Deep Dive
Shownotes Transcript
This BBC podcast is supported by ads outside the UK. Save up to 70% at Mattress Warehouse today and sleep better tonight, knowing you got the best possible price. So where would you look to find the perfect mattress? In a little mattress store or Mattress Warehouse? Visit mattresswarehouse.com.
Hey, it's Ryan Seacrest for Jewel Osco. This spring, stock up on all your personal care favorites and earn four times points. Now through June 17, shop in-store or online for deals on all your favorite personal care items like Pantene Shampoo, Native Body Spray Deodorant, Secret Body Spray, Venus Razors, Always Pads Head and Shoulder Shampoo, and Native Deodorant and earn four times points. Then use those points for discounts on groceries or fuel. You don't want to miss these deals. Offer ends June 17th.
Promotions may vary. Restrictions apply. Visit JewelOsco.com for more details.
Hello and welcome to World Business Report from the BBC World Service. I'm David Harper and in just a second we'll be speaking to the CEO of Elf Beauty to find out why they're paying a billion dollars for Hayley Bieber's cosmetics company. We're also hearing about a BBC investigation that's discovered hundreds of millions of dollars is still being spent on Russian oil and gas by the same countries that have invoked sanctions and people are still pirating live TV, live sport in particular, on an industrial scale. Can it ever be stopped?
First, though, the cosmetics industry is, in every sense, about image. With so many products available in a multi-billion dollar market, it's as much about who you're buying from as it is the product that you're buying. Case in point, the beauty brand founded by the model and businesswoman Hailey Bieber. RØDE was only founded in 2022 and it only has 10 products, but it's being sold to Elf Beauty for a billion dollars. Well, we're joined by the chair and CEO of Elf, Tarang Amin Nao,
thank you very much for joining us on World Business Report. What is it that you've seen in Road that has given it so much value?
well thank you for having me what we see in road is another like-minded disruptor elf beauty was founded 21 years ago selling cosmetics over the internet for one dollar everyone thought we're crazy you couldn't sell cosmetics over the internet pre-iphone and certainly couldn't make money at a dollar but we proved them wrong and that spirit of disruption has been with us ever since uh we're a very strong company we just reported our 25th consecutive quarter
of net sales and market share gains, we're the top selling cosmetics brand in the US, rapidly growing internationally. And what we saw in road was an incredible disruptor in Hailey Bieber. She took her brand from basically zero to $212 million in less than three years, direct to consumer only,
with just 10 products. And so it's in a phenomenal business that we see and plenty of runway for growth. In fact, Sephora, the world's largest global retailer,
is going to be expanding the brand in all US and Canadian doors this fall, followed by the UK by the end of the year. So it's not just us, but a great deal of number of people admire what Hayley and her team have been able to create. And we're looking forward to supporting her vision and being able to expand the business globally. Would there have been so much value in the company, though, without Hayley Bieber's very public involvement?
Well, Haley Bieber, this is her baby. She's highly involved in the brand. And what I tell you, it's well beyond her celebrity status. She's one of the most thoughtful founders I've ever met, has incredible instincts, a beautiful aesthetic. And it's one of the reasons why the brand really resonates with consumers. You know, e.l.f. Beauty is the number one brand amongst Gen Z, I think three and a half times higher than the next highest brand. We're also the most purchased by Gen Alpha and Millennials.
So always on the lookout for brands that particularly resonate with consumers. And that resonance with Rode is so deep. In fact, when Rode, their latest pop-up event in Los Angeles, they had consumers camping out overnight, waiting in line 14 hours, not just for product, but to buy into the entire lifestyle.
lifestyle of the brand. And that's something that really appeals to us. You don't find brands that break through that way. And I give a lot of credit to Hayley and the talented team that she's created to be able to create that type of consumer fervor. Let me just ask you, because I have to be honest, I'm not the world's biggest expert on cosmetics. What is it that makes a company like Elf and indeed Rode so popular with that generation? What is unique about your products and the way you market them?
Well, I think first and foremost, it's our value proposition. We make the best of beauty accessible to every eye, lip, and face.
Second is in our category, in particular, powerhouse innovation, this unique ability of taking prestige quality and introducing it at prices that are accessible for consumers. But probably most important is our disruptive marketing engine. For both brands, our unique ability to engage and entertain consumers wherever they want to be and how they want to engage with the brand. And that is really what
top of mind from it. How do you do that though? How do you engage with them?
Well, we engage with them with where they live. Elf was one of the first beauty brands on TikTok. We noticed there were a lot of teens on TikTok. They lived there. They had a lot of music, a lot of dance. We commissioned our own song, did our first engagement. I think it had 2 billion views. Our latest hashtag challenge on TikTok had 15 billion views. We're on Twitch, the gaming platform, because a number of our consumers...
our gamers or watch others play video games so we have our own channel on female empowerment we also have the number one branded experience on roadblocks our our experience is at 16 million plays over
98% positive rating as we go through. So we're living with where they're living and we're engaging with the way they want to be engaged and we're entertaining them. We do all sorts of unexpected collaborations and connections. And so I think it's how you engage with consumers. And most importantly,
Giving them what they want. We're known for our ability to take prestige quality and being able to bring it at an extraordinary value. And our community will tell us. Just finally, Hayley Bieber, we should say, is staying on as creative director. So presumably is going to be a part of how this operates going forward. How are you going to make this money back? Presumably with only 10 products, you're looking to expand that.
Well, I mean, she's been incredibly thoughtful. And, you know, I think her line is she wants one...
of everything, but the best of it. And so she's been really careful in terms of how she's expanded her line. And for us, it's our ability to help her expand distribution, invest more in marketing, help build out the team, and of course, innovation, which is our strength, being able to continue to give consumers the products that they absolutely can't live without. I just want to ask you quickly as well, because we've been talking, it seems almost incessantly about tariffs in the US. And you've
You manufacture in a few countries in the Far East. Is that something that you're going to have to look to diversify if this level of uncertainty continues? Well, we have a balanced plan. So we announced last week to our community we're taking our prices up a dollar. We really take very seriously our responsibility of having superior consumer value. And we're transparent with our community that, hey, we're facing tariffs, we're facing other cost pressures.
We're going to absorb a lot of those. We're going to have to take prices up. In addition, we've been optimizing the supply chain, actually with less to do with tariffs and more of we have a rapidly growing global business in order to fulfill that global consumer demand. We've been optimizing in various countries. We're manufactured in China, Thailand, the U.S. and Europe.
And so we're going to continue that optimization. And finally, our business diversification. International was our fastest growing part of our business last year, up 60%. We continue to bring the brand in other countries. And I think that ties back to the consumer engagement. We have pent up demand well before we get into a country. And we usually, we launch, Elf usually launches in the top three position in any country we go into. And so that we'll continue to follow that. But of course, like every single company,
We're looking forward to long-term resolution. The uncertainty really is a tough thing.
Let me ask you, first of all, though, it's easy for people to dismiss this as just another celebrity marketing exercise, another product with a name attached to it. But there is a strong company that Hayley Bieber's built here with successful products. People are going back to these products.
Absolutely. And this has been something where we've seen Rode continue to grow and expand its market share since its inception three years ago. And I think what's been really exciting about Rode is that they've not just built products, they've built a world around it that consumers have increasingly invested in. And that's so rare to see today. Yeah.
This is by no means the only big beauty company to have been started and later sold by a big celebrity name. There are quite a few. And I think one of the most talked about in our office earlier was Rihanna.
Yes, of course. There have been a roster of celebrity beauty brands, but I think what we're seeing here with Hailey Bieber and Rode is that she's able to kind of step away and really show that they are a case study in how to build a modern beauty brand from a celebrity standpoint. And they essentially have raised the bar on what a celebrity-led brand means today. Having someone that is so...
is able to bring such a cultural cachet, but is also able to lean in, D2C be a force as a community as well, that that has raised the bar as well in terms of what she's been able to bring to the table. So celebrity beauty brands are definitely a force
a roster or a sector of beauty that will continue to grow. But I think this road acquisition by Elf has really set a new standard for the industry. We've talked a bit, and this is what's grabbed the headlines, about the billion dollar fee for this. But given the cost of marketing, of advertising that companies spend, and also when you look at the following somebody like Hayley Bieber has online, there's an awful amount of value in that. Absolutely.
Oh, of course, of course. But I think what we, with the acquisition and what we've seen with the deal is that it's a strong, it's setting a strong signal for the industry, especially from an M&A perspective. And what we've then seen is that Rode has been able to build through marketing, through product innovation, that that investment is worthwhile because at the end of the day, three years in, there's been a billion dollar acquisition. Yeah.
Natisha Scott, Beauty Editor at Vogue Business. Thank you very much for joining us here on World Business Report.
Well, let's turn to our guest today, Lucinda Guthrie, head of merger markets. I'm going to steer us away from cosmetics for just a moment because in the last hour, we've learned that President Trump has accused China of totally violating its trade agreement with the United States. A deal to lower tariffs between the world's two biggest economies was reached in Geneva earlier this month. And this news comes a day after here on World Business Report, we were talking about a U.S. court agreement
ruling that his tariffs on China could stay in place for now. How have markets in the US reacted to this? Well, probably unsurprisingly, we have seen some modest falls today. You've got the major indices, the S&P 500 and the Nasdaq, both trading down on the back of basically
Basically, the uncertainty, because you have both, as you say, Trump's huge truth social posting plus the stay, saying that the tariffs can stay in place. So people really are just trying to digest the impact, what's going to come next. The Dow is up slightly, partly based on the fact that consumer price –
Data was slightly better than expected. Consumer prices only rose 2.1% in April, which is
I mean, arguably, the full impact of tariffs hasn't come through to that number yet. So that's probably why the Dow is up slightly right now. So it is a mixed bag. And yes, people are really trying to digest what the impact is going to be and what they may see next. I feel we're going to be continually asking that question as we hear more and more on this as things change going forward. Let's look at India for a moment because we've seen new GDP figures there.
Yes, the Indian economy grew by 7.4%. It is the slowest for the full year, for four years. But
What we're seeing here is you've got, obviously, it's one of the fastest growing economies in the world. There was strong farm activity. But despite manufacturing starting to move away from China to India, you
And that still is in the balance, obviously, with different trade tariffs looming over. The other things to watch for, the positives there is obviously the government's been pushing a made in India theme. And then also there's been a big infrastructure push, which has also helped those numbers. Of course, India by no means immune from those tariffs, particularly with things like steel production being hit. Let's just also talk about some figures that we've seen from Germany today.
Yeah, really interesting. And the inflation eased in May. It should be good for consumer confidence. As we all know, Germans are typically more cautious on spending and better savers than in other markets. So there is a sense that there's a hope.
that those inflation numbers could boost spending, which is obviously key because Germany's been in a very... Germany's economy's been in quite a difficult place for the past three years. However,
And slightly less positively, the labour market had a challenging May. Unemployment rose. So it is a mixed bag whether or not there will actually be a push there. One to watch carefully. Lucinda Guthrie from Merger Markets, thank you very much for being with us.
Sometimes life calls for a better mattress, and sometimes life hands you a better place to find one. Announcing the grand opening of Mattress Warehouse, with the largest selection of top brands at the lowest prices. That's the warehouse advantage.
Plus, you get a one-year low-price guarantee and 0% interest financing. So where would you look to find the perfect mattress? In a little mattress store or at Mattress Warehouse? Shop our grand opening sale going on now. Visit mattresswarehouse.com.
Offer ends June 17th.
Promotions may vary. Restrictions apply. Visit Jewelosco.com for more details. This is World Business Report from the BBC World Service. Now, for years now, Russia has been the subject of a range of trade sanctions as a result of the war in Ukraine. At the G7 meeting this afternoon, we agreed to work in unity to maximise the economic price that Putin will pay for his aggression. And this must include...
ending Europe's collective dependence on Russian oil and gas. Former British Prime Minister Boris Johnson there speaking in Parliament in 2022 as sanctions were announced. BBC News has analysed data which shows that despite these restrictions, Russia is continuing to receive hundreds of billions of dollars for oil exports, a significant proportion of this coming from NATO member countries.
Well, what I've found out is that politicians often talk the talk, but sometimes it's money that does the talking. And if politicians talk the talk,
face the prospect of re-election, basically keeping the lights on, they would be looking for cheap options of supplying oil and gas to their countries. So that's why, over the course of the full-scale invasion of Ukraine by Russia...
Countries calling themselves Ukraine's allies, they have consistently been paying Russia more for its oil and gas than they've been giving Ukraine in aid. I'll give you one example.
European member states, last year, they paid Russia 22 billion euros for fossil fuels. That's 4 billion euros more than they gave Ukraine in aid. And the same picture we see among NATO member states, among countries that have actually imposed sanctions on Russia.
Overall, we're talking about tens of billions of euros more than Russia received from Ukraine's own allies than Ukraine received in aid from them. So to put it bluntly, there aren't enough alternative sources for nations to get the fossil fuel supplies they need without having to spend money with Russia. Absolutely. The sources are there.
But they are either more expensive or they require a certain amount of political will to sign contracts and basically redirect all the flows of oil and gas. And that's why…
Kaya Callas, the EU's foreign policy chief, she was speaking to the BBC earlier and she admitted that the alliance has not yet imposed strong or effective sanctions on Russian oil and gas.
We haven't had the strongest sanctions. I mean, if you think about where their money for fueling this war comes from, it comes from oil and gas. We haven't put strong sanctions on that because we haven't had an agreement on that. There are some fears among some member states on what would further escalate the war and what would stop it. So are things heading in the right direction? Will this trade eventually reduce or end?
They are heading in the direction of Western countries reducing, significantly reducing oil and gas imports from Russia.
The EU, for example, just recently it passed what they call a roadmap towards completely ending Russian gas imports by the end of 2027. In the meantime, though, the volumes of Russian gas exported to EU member states increased.
are growing. In fact, more than half of Russian LNG, liquefied natural gas, is exported to EU member states. So what can be done? I was talking to Vladimir Milov, who is a former Russian deputy energy minister. Now he's a staunch opponent of Vladimir Putin.
And he's saying things like the oil price cap imposed by the G7 group of nations. That's not working. Instead of talking about new sanctions, fresh sanctions, the West should be actually talking about reinforcing the sanctions that it has already imposed.
Vitaly Shevchenko there. Now, some new research has shed light on the sheer scale and scope of live TV piracy. A report from Enders Analysis quotes figures suggesting that more than 17 million individuals in the EU and UK accessed illicit IPTV streams in 2022, with live sport a particularly large part of that. European sports rights holders say it could be costing more than $28 billion in lost revenue.
The report also suggests that big tech companies like Amazon, Google and Microsoft could be doing more to help tackle the problem. Barney Francis is the executive vice president of studios at the sports production company IMG and was previously managing director at the UK sports broadcaster Sky. And I asked him if the scale of the problem had surprised him.
Not at all. It's been a problem for many, many, many years. I guess what Claire and her team at Enders, their report suggests, of course, is that the technology companies need to play a bigger part. I think everybody does. What was a bit of a nudge and a wink in a pub 15 years ago from one sports fan to another, do you realise you can illicitly access the content you want through this thing called a fire stick? Now it's becoming sort of a cultural norm.
So I worry greatly that enough isn't being done, but it's going to take a collective effort from the entire industry because this is the biggest threat to its finances that we've ever known. And the firesticks that are mentioned are the Amazon devices, the small devices that plug into an HDMI port in the back of a TV and enable it to access streamed content.
There is criticism of the tech companies here and the digital rights management surround this. But the people who do this, who make this available, are known to be very adaptable. Won't there always be someone who will find a way around the protection? I think we've always called it a game of whack-a-mole. The problem is now so big we can just look across the water to France and what's happening with Ligue 1 and DAZN there.
which is the result of rampant piracy there, that it's just escalating all the time. So it is organised crime, as Claire's report suggests, organised crime that's often behind these things. So I understand why her conclusion is that the big tech companies around the world can be the only ones that can come up with the right sort of protection that's needed going forward. I've got to put to you the argument that a lot of people who use these streams would say that if
it didn't cost so much to legally subscribe to satellite or cable or streamed services, then more people would sign up for it, piracy wouldn't be such a problem, and companies that provide this wouldn't have to spend so much money on policing it. Okay, yeah, of course. You're then into the realms of the unvirtuous circle. What we do at IMG is we service a lot of sports federations and leagues around the world who, of course, want to generate the maximum amount of revenues out of their media rights.
And then when you've got broadcasters and legitimate streamers who are making those huge investments, they're trying to battle piracy and in a heavy churn industry where piracy only adds to that. It means that the commitments that a broadcaster has made to a federation and elite going forward, how on earth can you possibly monetize that if people are walking away and pirating? So consequently, prices have to go up to fill the void left by churned customers. So
I call it an unvirtuous circle. Actually, it's a deeply worrying spiral. The only outcome, I think, medium to long term, unless something is done, you are seeing in certain markets declining values in sports rights. And what I always say is the consequence of that will be less investment into the players, athletes, performers on the field of play, which means for the fans, of course, who are often those that do piracy.
But if they do attend their games, they're going to see less quality players on the pitch because the club won't be able to afford them because of the declining revenues that flows from media. We've touched on it already, but in this streaming age, do clubs and leagues need broadcasters anymore? Can they not just do it themselves, direct to the fans?
So, of course, you can go direct. And that's what we're hearing might well happen in France. But if you take the Premier League in the UK, for example, they've got guaranteed media revenues for the next four years, both domestic and international, to many billions of pounds. That is split between the 20 clubs. So each club now in the Premier League for next season knows exactly what its media revenue is going to be, pretty much.
So they can plan and plot their way ahead. They can make plays in the transfer market this summer, knowing that they can afford it. If you're going direct to consumer, unless you get people on a different sort of subscription through directly to the Premier League,
then you're never going to quite know what's coming. So that's why the big leagues still like the guarantee of revenue over a term, whether it be three, four, five or 10 years. You go direct to the consumer and you start to put into jeopardy guarantees of your revenue.
That's Barney Francis, Executive Vice President of Studios at IMG. And we should say that we have asked Amazon, Google and Microsoft if they'd like to respond to the points raised in that report. Microsoft declined to comment. Amazon did send us this statement saying, "...we remain vigilant in our efforts to combat piracy and protect customers from the risks associated with pirated content, which includes prohibiting apps that infringe upon the rights of third parties in our app store and warning customers of the risks associated with installing or using apps from unknown sources."
Now, the Nigerian government is cracking down on spraying money at parties in a bid to defend its currency. This week, a high-profile influencer was arrested for doing just that and is facing a large fine or potentially six months in jail as a result. Anu Adeyeye, a West Africa correspondent at the Financial Times, has been looking into this. Can I just start by asking, what exactly is money spraying and is this a bit of a thing in Nigeria?
Yeah, thank you for having me. It is indeed a thing in Nigeria. Money spraying happens at parties where people, you know, launch money into the air, typically at weddings or other functions. And the idea is to have a right laugh. You know, it's supposed to be celebratory, you know, and the money eventually goes to the people being sprayed. So if you're a couple at a wedding and people spray money on you at the wedding, that money basically counts as a gift.
that you've been given. So why is the government so unhappy about it?
Well, to take the government's view of this, the idea is that it contributes to what they called, quote, Naira abuse, that it leads to mutilation of the currency. And then that in a way, it also degrades the value of the currency. And the government want to, you know, engender respect for the currency that is being used in the country. That's the government's point of view on this. We've heard that people are finding other ways to do this, to sort of get round the law. Yeah.
Indeed, I mean, it wouldn't be nice if people didn't find, you know, smart ways to get around stuff like this. So we are seeing people basically create some sort of monopoly type money where at events they give, they hand out these things to you that you can buy, you know, then that real money goes to the host of the party and then you can spray the fake money.
so to say, currency. It's basically like monopoly money. There are also people who, you know, have the means and are spraying dollars at parties, but the anti-corruption agency in Nigeria also says they have jurisdiction over US dollars and are also trying to clamp down on that. So it's basically a game of whack-a-mole at this point.
the second game of whack-a-mole we've had in this programme. In fact, Anu Adeyeye from Nigeria, thank you very much for speaking to us on World Business Report. A little reminder that there is more online, bbc.com slash news, including the latest on tariff announcements from the US. And I'm sure we'll bring you more on that in our programme later on here on World Business Report. But from me, David Harper, and all the team here, thank you very much for joining us.
Hey, it's Ryan Seacrest for Jewel Osco. Now through June 17th, shop in-store or online for your favorite personal care items and save $5 when you spend $15 or more. Stock up on items like Dove Body Wash, Degree Motion Sense Deodorant, Trace-A-May Hairspray, Dove Shampoo, Dove Bar Soap, Dove Men's Body and Face Wash, and Dollar Shave Club Blades.
and save $5 when you spend $15 or more. Hurry in before these deals are gone. Offer ends June 17th. Promotions may vary. Restrictions apply. Visit JewelOscar.com for more details.