- Several blockbuster M&As in beauty industry have been announced recently.
- Acquiring companies are all global top-tier conglomerates, and acquired companies are mostly relatively young ones.
- In terms of product price, the acquired companies are players in prestige segment.
Kylie Cosmetics x Coty
- Founder of Kylie cosmetics Kylie Jenner has been active in communicating directly with consumers from the very beginning and applying their opinions on new products. Like a typical Gen Z would, Kylie Jenner actively promotes her products on all social media platforms such as Instagram, Twitter, and YouTube, and frequently shows videos of her testing colored products on her wrist or daily skincare/makeup routines.
- What started as a lip product-centered brand(Kylie lipkit) turned into a full color cosmetics brand, with SKUs ranging from eyeshadow, blusher, highlighter, etc.
- Now Kylie cosmetics has enough loyal customers to make its new launched products go sold out in a few hours.
- Meanwhile, Coty is a beauty conglomerate that recorded $8.7 billion of sales in 2019(June 30). However, looking into their portfolio, most brands are centered on perfumes and hair care, with just a few cosmetics brands that consumers are familiar with such as Covergirl and Bourjois.
- We interpret this acquisition by Coty as a signal to enhance its presence in cosmetics category.
Dr. Jart x Estee Lauder
- Dr. Jart is the first Asian brands that Estee Lauder have acquired. Starting from BB cream to Ceramidin cream to Cica lineup, the brand has built a prominent identity over the years as a professional skincare brand.
- Back in 2015 Estee Lauder acquired 33.3% of stake in Dr. Jart, and after maintaining strategic relationship for the following four years, has decided to take over the remaining 66.7%.
- Estee Lauder is the world’s largest cosmetics company with revenue of $14.9 billion in 2019. The portfolio consists mainly of luxury brands, and its recent acquisition of perfume brands and online startup beauty brands have led the company to strengthen the skincare category base.
- Out of all brands under Estee Lauder, the ones with strength in skincare are Clinique, Darphin, Estee Lauder, La Mer, Lab Series, and Origins. Dr. Jart’s products concept seems to add value to the company without hindering any one of the existing brands.
Drunk Elephant x Shiseido
- Drunk Elephant is a premium skincare brand that is less well-known in Asia. The brand doesn’t use environmentally harmful ingredients or artificial fragrances in any of its products, and this has led consumers to repurchase the brand over time.
- The brand focuses on balanced, natural skin, and shows bare skin of different individuals on SNS as part of their marketing scheme. This spreads the belief that not having a full makeup is still okay.
- Shiseido is a strong player in prestige segment, and has been actively acquiring overseas color cosmetics brands such as Laura Mercier and NARS. The acquisition of Drunk Elephant at high price can be interpreted as its endeavor to have balanced portfolio in skincare as well.
- The acquired companies 1) are all relatively young brands that is growing at a fast pace, 2) have prestige price range, 3) set clear brand identity, 4) have not expanded geographically yet.
- Drunk Elephant, having its new mother company in Japan, can be expected to become better available to Chinese consumers in the near future.