trying to do when you acquire them? What do they bring to the brand? Yeah, no, you're right. We are the number fifth group worldwide. So it's true the market's kind of dominated by some big, large groups which have many brands. I mean, actually, often consumers don't know what brand belong to them.

6:46Overall, we have like several tens of brands in Japan. In the UK, we have soon 12 brands because one is joining us and another one actually in 26. And we've been growing that a lot. We've been acquiring five new brands in the last two years. So the way it's organized, it's usually like fragrance. Fragrance is half of the market. That's impressive. 50 %? Yeah, yeah. It's always been big and it's a very resilient category. And then makeup and skincare are more or less even spread in 25 and 25. For us, the balance is a bit different. We're still very strong in makeup. One of our brands, NARS, is really strong.

7:24It's number four brand in the UK. So we're a bit overweight makeup. Fragrance is a big opportunity for us. It's only 25 % of our business. And skincare is what the Japanese are great at doing, you know, like the brand Shiseido, brand Kledopo, but also we bought a brand called Drank Elephant, which is doing really well. And we have others. So the logic, our logic in terms of acquisition is first to grow, start our own brand. So we have a brand like Oulé, which we just created here in Europe because we believe there's a gap in the market. It's about like a natural, but also a nature tech skincare with like vertical farming.

8:02So we grow plants in labs with no soil, reusing water. So it's highly sustainable. We can only grow what we want. We don't have to waste any plant and we don't need any pesticides. So that's typically a gap we saw in the market. There's also some brands where we see some new trends coming, Like we've bought some brands around ingestible or like beauty electronics or like beauty devices. We've bought two brands who have like one as a LED mask called Dr. Dennis Cross, which we bring next year. Another one is effective in China. So when we see trends coming, when we want to acquire technology, when we see a gap in the market, that's when we will go and look for the right brand.

8:45And of course, it has the philosophy of the brand, the match with Chiseido, P &L of that brand matter a lot as well. Let's talk about fragrance. Tell me about some of your brands. There's Max Mara. I actually didn't know they did fragrance, but that's very exciting because it's a brand, again, an excellent brand. So it's a very hot news. So congratulations. You picked up that. Actually, we just announced that we are taking the license for Max Mara fragrances. We're planning a new first project for 26. You know, Max Marais is like a super famous, high luxury Italian brand. And often fragrance and luxury go well together.

9:25First, I think through fragrances, like in luxury, through fabrics, you can express a lot of emotions. You can express a lot of connection with the brand. It's a smell, but also it's a part of a community. When you buy a fragrance, you're already part of the Max Marais community. And therefore, you're part of the brand. So it's also an accessible way to be part of a brand. So many of the luxury brands have fragrances. So Max Mara had made fragrances in the past, but not recently. And they do believe that they can do better at a higher level. And that's where we come to the party. And Charles, I think you did mention this, that when you deal with beauty and fragrance as well, there is something emotional to it.

10:09because even before I came to talk to you, I brought my Shiseido oil blotting paper, which is honestly, I've been buying for years. There is a connection like with the buyer because I think people get used to, they buy the same fragrance or the same products. There's a sense of loyalty as well. How do you see dealing with those customers? You know, I mean, you're touching probably the main reason why I love this industry because we're really touching to people's hearts and minds And why? Because we're talking about people's confidence. When you've found the right foundation, when you found the right skincare that's the right for your skin, that is working on you, when you find the fragrance that people tell you, wow, you smell incredible today, you're very afraid of moving away from that.

10:57And sometimes we see desperate customers when we discontinue a product, where we change some formulas. they're like, where? No, I mean, you can't do that to me. I've been wearing this for 20 years. Yes, you're very right. There is a very high emotional connection to our products and fragrances in particular. But also fragrances are very much representing either who you want to be or who you are at the moment. So without being too intellectual, because I think we're talking a lot about archetypes and the fragrance world, but it's a status object for many. It's an object of like projection of yourself.

11:33Do I want to be that like super fit guy on the ad? Is it people and me and myself, like a man crossing the desert? Or is it like am I in the mood of seduction tonight? Or am I in like a chill at home and am I using different fragrances then? So we're very much, yeah, linking what we wear to what's in our mind or in our heart that day. Absolutely. And how do you see the market? Is it a resilient market? I know you're probably talking here more about the UK as well. Do you see the beauty market with good eyes for the next two years? I don't know. How much ahead do you want to look at? The beauty market overall in Europe, I mean, is very dynamic.

12:17It's around plus 15%, probably around plus 10, 11 % in the UK. So, I mean, still very buoyant in the current context. I think it's a mix of several things. First, there are new brands that are coming. Social media and some brands which are hot on TikTok or on social media has also got like a momentum that didn't exist before. There's definitely a factor that is just like linked to social media. The second thing is probably in tough times like there are, there's what we call a lipstick index. The lipstick index is a true measure that when the times are tough, people actually stick to the little luxury and they're ready to maybe cut on that extra meal or restaurant or cinema.

13:05But changing your foundation, changing your fragrance is almost the things that give you that confidence and help you go through the tough times. The beauty market's always been very resilient. And that's why I only see it growing. I think as we're talking about people wanting to feel good, look good, live good, the beauty market will always be better, offer more. and I don't see that slowing down at all. And the way those products are promoted is always changing as well, right? Especially talking about aging products, right? There's a change with the wording, right? It's not about like to look young and sexy.

13:42I mean, as well, but I think there's a change in the language to sell those products, right? Absolutely. I mean, the aging phenomenon is super interesting, actually. First, it's a very serious topic, global aging in the world. I mean, you can see that globally the demographics are aging in most developed countries, which also means that we have to change also our look on it. We used to talk about anti-aging before. We very much talk about pro-aging. We talk about embracing positive aging. And actually, I've been doing quite a lot of research on that and projects internally on this. And it's very exciting to see that actually our approach at Shiseido is unique.

14:27We very much see aging as a conjunction of like skin, body and mind. And it's a lot of like very serious analysis that shows us that actually if your mind is not great, if you're not in good mental, actually your skin is aging faster. the same way that the relationship between your body and skin, like what you're eating, how much sport you're doing, like all the hormones is actually having a direct effect. I mean, all of us, we've been waking up with like tired skin if we went to bed too late or like consumed alcohol and everything. So that triangle between skin, body and mind is really special to us.

15:07And we have established an algorithm with nearly 2 ,000 connections between those three. And we really want to embrace aging as this positive around beauty and wellness. Charles, by the way, I have to tell our listeners, you have very good skin. So you're selling Shiseido very well here. And my final question here is, I know you're from France and now you're working here in the UK. Are there big differences in both markets? I have a feeling there is, but what do you think? Or they're more similar than I imagine? No, they are very different. They are very different markets. First, the distribution.

15:43Here, there is the pyramid of retailers. You start from the very top with high-end department stores, but then you have a specialty store with chains with special ideas in skincare, or then you have your chains, your drugstore, and then a lot of online pure players. You don't have that complexity in France. In France, you have two, three very powerful chains, but like department stores, are smaller the business is concentrated in the hands of just a few players but also it's the brands i mean like you know uh beauties there's a lot of french brands in beauty when you look at the top charts you'll see many french names uh so it's part of the one of the strong industries of they're even stronger in france where it's their home market while here in the uk you'll find them but but american brands are very important as well so us as a japanese we we are a challenger in this market and we definitely see a big opportunity to come because we're number 8 today our ambition is to be top 5 in the next 3 years, for us we see this market as a massive opportunity

16:52Thank you very much Charles de Montalivre UK Managing Director for Shiseido The show was edited by Sarah Nico and I am Fernando Augusto Pacheco

17:06Thank you.