Korres skincare

A few days before 2018 begins, and the new year’s beauty deals are already under way.

Greek brand Korres has received a cash infusion of 48.3 million euro from a Morgan Stanley-managed private equity fund and a Chinese cosmetics distributor, WWD has exclusively learned. The deal is expected to close in a few weeks.

The investment comes with a new ownership structure under a holding company, Nissos Holdings. North Haven Private Equity Asia IV and Profex Inc. will own 56 percent and 14 percent of Nissos, respectively, while Giorgos Korres and members of the Korres family will own the remaining 30 percent.

To claim their shares, North Haven and Profex bought out all shareholders outside the Korres family, including former Johnson & Johnson executive Pericles Stamatiades and Greek magnate Dimitris Daskalopoulos’ Damma Holdings.

As WWD reported last year, Korres had been one of many beauty brands weighing the possibility of a transaction. The new deal, said Korres founder and chairman Giorgios Korres, will allow the brand — which is growing in the U.S., Central and South America and Europe — to expand into Asia.

As part of the deal, Korres and Profex will enter into an exclusive license and supply agreement, allowing Profex to distribute Korres products in China and Hong Kong.

Korres believes that the company’s skin and body products in particular — the brand’s assortment also includes fragrance and color — will appeal to the trend-savvy Chinese consumer. Korres products boast natural ingredients, a back story rooted in a homeopathic Greek pharmacy and an apothecary-inspired package design.

“What I understand is that the consumer is growing quickly there, and they understand the [uniqueness] of different brands,” Korres said. He ticked off Korres’ peer brands that have seen success in the market. “The young Chinese girls know all the brands that exist. Look at brands like Kiehl’s, like Caudalie — how quickly they grow in China….Fresh is doing amazingly well.”

Industry sources say Korres does about 100 million euros in annual retail sales, which does not include its business in Central and South America done through a distribution partnership with Avon. That business has grown significantly since Avon and Korres entered their strategic partnership — jumping from about eight million euros in 2014 to a projected 35 million euros to 40 million euros this year, according to industry sources. “They respond to the authenticity of the brand,” said Korres of the Latin American consumer. Fragrance, skin and body care all sell well in that market.

In the U.S., launches such as the Wild Rose skin-care range, the Pure Greek Olive collection — an exclusive body-care line for HSN — and the Black Pine Super Eye Serum, a lifting and firming eye pen, have helped sales spike in the past year. Industry sources say the brand does about $15 million in the U.S., and Korres said he has plans to boost sales and brand awareness further by opening stand-alone retail in the region in 2019. The first Korres pharmacy store, which will be an experiential retail play, is set to open in Athens in early 2018.

“My dream is to continue to work — the intention is not to sell,” Korres said of the deal.

He said the brand will continue to focus on product launches in the next few years, with a strong product innovation pipeline set through 2021, as well as international expansion and strengthening its existing markets in Europe and the U.K. — including Germany, France, Norway and Spain.

Beauty deals, particularly for skin and hair-care brands, are expected to continue their momentum in 2018.

“You saw a lot more skin care and you started to see some hair-care [deals] in 2017,” Steve Davis, managing director at Intrepid Investors, told WWD in an interview earlier this month. “You’ll see some of that shift [continue into 2018],  there are some interesting color cosmetics brands out there, but the list is shorter.”