Beauty Still Favored by Capital with 105 Investments This Year
- Chaileedo Press
- Dec 12, 2022
- 5 min read
Abstract: According to CHAILEEDO data, there were 85 investments and financing in the Chinese beauty industry from January to November this year, with a single financing of over 100 million yuan (about $14.3 million) accounting for 25.9%. The number of investments and financing in China and internationally in beauty industry is 105 in total.
In the international market, Estee Lauder acquired Tom Ford, L'Oreal invested in biotechnology companies. Recently, Unilever's first investment in Southeast Asia was ESQA, an independent vegan beauty brand in Indonesia.
We can see that capital and international giants are still increasing the development of beauty. So, during the winter of beauty this year, what kind of beauty companies are favored by capital? What are the heated trends that capital is chasing today?
Keywords: technology beauty, clean beauty, synthetic biology
According to CHAILEEDO statistics, from January to November this year, there were 85 investment and financing events in Chinese beauty industry, down 32% year-on-year. Two more companies received financing in December. As of the press, there are 87 financing in the Chinese beauty industry this year, covering beauty and personal care brands, ingredients R&D enterprises, OEM/ODM enterprises, beauty technology enterprises, cross-border e-commerce, brand management and other categories.
Moreover, international beauty giants L'Oreal and Estee Lauder have also participated in a number of investments or acquisitions this year. After de-emphasis, the number of Chinese and international beauty investments and financing is 105.
Excluding brand management and cross-border e-commerce companies, CHAILEEDO collated 10 cosmetic-related companies that have disclosed financing amounts of more than 100 million yuan (about $14.3 million) so far this year. HARMAY and WOW COLOUR, two beauty collection stores, were invested more than 500 million yuan (about $71.7 million). It is worth noting that HARMAY has completed four rounds of financing, and the two rounds of financing officially announced this year amounted to $200 million, which also made it the top Chinese cosmetic enterprise financing this year.
Of course, investing in brands is still the focus. Several brands have even received multiple rounds of financing. For example, after receiving a 10-million-yuan investment from ZCapital in January, DOCUMENTS received another minority investment from L'Oreal in September. The synthetic biology brand GsynBioT also received two tens-of-millions financing. The technology skincare brand YOUNGMAY received three rounds of investment.
CHAILEEDO collected 40 financing for beauty brand this year. It was found that the categories are diverse, covering makeup personal care, fragrance, beauty device, oral beauty, etc. Compared to the previous two years of makeup fever, makeup brands received less attention, clean, organic or technology skincare has become the focus this year.
In addition, the upstream ingredients companies become the favorite. Synthetic biology has become the most hit. Compared to clean beauty which emphasizes plant extraction and clean ingredients, synthetic biology has more distinctive technology and R&D attributes and also has a higher industry threshold. Companies that are mature and have certain R&D results are more concerned with capital.
In general, with independent R&D system and technical advantages will be the main theme of the beauty industry. This type of enterprise is also relatively easier to obtain capital attention.
What do the international beauty giants love to invest in?
For the Chinese market, the international giants are still focusing on, L'Oreal, Shiseido, Unilever, BASF, etc. are involved in the investment of some Chinese enterprises.
In the international market, the beauty giants also did not stop the pace of conquering the market. Through the investment trends of 11 well-known international beauty companies since this year, CHAILEEDO found that the acquired/invested companies cover a number of sectors and categories such as ingredients, skincare, personal care, color cosmetics and even beauty technology, synthetic biology, etc. Almost every month, there are investments and mergers and acquisitions. Among them, L'Oreal, Shiseido, Unilever's investment is the most frequent, especially the L'Oreal Group. From September to November, L’Oreal has officially announced three financing/acquisition.
In September, L'Oréal announced the acquisition of Skinbetter Science, a high-end skincare brand and another investment in DOCUMENTS, a high-end fragrance brand in China. DOCUMENTS was founded in 2021, which is the first investment made by L'Oréal China Ventures since its establishment in May.
L'Oréal is not the only one with a focus on the high-end. Last month, Estee Lauder spent $2.3 billion to finally acquire Tom Ford, a high-end ready-to-wear and beauty brand. The leading luxury goods group Kering also join the competition of acquiring Tom Ford. Some insiders speculate it is an important step for Estee Lauder to enter the fashion industry
Byredo was also involved in this trend of acquiring. After several rounds of battles, high-end perfume group Puig was bought by the top luxury fragrance brand Byredo to extend its brand matrix in May this year. According to international media reports, L'Oreal Group had also planned to acquire the brand. This shows that high-end brands have always been a must-have for head beauty groups.
Brand awareness is one aspect. The long-term development of a brand ultimately depends on its core technology. The layout of upstream enterprises is also one of the important reasons why the giants can continue to develop.
For this reason, the first investment of Shiseido China's first investment fund, Ziyue Fund, chose the recombinant collagen ingredients company Trautec, which is also an important step for Shiseido to deploy new biomaterials for beauty and explore functional skincare products in advance. Recently, L'Oréal also announced an investment in biotech company Microphyt to further its sustainability goals.
New strategy to explore the future
From the current investment and financing, expansion is one aspect, while strategic contraction, brand integration and the construction of incubation centers are another focus of beauty companies.
Recently, P&G revealed its latest growth strategy at its investor day event, saying the company has no plans to rely on acquisitions to drive growth. In fact, P&G once relied on a major acquisition spree to boost its revenue, with its biggest acquisition being the $57 billion Gillette announced in 2005. In recent years, however, P&G has trimmed its brands from more than 170 to 65. It has acquired only the probiotic skincare brand TULA this year.
In addition, Unilever is also in the process of slimming down its brands. According to previous international media reports, Unilever has started to evaluate its beauty and personal care brands, and some underperforming brands may be sold.
Not only P&G and Unilever, even Shiseido, which has officially announced three financing/acquisitions this year, has been seeking brand optimization and internal restructuring in recent years. Just this month, Shiseido announced a number of internal organizational and personnel changes. It reorganizes six old divisions into seven new ones and appoints a new leadership team for each of them, moving toward its medium- to long-term strategy "WIN 2023 and Beyond". The strategy plans to achieve sales of approximately 1 trillion yen and an operating profit margin of 15% by 2023 as a Skin Beauty Company.
Regardless of the ups and downs of the market, opportunities are always emerging. Companies should nurture quality companies while optimizing internal structures. Reviewing the situation and making the change at the right time is the way to grow for the beauty giants.
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