Abstract: Watsons' first-half China revenue declined 17.6%. But it remained one of the few offline retailers to keep profitable amid the challenges of the epidemic lockdowns. On August 4, Watsons' parent company, CK Hutchison Holdings Limited, released its financial results for the first half of 2022. As a result of the epidemic in the first half of the year, Watsons' revenue in China declined to $1.23 billion, down 17% year-on-year. Its sales in stores decreased 17.6% year on year. However, CHAILEEDO learned that Watsons remained profitable overall. It recorded an EBITDA of $79.4 million making it one of the few retailers that did not lose money in the first half of the year. Since 2018, China's new beauty collection stores have taken off with innovative brands such as The Colorist, KKV, and Harmay emerging one after another. It has impacted traditional beauty collection stores like Watsons. According to a report released by the Forward Research Institute in 2022, the market size of new beauty collection stores in China was $209 million in 2020 accounting for 2.9% of the overall market size of beauty collection stores. It is expected that by 2026, the market size of new beauty collection stores will reach $6.6 billion. Beauty collection stores were growing by leaps and bounds between 2018 and 2021. Take KKV as an example, KK Group, KKV's parent company, released a financial report showing a CAGR of 246.2% in GMV from 2018-2020. The main brand KKV's GMV in 2019, 2020 and the first half of 2021 was $14.4 million, $171 million and $203 million, respectively. The figure showed an obvious growth. In comparison, Watsons' same-store sales growth in China was -1.6% in 2018. With a small rebound in 2019, it achieved 2% year-over-year. However, it slips 21.8% by 2020 during the epidemic. However, in the first half of 2022, there were more serious COVID-19 cases in some provinces and cities in China causing many beauty companies' logistics supply chains to be affected by this inability to deliver in a timely manner. It affected customers' purchase demand and their willingness to consume beauty products. National Bureau of Statistics data shows that in the first half of this year, China's overall total retail sales of cosmetics consumption declined for the first time in nearly 10 years. Offline retail stores have also been affected by the pandemic and weak customer spending. In April 2022, a number of stores of HAYDON, a collection store brand of high-end beauty retail, located in Hangzhou, Shanghai and Harbin, announced temporary store closures. Sephora, a global high-end beauty retailer, also mentioned in its earnings report that offline store traffic decreased in the first quarter of 2022 due to hygiene restrictions in China. As the sluggishness of offline retail channels, traditional beauty collection stores such as Watsons and others also need to seek transformation in order to survive the downturn in the offline retail market. In 2018, Watsons accelerated its digital transformation and subsequently pioneered Online+Offline retailing. It used digital technology to gain better insight into users' consumption preferences. In addition, Watsons has also entered the live streaming platform in recent years to explore the way for live streaming. In March, Watson announced its financial results for the year ended December 31, 2021, with global sales of $22.1 billion in 2021, up 9% year-on-year. Its health and beauty products segment accounted for 84% of the retail segment's revenue in 2021. In China, Watsons' full-year revenue for health and beauty products reached $2.9 billion, up 14% year on year. It is the largest increase in the past five years. The report also mentioned that Watson expanded its customer base by integrating offline stores with its online platform. This O+O retail model was an important factor in its return to sales growth. Overall, Watsons' evolution over the past few years has been based on digital transformation. Its O+O retail model provided consumers with a better and more efficient shopping experience and this model will become a new direction for beauty companies to explore.

Abstract: On August 4, the financial data of Beiersdorf in the first half of 2022 showed sales of $ 4.569 billion, organic growth of 10.5%, and pre-tax profit of $ 717 million, up by30.5% year on year. Its brands NIVEA and La Prairie achieved organic growth of 11.2% and 1.8% respectively. According to Beiersdorf's 2020 and 2021 financial report, the group registered a 5.7 % decline in sales of 2020 and an organic sales of 2021 rising by 9.7 %. In the first half of 2022, its performance picked up again, reaching sales of $ 4.569 billion with an organic growth of 10.5 % and pre-tax profit of $ 717 million, up by 30.5 % year on year. Sales in the second quarter were $ 2.234 billion compared to the first quarter of 2022, staying roughly unchanged from the first quarter. Sales in Europe were $ 2.082 billion with an organic growth of 7.5%; organic growth in the Americas reached a maximum of 20%, with sales of $ 1.09 billion. Sales in Asia, Africa and Australia were $ 7.554 billion, an organic increase of 8.9%. In terms of brand performance, Nivea's sales grew organically by 11.2%, the sunscreen, lip, face and body care categories in skin care products achieved higher sales, and the deodorant and bath gel sales in personal care products performed well. Eucerin and Aquaphor, Derma's cosmeceutical brands, continued to maintain good sales performance, achieving strong organic growth of 26.6%, while the brand portfolio also enjoys the highest online share. Eucerin has maintained double-digit growth since 2020, according to the financial report. It is worth mentioning that the brand is back on the right track in the Chinese market, especially with 618 shopping festival, which saw sales growth of 94% in the second quarter. By contrast, luxury brand La Prairie registered an organic growth of just 1.8 % in the first half and even a 7.4 % decline in the second quarter, which is mainly due to severe sales decline in its core market China undermined by the COVID-19 lockdown in the second quarter.However, with the easing of restrictions in China since June, La Prairie's growth begun to pick up while in North America, it has maintained a double-digit growth. The recently acquired Chantecaille contributed $ 37 million in sales from February to June. For the first half of the group's performance, Vincent Warnery, Beiersdorf's chief executive, said: "2022 has been a successful year for us so far. Amid such an increasingly grim environment, Beiersdorf has maintained strong growth momentum from the beginning of the year to the second quarter, achieving double-digit sales growth and significantly improving our profitability." Europe remained an important core market for the consumer sector by region, with sales of $ 1.659 billion, an organic growth of 8.1 %; Sales in Asia, Africa and Australia rose by 8.9 % to $ 1.094 billion. North America posted strong performance growth of 23.8 % with sales of $ 941 million, which thanks mainly to double-digit growth in Coopertone's sunscreen products and contributions from Eucerin and Aquaphor. While the macro environment remains uncertain and future performance forecasts will be severely constrained, Beiersdorf said it has confidence in achieving higher-than-market sales growth in the single digit range in the consumer sector throughout fiscal 2022.

Abstract: Leading global flavors and fragrances company Firmenich reported revenues of $4.9 billion for the fiscal year 2022, with China up 9.4% year on year. Firmenich, a leading global flavors and fragrances company, announced its results for the year ended June 30, 2022. revenues for fiscal 2022 amounted to $4.9 billion, an increase of 11.1% year-on-year. Despite higher global prices for raw materials, logistics and energy, the Group reported record revenues and adjusted EBITDA, which increased by 10.9% to $942 million, according to Firmenich. Commenting on this, Patrick Firmenich, Chairman of Firmenich, said that Firmenich's strong performance in FY2022 was the result of the Group's long-term commitment to strengthening customer service and innovation. It reflected its product strengths in the aroma and flavor segments. CHAILEEDO found from the earnings report that the fragrance and flavors ingredients business revenue grew by 11.3%, mainly thanks to the industry-leading growth rate and market share growth of the Fine Fragrances business, with a 32.5% increase in performance. Its strong growth even partially offset cost inflation due to rising costs of raw materials, logistics and other expenses. In addition, strong customer demand for fragrance ingredient products also contributed to the segment's better performance with a growth of 18%. The Consumer Fragrance business, however, achieved only low single-digit growth against a backdrop of overall industry weakness. Geographically, strong growth was also achieved across all regions. In particular, China is the second largest market in the world for Firmenich, with revenues of $317 million, up 9.4% year-on-year. During the 2021 fiscal year, Firmenich is also deepening its ties with Chinese companies. In January 2022, Firmenich entered into a strategic partnership with HARMAY, a leading new retail brand in China. The partnership with HARMAY aims to further develop the premium fragrance category in China, leveraging their respective capabilities to support new fragrance brands, concepts, experiences, and new business models, according to Firmenich. In May of the same year, Firmenich announced a strategic partnership agreement with Scent Realm, a pioneer in digital scent technology. Paul Andersson, President of Firmenich China, said the partnership will strengthen Firmenich's leadership in digital innovation in the fragrance and flavor industry and develop engaging new experiences for consumers in China. From 2013 to 2019, the top 10 global flavor and fragrance companies accounted for about 75% of total global sales, showing a very high market concentration, especially the four giants of Givaudan, Firmenich, an International Flavors and Fragrances(IFF) and Symrise. The four giants' combined market share has remained above 50% in recent years. And, according to IAL Consultants, the global flavor and fragrance market size could reach $30 billion in 2020, with a CAGR of 5.1% in 2020. The Asian market accounted for the highest market share of flavors and fragrances and is already a 10 billion market. The overall global demand for flavors and fragrances and the global economic development trend are highly consistent, that is, the growth of the center of gravity to Asia and Africa and other developing countries to focus on the region. It is worth noting that on May 31, DSM and Firmenich, two global raw material giants, announced an agreement to merge their businesses and jointly establish a new company DSM -Firmenich, which is expected to be completed in the first half of 2023. After the merger of the two companies, the world's number one flavor giant may change. The combination of DSM and Firmenich's businesses creates four business segments: Fragrance & Beauty, Food & Beverage, Health & Nutrition & Care, and Animal Nutrition & Health. By 2026, the combination is expected to achieve EBITDA of approximately $356.3 million per year. Patrick Firmenich, Chairman of Firmenich, said:“Our shared purpose and common values, combined with our highly complementary capabilities gives me confidence we can accelerate our growth further through innovation and new creations.” China is the second largest market for Firmenich worldwide. In the context of the rapid growth of the fragrance industry in China, technology-leading and fast-growing fragrance companies like Firmenich may grow stronger through mergers and acquisitions to optimize the allocation of resources and improve the overall market competitiveness of the industry. DSM-Firmenich will be a global company where anyone who has a desire to make a positive impact in the world should aspire to work," said Firmenich. The merger will bring together two purpose-led, growing companies with shared values and an engaging culture that puts people first.

Abstract: Is there any chance for national brands around the layout of "Pro-Xylane"? Recently, CHAILEEDO noticed that L'Oréal Paris has officially launched "20% Concentrated Pro-Xylane PRO" cream, and Yue Sai also announced that it will soon launch the "21% Pro-Xylane Solution" gilt cream. So far, the concentration of Pro-Xylane products in L'Oréal's popular brands and mid-range brands has been increased to more than 20%. "The battle of Pro-Xylane may usher in the endgame." A number of industry professionals pointed out that such a high concentration of Pro-Xylane used to be more often found in high-end brands such as HR and SkinCeuticals. Now L'Oréal's popular and mid-range brands are improving the concentration of Pro-Xylane, enough to show the current market focus on the competition of Pro-Xylane, which will certainly put pressure on domestic brands. From the second half of 2019, because of the rumor that L'Oréal's Pro-Xylane patent has expired, many Chinese ingredient dealers and national brands have entered the Pro-Xylane market. According to the data from Beauty Evolution, the filing of goods containing Pro-Xylane ingredients began to surge from June 2019, and in 2019-2020, well-known companies such as Nox Bellcow, Bloomage Biotech and Shandong Freda used Pro-Xylane ingredients or Pro-Xylane-like ingredients when producing products for local brands. The data further shows that up to now, as many as 16,158 pieces of valid goods with "Pro-Xylane" in the name of the record. Among the national brands, Mignon Maimai and Mixx are both known for their domestic Pro-Xylane creams. It is not difficult to see that since the second half of 2019, local beauty companies have set off a wave of Pro-Xylane craze. Perhaps stemming from the gradual emergence of various products claiming high concentrations of Pro-Xylane in the Chinese market, L'Oréal Group has gradually downgraded Pro-Xylane, which used to be used only in high-end brands, to popular brands L'Oréal Paris and mid-range brand Yue Sai in recent years, and the added concentration of Pro-Xylane in its products has become higher and higher. CHAILEEDO learned that the current L'Oréal 20 cream is still in the pre-sale stage, the activity price of 519 yuan to buy 50ml to send 52.5ml, Tmall L'Oréal official flagship store booking volume has exceeded 20,000 + pieces. The net rumor is that the pricing of the 50g Yue Sai Gilt Face Cream may be between 600 - 700 yuan($88.71-$103.49). And the current price of 50g of domestic Pro-Xylane face cream is basically between 500 yuan - 600 yuan($73.92-$88.71). Only by this comparison, the price advantage of domestic Pro-Xylane products is no longer obvious. CHAILEEDO also noted that currently L'Oréal 20 cream has 5200+ notes on Xiaohongshu(RED), and Yue Sai Gilt Face Cream also has 1000+ notes, which shows that the attention of the product is quite high. A senior industry analyst believes that "in many ways, it will cause a descending blow to domestic Pro-Xylane beauty products, and the battle of Pro-Xylane may usher in the endgame." At present, most of the main domestic Pro-Xylane products are new brands, and the monthly sales of most products in Tmall flagship stores are not more than ten thousand. Although Pro-Xylane is a popular ingredient, and the application of domestic Pro-Xylane has been close to three years, there is still no well-known domestic Pro-Xylane brand. Yang Yang, general manager of Shanghai Yankai Biotechnology Co., Ltd. said that Pro-Xylane is one of L'Oréal's business cards, and to some extent has been highly bound to L'Oréal, while most of the domestic Pro-Xylane are not long established e-commerce brands, compared to consumers also recognize L'Oréal's Pro-Xylane products. Leshan Liyuan Technology Co., Ltd. is a more famous domestic Pro-Xylane ingredient supplier in the industry. The company's chief research and development officer Chen Fengzheng told CHAILEEDO that domestic consumers buy L'Oréal products mainly based on the identification of the L'Oréal brand, but there is not much understanding of Pro-Xylane. After the domestic market education about Pro-Xylane in the past two years, consumers' awareness and recognition of Pro-Xylane have gradually increased, and the market of domestic Pro-Xylane ingredients and Pro-Xylane products may usher in new opportunities.

Abstract: The well-known Japanese fashion designer Issey Miyake died of cancer, whose eponymous perfume had won the best packaging award for women's perfume. According to several media reports, the famous Japanese fashion designer Issey Miyake died on August 5 at the age of 84. The cause of death was hepatocellular carcinoma, a type of liver cancer, according to a brief release Tuesday from the Miyake Design Studio and the Issey Miyake Group. To public information, in 1938, Issey Miyake was born in Hiroshima City, Japan. After graduating from high school, he moved to Tokyo and trained as a graphic designer and graduated from the Tama University of Fine Arts in Tokyo. After graduating from university, he went to Paris, France for further study and worked as an assistant to Givenchy in 1968. In 1970, Issey Miyake returned to Japan and established the Issey Miyake Studio. In the following year, he founded the brand ISSEY MIYAKE. From "a piece of cloth" to "pleated" design, it became a world-renowned fashion brand. ISSEY MIYAKE's "baobao" bag series once became a "must-have" in the market, especially since the rhombus bag is highly sought after. Apple co-founder Steve Jobs is also a fan of Miyake. Miyake was asked by Steve Jobs to design his iconic turtle neck jumpers and reportedly made 100 of them, at $175 each. In the beauty field, ISSEY MIYAKE also had bright results. ISSEY MIYAKE signed a licensing agreement in 1991 with Shiseido Co. to produce his first women's fragrance. It was the debut scent to be manufactured by Beauté Prestige International, or BPI, a Paris affiliate set up by Shiseido in 1992. Beauté Prestige International S.A. was created in October 1990 by the Shiseido Group, BPI's sole shareholder, to augment Shiseido's fragrance business with the development of new designer fragrance brands. The BPI had been operating Dolce & Gabbana fragrances, among other businesses. After Shiseido took over the operation, "ISSEY MIYAKE Parfums" can be said to have a bright development in industrialization. Capital from a beauty giant Shiseido has given it unprecedented support in research and development, production, and marketing. It is worth noting that ISSEY MIYAKE's first fragrance for women, L’Eau d’Issey won numerous prizes, including a Fragrance Foundation FiFi for best women’s introduction in Europe in 1993. L'Eau d'Issey is known for its unique bottle design, which is inspired by the Eiffel Tower in Paris, with timeless classic minimalist lines giving the bottle a pure and natural look. According to Stylecraze, Issey Miyake L'Eau D'Issey Eau De Toilette is one of the top 1 best Japanese perfumes in 2022. Since then, ISSEY MIYAKE has launched a series of men's and women's fragrances, among which the men's fragrances "Fusion D’issey", "L’eau D’issey Pour Homme" and Muit D’issey" have gained unprecedented popularity. Currently, ISSEY MIYAKE has personal care, perfume, and international SA products that are sold in about 120 countries around the world. The main focus is on individual fragrances, mixing natural and elegant elements. It is reported that ISSEY MIYAKE's first offline boutique clothing store arrived in China in November 2013, which is located in Shin Kong Place, a luxury brand gathering place in Beijing. Subsequently, ISSEY MIYAKE's fragrance business also entered China. Currently, ISSEY MIYAKE currently has offline fragrance stores in Nanjing, Suzhou and others etc. In 2021, Issey Miyake launched its online channel on the Chinese e-commerce platform Tmall before the Chinese 618 Shopping Festival. In addition to ISSEY MIYAKE, Shiseido's Narciso Rodriguez and Serge Lutens have also entered the Chinese market with their presence on the Tmall platform. ISSEY MIYAKE has a fragrance flagship store on Tmall with sales of several fragrance products exceeding 1000+. ISSEY MIYAKE's men's fragrance L’eau D’issey Pour Homme, topped the top 1 in terms of store sales. On the Chinese sharing platform Xiaohongshu, Issey Miyake's fragrance has been read 3.045 million times in the past 30 days. In response to the passing away of Issey Miyake, many Chinese netizens expressed their regret, "It was not only a great designer but also created a great brand", "Another great designer has gone" and "The fashion industry lost a general ".

Abstract: A few days ago, Intercos, the only global player in the cosmetics ODM industry, released its 2022 semi-annual report showing the company's revenue of $375.1 million, an increase of 17% year-on-year. The financial results show that in the first half of this year, the revenue of Intercos increased by 13% at constant exchange rates, and net profit was $18.6 million, up 4.5% year-on-year. Meanwhile, all segments of Intercos's business achieved good performance growth, especially the color cosmetics segment which jumped 24% year-on-year. In addition, the skin care, hair and body care segments also grew by 9% and 4% respectively. In analyzing the financial report, Chaileedo found that at present, color cosmetics is still the biggest business among Intercos's three main businesses, with revenue of $242.1 million in the first half of this year, accounting for 64.3% of revenue share. The revenue of skin care segment was $66.8 million, accounting for 17.8% of revenue share. The hair and body care segment generated $767.6 million, accounting for 18% of revenue share. Intercos announced that the color cosmetics business has recovered and its revenue in the first half of the year was also 6% higher than before without the epidemic, especially in North America and Europe, where its color cosmetics segment's main customers are emerging brands and international beauty companies. In the skin care business, Intercos's growth in this segment was driven by sales in EMEA (an acronym for Europe, Middle East and Africa) and the Americas. In its financial report, Intercos showed that despite the impact of multiple adverse factors such as the epidemic and the global supply chain crisis, the company achieved good results in the first half of the year, especially in the second quarter, when both revenue and adjusted EBITDA (earnings before tax, interest, depreciation and amortization) reached record levels. According to the financial report, Intercos reported revenue of $197.8 million in the second quarter of this year, up 13 percent year-on-year. In the second quarter, Intercos's color cosmetics and hair and body care businesses grew 24% and 5% year-on-year, respectively, but its skin care business declined 7% year-on-year, mainly due to the impact of the epidemic lockdown in China. In terms of geographic regions, last year, all 3 of Intercos's global regions achieved growth. Especially in the Americas, the year-on-year growth was close to 30%. According to the financial report, in the first half of this year, the revenue of the Americas region was $127.4 million, accounting for 33.8% of revenue share, which was the second largest region in Intercos's revenue share. EMEA is still the largest market for Intercos, with revenue of $180.7 million in the first half of this year, representing a year-on-year growth rate of 12% and a revenue share of 48%. The Asian region performed slightly less well than before, with the smallest revenue share and year-on-year growth rate among the three regions, with revenue of $68.3 million in the first half of this year, up 10% year-on-year, with a revenue share of 18.2%. Although Intercos relies heavily on the performance of multinational companies, it is not difficult to see from the financial report that Intercos was trying to change this pattern. The financial report showed that the company's emerging brand customers contributed $126.8 million in the first half of this year, an increase of 31% over the same period last year, the fastest growth rate among the three major customer types. Taking the Chinese market as an example, Intercos has been increasing its cooperation with emerging brands in recent years. It is understood that in the first wave of the Double 11 in Tmall last year, eight brands from the Top 10 cooperated with Intercos, including new national makeup brands such as Perfect Diary, Florasis and Colorkey, in addition to international brands such as Estee Lauder. For example, in February this year, Intercos and KATO-KATO cooperated to establish an R&D base for the foundation aesthetics. Public information shows that the latter is an up-and-coming national beauty brand founded in January 2020. It is worth mentioning that the financial report also mentions that although Intercos's market share in China is still not large compared to other large beauty groups, and the emerging Western brands are only just starting to enter China, which means that Intercos is expected to grow in China and will continue to expand in China and the Asian region in the future.

Abstract: Shiseido's first investment fund in China invested in a Chinese recombinant collagen ingredient company to further promote the high-quality development of the Chinese beauty industry. On August 10, Beijing time, Shiseido released news that the company led the Series An investment in Chinese recombinant collagen raw material company Trautec, with an investment amount of nearly $14.8 million. It is understood that this is the first investment of Shiseido's first investment fund in China, Ziyue Fund. In May this year, Xiamen Ziyue, the entity of Shiseido's first special investment fund in China, was officially established. According to public information, Xiamen Ziyue has a total registered capital of $74.1 million, of which Shiseido occupies 98%. As Shiseido China said at the establishment of Ziyue Fund, Ziyue Fund focuses on the investment opportunities of emerging brands and upstream and downstream related technology companies in the frontier markets of beauty and health, so the first investment was made to a biotechnology company. According to public information, the company that received the investment from Shiseido, Trautec, was established in 2015 and is dedicated to the research, development and production of recombinant collagen-based biomaterials. The company claims to have achieved two major technological breakthroughs: the construction of a stable genetic expression system for recombinant type III collagen yeast and the development of a 30-ton stable fermentation and purification technology. In terms of product development, according to the official website of Trautec, the company has developed recombinant type I collagen, recombinant type III collagen and recombinant type XVII collagen, all of which are recombinant humanized collagen. Qian Song, CEO of Trautec, said, "This round of investment by Ziyue Fund is a strong endorsement for Trautec, which accelerates the pace of R&D innovation and development of the international market." In the past two years, the recombinant collagen sector in China has been in full swing. According to Grand View Research, China's collagen market size is $983 million in 2019 and is expected to reach $1.576 billion by 2027, with a CAGR of 6.54%, higher than the global market growth rate. Currently, the market for recombinant collagen in China is occupied by Jinbo Bio, Giant Biogene, and Trauer Bio. From 2019 to 2021, Jinbo Bio's revenue was $23 million, $23.8 million, and $34.5 million, respectively. During the same period, Giant Biogene's revenue was $141.6 million, $176.3 million, and $229.8 million, respectively. Trauer Bio's revenue is 303 million yuan, 303 million yuan and 240 million yuan respectively. Jinbo Bio and Giant Biogene have also been planned to be listed on the Beijing Stock Exchange and Hong Kong Stock Exchange respectively. It can be seen that the recombinant collagen market will continue to grow at a high rate in the next few years and the end-use applications in the medical beauty and cosmetic industries will be increasingly expanded. Shiseido has been researching collagen ingredients for more than 40 years. For example, in 1983, Shiseido founded ELIXIR, a brand that specializes in collagen. It is now one of Shiseido's main brands. At present, the best-selling product in ELIXIR flagship store on the Chinese e-commerce platform Taobao is Elixir Lifting Moisture Lotion and Emulsion with monthly sales of 2000+. The set is priced from $90.3. In this year's Chinese 618 Shopping Festival, sales achieved $30,932 in ELIXIR flagship store on TikTok. Also, in 1996, the collagen supplement brand The Collagen was created, a women-only beauty brand under Shiseido that focuses on collagen supplement products. Currently, functional skincare products are favored by more and more consumers due to their professional health backgrounds. The segments including anti-sensitivity, anti-aging, strong efficacy, clean beauty, and post-process are emerging. Thus it becomes a segmentation sector for forwarding deployment in Shiseido China. According to an incomplete count, at least 15 synthetic biology companies have announced funding since 2022. Not only Shiseido, but also L'Oréal China has set up a fund this year with the aim of investing in innovative companies and emerging brands. Among Chinese companies, Bloomage Biotech and Winona's parent company, BTN, have also set up private equity funds to focus on skin-related basic science. It can be said that, for the moment, companies with scarce ingredients and technological R&D barriers have become the value plateau in the cosmetic industry chain while major Chinese and international beauty companies have entered the game.

Abstract: Shiseido's sales for the first half of 2022 were approximately $3.72 billion, a decline of approximately 0.4% year on year. China declined about 19.7% year on year, and CHAILEEDO observed that China is the market with the largest sales decline for the Shiseido Group worldwide. On August 10, China Standard Time, Shiseido Group released its financial results for the first half of 2022, and the data showed that the group achieved sales of about $3.72 billion in the first half of the year, down about 0.4% year-on-year. Its operating profit was about $132 million, up about 180% year-on-year, compared with an operating profit loss of about $173.7 million in the same period of 2021. Shiseido Group said in its earnings report that the Shiseido Group mentioned in its earnings report that the termination of its beauty collaboration with Dolce & Gabbana led to a $334.5 million rise attributable to owners of the parent in the first half of this year compared to the same period last year, to $122.5 million, turning a loss into a profit. But the outlook for performance remains uncertain due to the lockdown in parts of China affected by the epidemic, the prolonged conflict in Ukraine, soaring resource and energy prices, and significant volatility in financial and capital markets. By region, China achieved sales of approximately $875.2 million, surpassing Japan for the first time and becoming the Shiseido Group's top market. However, net sales in China declined by approximately 19.7% year-on-year, again the largest decline in sales for the Shiseido Group globally. In terms of China business, e-commerce had a major contribution to the Group's performance, with the Shiseido Group gaining 9% sales growth in the Chinese e-commerce platform Tmall channel. In its report, Shiseido highlighted the growth of its brand NARS. During China’s "618" Shopping Festival in 2022, sales of the NARS increased by more than 60%, further expanding the brand's market share in China. On the other hand, the resurgence of the epidemic in China and a series of lockdowns centered in Shanghai caused problems in the supply chain and store traffic, which also seriously affected Shiseido's offline sales in China. Because of declining sales and ongoing marketing investments, the Shiseido Group's core operating profit in China posted a loss of approximately $14.98 million for the reporting period. By brand, in the first half of this year, brands such as NARS and CPB performed brightly in the global market. Among them, NARS sales rose the most year-on-year, reaching 26%. Meanwhile, Shiseido's fragrance brands also achieved year-on-year growth of 15%. On the other hand, the Shiseido brand, IPSA, Drunken Elephant, Anessa, and other brands saw sales decline in varying degrees. Among them, Anessa had the largest decline of 14%, while Elixir and Drunken Elephant also experienced double-digit declines. In the financial report, Shiseido's Travel Retail Business (sales of cosmetics and fragrances mainly through airport and downtown duty-free stores) was continuously affected by considerable reductions in international flights and the resulting decline in the number of travelers. However, sales of prestige brands such as SHISEIDO, Clé de Peau Beauté, IPSA, and NARS grew strongly, mainly on Hainan Island in China. Notably, Shiseido participated in the second China International Consumer Products Expo 2022 in Hainan. At this year's Expo, Shiseido China brought new brands, beauty technologies, and its 19 brands and star products to the expo. For China's Hainan travel retail business, Shiseido has said that with the gradual release of the dividends of various supporting policies for the construction of Hainan's free trade port. New opportunities have been brought to the development of major industries in Hainan and many enterprises and talents have been attracted. Just yesterday (August 10, China Standard Time), Shiseido China announced that its exclusively funded Ziyue Fund had completed the relevant filing, and the first investment focused on recombinant collagen biomaterials of Jiangsu Trautec Co. In the earnings report of H1 of 2022, Shiseido Group also specifically mentioned that it will shift its future investments in China to brands and products with higher visibility/higher added value while strengthening the efficacy of eye care products, sun care products, etc. It will actively develop the online channel business to provide consumers with a new brand experience, among other ways to promote sustainable growth in the Chinese market.

Abstract: KOSÉ recorded sales of $980 million in the first half of 2022, up 4.4% year-on-year. Its revenue in Asia Pacific reached $270million, down 4.3% year-on-year. On August 10, KOSÉ announced its interim financial data for 2022. In the first half of the year, KOSÉ recorded sales of 130.6 billion yen (approximately 6.608 billion yen), up 4.4% year-on-year, and an operating profit of 7.2 billion yen (approximately 364 million yen), up 81.5% year-on-year. In the first half of the year, KOSÉ's results were significantly impacted by the lockdown of China due to COVID-19 cases and control policy, as well as higher crude oil and other ingredient prices. However, KOSÉ believes that normal economic activity has now resumed in China and expects demand for cosmetics to recover. Especially as the travel retail market is expected to accelerate with the recovery of results in Hainan, along with increased competition. In Asia Pacific, where China is located, revenue for the reporting period was $270 million, down 4.3% year-on-year. In terms of sales channels, e-commerce, travel retail and offline all declined overall in China. Specifically, KOSÉ mentioned in its financial report that e-commerce sales in Japan rose 23.8% to $38 million, driven by the growth of the DECORTÉ in particular. However, e-commerce sales in China were $63 million, down 5.5% year-on-year with growth slowing in this year's Chinese 618 Shopping Festival. For the travel retail segment, KOSÉ’s overall revenue was $165 million, down 7.6% year-on-year. The travel retail sales of duty-free stores in Korea resumed growth, but the Korea travel retail business still fell 1.9% to $68 million, while the China travel retail business fell 11.8% to $93 million due to the lockdown in China. For the revenue decline in the China region, KOSÉ said in its financial report, due to China's 0-COVID 19 policy resulting in strict closure control will continue as well as the decline of top KOL live streaming, the group's revenue may not be able to recover in the short term. Specifically, in the cosmetics division, sales for the period were $791 million, up 6.5% year-on-year, while operating profit was $74 million, up 51.1% year-on-year. High-end brand DECORTE overall sales reached $316 million. The momentum of development in Japan is strong but China's sales are not very satisfactory. In addition, brands such as ALBION, Tarte, Carte HD, and CLEAR TURN all contributed to revenue growth. Sales of Sekkisei were also not good with sales of only $39 million, down 14.75% year-on-year. In its earnings report, KOSÉ also presented its plans for the second half of 2022 for its premium brand DECORTE. KOSÉ will open a flagship store in October 2022 on Hainan Island. The store will sell a broad range of high-end DECORTÉ products, including LIPOSOME and AQ line products. The store will boast the first treatment room in a duty-free store in Hainan. KOSÉ also analyzed that due to the dry climate in multiple regions in China, the demand for skincare cream is strong. LIPOSOME ADVANCED REPAIR CREAM will be launched as a major DECORTÉ product in addition to beauty serum products. The product will be available on September 1, 2022, outside Japan and will be sold on September 16 in Japan. In terms of future development, KOSÉ expects to further expand its sales in the young Japanese market by developing high-end products such as DECORTÉ and to expand its market share for sensitive skin with a focus on Sekkisei. In addition, KOSÉ is also hoping for the recovery of the travel retail market in China and Korea to recover the decline in sales. Recently, the Japanese beauty KOSÉ, Shiseido, Kao, and POLA are four leading companies, three have released first-half financial results. With a look at the three financial reports, the China region due to the epidemic has declined to various degrees. Shiseido 2022 first half sales reached about $3.7 billion, down about 0.4% year-on-year. The China region declined about 19.7% year on year. Kao Group's total net sales for the first half of the year were $5.504 billion, up 8.7% year-on-year, with the cosmetics business in China down 5% year-on-year. Although beauty companies were hit to varying degrees in the first half of the year, they all mentioned in their earnings reports that they will still push for the China market. And it is believed that the Chinese market will rebound substantially after the epidemic sealing is over. PS: The amount is calculated at the exchange rate of August 12, 2022(China Standard Time)

Abstract: At the special session on August 12, L 'Oreal officially introduced the relevant research data of Pro-Xylane, and for the first time publicized the latest exclusive formula technology of L 'Oreal Group, dual penetration micro pump technology. With the rise of the ingredient-fascinated group and the efficacy-fascinated group, young consumers in China are increasingly concerned about the ingredients and efficacy of cosmetic products, and more transparency of the ingredients and efficacy data. When collecting public data, CHAILEEDO found that 72% of consumers want brands to clarify the efficacy of product ingredients, while more than 60 % want clear source of ingredients. On August 12th, L 'Oreal Research and Innovation Center held a special session on Pro-Xylane, sharing more than 20 years of research on Pro-Xylane and officially released the new ingredient Pro-Xylane PRO and the latest patented formula technology. In the same vein, it also directly brought the market competition of this ingredient to the public view. L 'Oreal found that Pro-Xylane can act on the dermis, facilitate the synthesis of glycosaminoglycans and proteoglycans, promote the expression of CD44, and increase the thickness of the epidermis; It can also act on the dermal-epidermal junction, strengthen the structure of dermal-epidermal junction, promote the expression of collagen and increase the expression of the adhesive protein. It is worth mentioning that L 'Oreal's latest clinical tests have found that certain concentrations of Pro-Xylane can promote skin repair. According to Biao Jie, deputy director of L 'Oreal China Research and Innovation Center and scientific communication, a low concentration of Pro-Xylane can moisturize and lock in water, and further increase the concentration of Pro-Xylane, achieving anti-aging efficacy such as wrinkle-reducing, skin tightening and skin elasticity improving, while restoration requires a higher concentration of Pro-Xylane. By years of research, L 'oreal found the skin absorption of Pro-Xylane is determined by the physical and chemical properties of its raw material, its concentration within the product, and the formula technology," The formula of Pro-Xylane because the concentration is not the only measurement of efficacy, formula technology is actually the key to improving Pro-Xylane's skin absorption and anti-aging efficacy." Says Cyril Chevalier. At today's session, the company officially introduced the related research data of the condensed ingredient Pro-Xylane PRO, and disclosed the latest exclusive formula technology of the company, dual penetration micro pump technology for the first time. In march this year, its brand L'oreal Paris launched the Revitalift[HA] Filler Eye Cream (also known as the "second-generation purple iron")containing upgraded ingredient Pro-Xylane PRO, and launched in July the Revitalift[HA] Filler Facial Cream containing "20% condensed Pro-Xylane PRO" (also known as " L'Oreal 20 Cream") The high concentration of 20% Pro-Xylane PRO aroused extensive attention to these two new products across the industry and among consumers, also shocking the whole Pro-Xylane product market. As we all know, in recent years, there has been a lot of homemade Pro-Xylane in the Chinese market, which will inevitably be compared to that of L 'Oreal. But such comparison has always lacked the original Pro-Xylane ingredient of L'Oreal as a reference, and CHAILEEDO noted that the word "imitation" appeared twice during today's L 'Oreal special session. "By sharing comprehensive research data on Pro-Xylane, L 'Oreal is clearly endorsing its own Pro-Xylane products. In addition, L 'Oreal's new Pro-Xylane products highlight cost performance, which may create certain market pressure to domestically made Pro-Xylane." According to one industry insider who declined to be named, this marks the beginning of a head-on war between L 'Oreal and other Pro-Xylane makers. CHAILEEDO has also been told by raw material suppliers that Pro-Xylane has become symbolic of L 'Oreal and those other producers joining the competition, to some extent, also indirectly expanding the brand's reputation. There are industry veterans who believe that the domestic Pro-Xylane's story still can't go without L 'Oreal, lacking its own charm in this regard. In his opinion, China's domestic Pro-Xylane products should always seek self-improvement and to learn from others' advanced experience, experiences, so as to create more products of excellence. Undoubtedly, domestic Pro-Xylane needs to present its own story and features as L 'Oreal is putting real effort in speaking for its Pro-Xylane. Only in this way can competitors be more emboldened to confront head-on the world's largest beauty group.

Abstract: Prada beauty recently set up an independent account @pradabeauty on Instagram. Last month, Prada beauty debuted at the China International Consumer Expo. After signing a cooperation agreement with L'Oreal Group in 2019, Italian luxury brand Prada recently set up an independent account @pradabeauty on the social media platform Instagram and opened the Prada Beauty official website. The industry speculates that this is a signal indicating that the Prada Beauty beauty business will be officially launched. According to the seven posts published on the account, Prada will launch an amber floral fragrance for women called Paradoxe, with famous actress Emma Watson as the spokesperson. The fragrance's bottle design draws on Prada's iconic triangle and the glass packaging can be recycled. Emma Watson has been the brand's co-star for many years and this new ambassadorship is fitting given her status as an environmentalist. In 2019, Prada signed a long-term license agreement with the French group L'Oreal to create, develop and market luxury beauty products for Prada, effective January 1, 2021. Prior to this, Prada perfumes were operated by the Spanish beauty and fragrance group Puig. "The Prada brand is a symbol of excellence and avant-garde with a unique and subversive vision of the brand that appeals to consumers worldwide," said Cyril Chapuy, president of L'Oréal Luxe, in a statement. "This agency will perfectly complement the exceptional portfolio of brands under L'Oréal Luxe." As a famous Italian luxury brand, Prada is mainly engaged in ready-to-wear collections, leather goods and footwear. Prada Group's total net revenues achieved $3.41 billion. The beauty business, where fragrances are located, is one of the growth poles of the Prada group with the Prada brand perfume business achieving annual sales of about $101.3 million. After Prada perfume business handover to the L'Oréal Group, in July this year, Prada perfume for the first time launched at the 2nd China International Medical Products Expo with the L'Oréal Group. This move also shows the brand's determination to force the Chinese market. According to 2021 statistics, the global perfume market will grow at a compound rate of about 7% in the next five years and will reach $63.7 billion in 2025. According to Euromonitor, China's fragrance market will reach $4.4 billion in 2025 with an estimated CAGR of 22.5%. There are few luxury ready-to-wear and leather product groups similar to Prada that have launched perfumes in China, such as LVMH. According to LVMH's third quarter 2021 results, it showed that the perfume and beauty division performed well with total revenue of $688 million in the first three quarters, up 30% from 2020, thanks mainly to the continued growth of the U.S. and Chinese markets and improvements in Europe. Hermes Beauty was also opening its first flagship store in China on the Chinese e-commerce platform Tmall in 2021, where the best-selling product is Hermes Un Jardin Sur Le Nil priced from $81.8 with 4,000+ reviews. While international conglomerates are winning new growth points in China with the help of perfume, more and more Chinese perfume brands are also pouring into the perfume market. From July 2020 to July 2022, according to sales ranking on Chinese e-commerce platforms Taobao and Tmall, the top 10 Chinese domestic perfume brands are: MINISO, Berbena linn, and SOLEHE, dear boyfriend, RE CLASSIFIED, ttouchme, Dr. lrean Eras, Perfect Diary, Beast, L'SPHERE. Among them, the sale of 2.04 million units of MINISO, accounting for 41.67%. It is easy to see that the beauty and perfume business of luxury brands in China is the focus of attention of various companies in recent years, which can also reflect the side that the Chinese fragrance market harbors great potential. And combined with the recent actions of Prada beauty, it may give the Chinese high-end perfume market to inject new vitality.

Abstract: Henkel's operating profit for the first half of 2022 was 1.166 billion euros, which decreased 18.5 percent year on year. The Asia-pacific region has become a significant layout area for Henkel. On August 15, Henkel reported its mid-term results for 2022. According to the report, Henkel's sales amount grew organically by 8.9% to €10.913 billion ($11.105 billion), and adjusted operating profit was €1.166 billion($1.186 billion), declined 18.5% year-on-year. Specifically, the Beauty Care department achieved only 0.4% year-on-year organic growth with sales amount of €1.842 billion euros ($1.874 billion). Henkel's professional Hair Care business has a leading market status in various international market segments and is one of the top three Beauty and Hair Care corporates in the world. The core brands in this category include Schwarzkopf, Syoss, Dial, and others. In particular, the hair salon business still achieved double-digit organic sales growth, based on the powerful performance of the previous year. That business department is a whole new multi-category platform that will be created in early 2023 by combining Henkel's Detergents & Home Care Department with the Cosmetics/Beauty Supplies Department in early 2023. On the other hand, however, growth in the Consumer Products business was below the previous year's level, which Henkel said was mainly due to the implementation of portfolio and improvement measures for 2022 and the discontinuation of a part of activities that are not belonging to its core business for the future. Based on the first-half year performance, Henkel revised its forecast for the division to -3.0% to -1.0% from the previous estimate of -5.0% to -3.0%. The Laundry & Home Care department achieved significant increase of 7.4% conversely, with sales amount of €3,494 million ($3,555 million), and even double-digit growth in the Asia-pacific region. Among all categories, the core brands of the laundry business, such as Persil, also recorded double-digit organic growth. The performance of the home care division benefited from the business growth of brands such as Bref, Pril, and Somat in the toilet cleaning and dishwashing categories. Simontaneously, as part of its portfolio management, Henkel has reviewed its businesses and brands with total sales amounting up to 1 billion euros. In the near future, Henkel possibly chooses to divest businesses that do not match Henkel's growth and profitability criteria, while further strengthening its product portfolio through acquisitions, such as the successful completion of the acquisition of Shiseido's hairdressing professional business in the Asia-Pacific region in July. The acquisition targets include Sublimic, Primience, and other core brands.It is known that the business areas covered by this Henkel acquisition action have annual revenues of more than 100 million euros in 2021. David Tung, President of Henkel's Consumer Brands Business Division in Asia, said that with this acquisition, Henkel has become one of the dominant companies in the professional hairdressing business in that region and has significantly enhanced its market status in Japan and China. Meanwhile, Henkel has successfully entered the South Korean market and has established a leading position in Thailand. In addition, to further extend its business in Asia-pacific, Henkel will open a Japanese-style Simple Beauty (J-beauty) Innovation Center in Tokyo, which will also serve as a base for the development of new products and formulations for the Shiseido Professional and Schwarzkopf brands, in order to create more products for Asian consumers. Henkel Chief Executive Officer, Carsten Knobel, said that sales performance in the first six months exceeded previous full-year expectations, while overall profits were in line with the Group's forecast for the fiscal year 2022. Henkel's future goal is to establish its consumer products business by 2023 at the latest, thus further driving high growth in the business.