L'Oreal Invests a D2C Brand Again
- Chaileedo Press
- May 22, 2022
- 4 min read
On May 20, 2022, Beijing Time, L’Oreal’s corporate venture capital fund BOLD announced a minority investment in Japanese beauty startup SPARTY, Inc., which marks the first venture capital investment by L’Oréal in Japan. In fact, beauty giant group are paying more attention in Asian Market.
On May 20, 2022, Beijing Time, beauty giant L’Oreal released that its corporate venture capital fund BOLD (Business Opportunities for L’Oréal Development) announced a minority investment in Japanese beauty startup SPARTY, Inc. This investment in SPARTY marks the first venture capital investment by L’Oréal in Japan.
Based in Tokyo, SPARTY has successfully created a D2C business model grounded in personalized beauty, with brands such as Medulla in haircare and Hotaru in skincare. This unique business model enables consumers in Japan to enjoy both a personalized product and a personalized consumer experience.
In addition to D2C product development, Spatry has built platforms that leverage personalized data and provide brand development support for companies pursuing the same ideals.
It provide one-stop brand development supported by leveraging its expertise in D2C product development and personalization platforms.
About this investment, Yosuke MIYAMA, Founder and CEO of SPARTY Inc. Stated that “With SPARTY’s proven track record in personalization and L’Oréal’s leadership in the worldwide beauty market, we are confident that we will be able to embark on the next chapter of our growth journey and scale our business even further, both in Japan and overseas, to the fullest potential,”
In its financial report in Q1 of 2022, L’Oreal specially stated that in North Asia, L’Oréal Luxe achieved strong market-share gains, thanks to the success of premium skincare and a spectacular performance in fragrance, an emerging category in the Zone. The rebound of makeup and the breakthrough in premium haircare contributed to the performance of the Consumer Products Division. Active Cosmetics recorded strong growth underpinned by its scientific and medical roots. The Professional Products Division grew strongly, both in salons and online. It showed that Asia has great potential.
It is worth noting that previously L'Oreal set up its first investment company in China - Shanghai Meicifang Investment Co., Ltd, which is backed by BOLD, the venture capital fund involved in this investment.
L’Oreal said: 25 years of development in China has proven that China is not only a key growth engine for the Group, but its unique technology and innovation development and digital marketing ecosystem has also become one of the inspirational curators to lead the Group's future innovation. By bringing our open innovation investment to China, we demonstrate our commitment to the Chinese market and our determination to further enhance and empower the Chinese innovation ecosystem and accelerate open innovation and results translation in China." The establishment of this separate China investment company not only reaffirms the importance of the Chinese market in L'Oréal's global layout, but also demonstrates L'Oréal's confidence in the Chinese market.
L'Oréal North Asia President and CEO of China said that China's unique technological innovation development and digital marketing ecology provide L'Oréal with inspiration for innovation, and that the L'Oréal Group attaches great importance to this project and will explore more potential startups, incubate forward-looking innovations and promote their commercial implementation.
L'Oréal Group Chief Financial Officer has said that BOLD is an important part of L'Oréal Group's beauty technology transformation, dedicated to investing in technology innovation companies with high growth potential in marketing, digital, research and development, data, supply chain, packaging and other areas.
In addition, L’Oreal’s corporate venture capital fund BOLD has invested 7 companies including biotech, date management and other industries. One of them is a marketer of beauty brands named Functionalab Group. It was founded in 2009 and is a leading and innovative developer and marketer of beauty brands focused on the professional aesthetic market with its Dermapure, Project Skin MD and Functionalab brands, and on the dermo-cosmetic market with its Jouviance brand.
Asia, especially China, has become the limelight focused on by international beauty groups.
At the beginning of this year, Japan’s Shiseido Group released its December 2021 and full-year financial results. The report shows that Shiseido's sales for 2021 were $8.5 billion, up 12.4% year-on-year, and operating profit was $373.8 million, an increase of 203% year-on-year. Significantly exceeding the performance growth plan.
In fiscal 2021, Shiseido's sales in China will be $2.14 billion, up 16.5% year-on-year. It accounted for 26.6% of total sales in the global business, second only to the Japanese market at 26.7%.
Meanwhile, Shiseido's growth in China was also mentioned in the earnings report: The China business was affected by some retail closures and lower consumer traffic due to unprecedented heavy rainfall in the third quarter and the outbreak of the COVID-19 variant in major metropolitan areas. However, e-commerce remained strong at 40 percent of total sales due to strategic investments, driven by well above-market sales growth from Double 11, China's largest e-commerce event. In addition, continued strategic investments in premium brands drove market share growth in the premium category, particularly for CPB and NARS.
Moreover, in 2021, Shiseido China announced a strategic partnership with Boyu Capital, a leading alternative asset management company in China, to launch Ziyue Fund, the first international beauty group-specific investment fund in mainland China, in 2021. In the future, it will focus on investment opportunities in innovative brands and upstream and downstream related technology service companies in frontier markets such as beauty and health.
Shiseido China CEO said, "With the establishment of Ziyue Fund, Shiseido has taken a solid step on the road of deep involvement in local cutting-edge innovation - internally, we are committed to promoting the high-quality development of China's beauty and health industry, boosting domestic demand and promoting consumer upgrading. Externally, Shiseido will leverage its advantageous position as the second global headquarters of Shiseido China to promote Chinese emerging enterprises to enter a larger international stage. This strategic initiative is not only a positive response to China's 'double cycle' development strategy, but also a new milestone for Shiseido's 40th anniversary in China, which will lay a solid foundation for accelerated development in the next 40 years."
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