Sephora acquires stake in Russian perfumery chain

By Katie Bird

- Last updated on GMT

Related tags Lvmh

Beauty retailer Sephora has acquired a stake in a Russian perfumery chain as part of its plans for expansion in the region.

The retailer, which is part of the France-based luxury group LVMH Moët Hennessey Louis Vuitton, has bought a 45 per cent stake in the chain ‘Ile de Beauté’.

Increased presence in the region

Furthermore, Sephora has stated the agreement allows it the option to become a majority stakeholder in Ile de Beauté over time.

By the end of 2008 the Russian chain will have approximately 100 stores spread across the country, giving Sephora significantly increased coverage in the region.

Sephora already has a franchise in Russia with Alkor however this will terminate at the end of 2010, the company explained.

Russian market of growing importance

Russia is becoming an increasingly important market for the international players, particularly at a time when sales growth in the more developed regions can be relatively flat.

Indeed, according to Euromonitor, the retail value of the Russian cosmetics and toiletries market increased 106.3 per cent at current prices between 2002 and 2007 to $11.6bn (RUB269.5bn).

This translates into annual growth of 15.6 per cent.

Recent investors into the region include finished goods giant L’Oreal, ingredients supplier Lipotec and packaging provider Alcan.

Back in July Spain-based Lipotec struck a deal with NovaCom to distribute its products in the country, citing increased demand for cosmetics as one of the reasons behind the move.

Earlier in the year, L’Oreal unveiled plans to invest 45m in a factory near Kaluga in the West of the country, manufacturing hair care products for the region.

Alcan packaging’s foray into the Russian market includes the construction of a 7,000m2 factory near Moscow that will specialize in tubes for the cosmetics market.

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