Shrinking K-Beauty... Amore & LG Saenggeon Kickstart Structural Reform Through New Growth Engines

Amore targets North America with BTS marketing
LG Household strengthens luxury 'Hoo' line, etc.

In January last year, before the Lunar New Year holiday, the cosmetics corner at Shinsegae Duty Free Myeongdong branch. The 'Sulwhasoo' and 'Whoo' stores, which used to be crowded with Chinese tourists, are now deserted. Photo by Oh Jong-tak

[Asia Economy Reporter Moon Hyewon] Amorepacific and LG Household & Health Care, the top two companies in the domestic cosmetics industry, are accelerating efforts to improve their business structure through new growth engines. This is due to a shrinking presence in China, where sales dependency is high, and strengthened regulations on peddlers.

According to the Financial Supervisory Service's electronic disclosure system on the 10th, Amorepacific's cosmetics division sales based on consolidated financial statements amounted to 4.9237 trillion KRW, showing only 9% growth compared to the previous year (4.5114 trillion KRW). Compared to two years ago before the COVID-19 pandemic (6.1236 trillion KRW), it is only about 80% of that level.

LG Household & Health Care, which announced its performance earlier, recorded cosmetics sales of 4.4414 trillion KRW, a 0.37% decrease from the previous year (4.4581 trillion KRW).

The proportion of China cosmetics sales in total overseas sales for Amorepacific and LG Household & Health Care accounts for about 70% and 50%, respectively. The sharp decline in consumption in China due to COVID-19, the closure and suspension of offline stores, and intensified competition in the Chinese cosmetics market are hindering growth. Moreover, the Korea Customs Service recently issued guidelines restricting cosmetics sales to Chinese peddlers, who are major consumers of duty-free goods, adding to the negative factors.

Accordingly, both companies plan to diversify their overseas markets this year, focusing on luxury brands. Amorepacific aims to overcome the crisis through overseas market diversification, with a particular emphasis on strengthening marketing in North America. At the end of last year, it participated as a sponsor in BTS's concert in the United States to promote its brand to local customers. Recently, it signed a strategic partnership with the skincare brand ‘COSRX,’ which has expanded to about 40 countries worldwide including the U.S., Southeast Asia, Europe, China, and Japan, to enhance competitiveness in the North American market. LG Household & Health Care plans to strengthen local marketing in China, focusing on its flagship luxury brand ‘Whoo.’ During ‘Guanggunje,’ the Chinese version of Black Friday, Whoo’s sales increased by more than 60% compared to the same period last year, demonstrating high popularity locally. Additionally, the company plans to pioneer the global market by utilizing global brands acquired through mergers and acquisitions (M&A), such as ‘Physiogel’ and ‘Altifox.’

This content was produced with the assistance of AI translation services.