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Tag: LG Household & Health Care

  • LG H&H buys Avon factory in China

    LG H&H buys Avon factory in China

    LG Household & Health Care announced Wednesday it is buying Avon’s Chinese factory in an effort to expand production facilities. According to LG Household, subsidiary The Face Shop will purchase the London-based cosmetics firm’s factory in Guangzhou, China, for around 79.3 billion won ($70.8 million). Avon’s 49,500-square-meter (12.25-acre) factory in Guangzhou, China is capable of producing 13,000 tons of cosmetics and hair care and body products every year. Its facilities meet cGMP (current Good Manufacturing Practice) regulations, which are enforced by the U.S. Food and Drug Administration.

    LG Household will use the Guangzhou factory to manufacture LG products like The Face Shop branded goods for its Chinese and other Asian businesses while continuing to produce Avon products as well. Avon employees will remain at the factory.

    The buyout deal is expected to be finalized in February after Chinese authorities approve the transaction.

    The move comes less than a year after LG Household purchased Avon’s Japanese operation for around $96 million last April. Avon said it hopes the Guangzhou factory sale will help increase its operational flexibility.

    “This transaction is a significant step forward in our effort to ‘Open Up Avon’ by operating more efficiently, with a leaner, more agile global infrastructure,” said Jan Zijderveld, CEO of Avon. “We know [LG Household] well and believe that they will continue to be a strong partner for Avon.”

    “We are pleased to … add a state-of-the-art facility with powerful capabilities to deliver quality products for the fast-growing local market,” added Suk Cha, CEO of LG Household.

  • LG Household’s History of Whoo makes history

    LG Household’s History of Whoo makes history

    LG Household & Health Care’s skin care brand The History of Whoo generated 2 trillion won ($1.79 billion) in sales this year as of Thursday. This is the first time a Korean beauty brand has reached that threshold. The 2018 record is also a 40.8 percent increase from last year’s annual sales.

    “For us, the achievement is meaningful in that it’s a sign we’re nearly able to compete shoulder-to-shoulder with global beauty brands,” LG said in a statement.

    The 2 trillion won in sales figure is based on manufacturer price. Counting the consumer price tag, the figure jumps up to 3 trillion won. According to market research firm Euromonitor International, the top three global beauty brands – Lancome, Shiseido and Estee Lauder – generate between 4.4 trillion and 5.3 trillion won a year based on the same standard.

    The last time The History of Whoo set a record was in 2016, when the brand made 1 trillion won in annual sales, 14 years after its launch. Breaking the 2 trillion won threshold came just two years later.

    The rapid growth is notable in that Whoo successfully survived a widespread boycott of local brands in China last year, following the installment of the U.S.-led antimissile system Thaad. This is in contrast to a score of other beauty companies like local leader Amorepacific, which have suffered huge blows from the loss of Chinese customers and some have yet to recover to pre-Thaad revenue levels.

    A spokesman explained that the brand kept its positive image thanks to word-of-mouth marketing and repurchases from Chinese customers.

    In terms of strategy, LG believes Whoo’s positioning as a high-end beauty brand has proven effective. Among its wide brand portfolio, The History of Whoo is one of LG’s premium brands with a higher price tag.

    Its main concept is that the products are based on records from Korea’s past dynasties which use oriental medicine as main ingredients. The brand story is also reflected in its product packaging, which emphasizes gold and red, which industry watchers say fits well with Chinese consumers’ taste for glamor.

    “We also concentrated a lot of our marketing activities to target VIP customers that have buying power,” said an LG spokesman.

    For next year, the company plans to continue its drive to push premium brands. Another brand LG is hoping to develop in the price range is SU:M, which is less flashier than Whoo, but emphasizes the use of fermented plants. Although smaller than Whoo, SU:M is also expected to reach 440 billion won in sales this year, a 15.8 percent increase year-on-year. During this year’s third quarter, LG’s three luxury brands – Whoo, SU:M and O HUI – were responsible for more than 60 percent of its beauty revenue.

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  • Korean cosmetics makers fear losses from THAAD deployment

    Korean cosmetics makers fear losses from THAAD deployment

    South Korean retailers and cosmetics companies are closely watching China’s moves after Korea and the US decided to deploy an advance missile defense system in the country on July 8.

    Neighboring China lodged a swift protest against the decision announced in the morning which is expected to further heighten geopolitical risks.

    Local cosmetics makers and duty-free shops are on alert as they worry about losing Chinese market and consumers who account for a growing portion of their revenues.

    Customers shop for cosmetics at a local duty-free shop.

    On the day, cosmetics stocks like LG Household & Health Care and AmorePacific plunged more than 4 percent.

    “The THAAD issue was a huge blow to Cosmetic stocks earlier this year and it happened again,” an official at a cosmetics company said.

    South Korea’s cosmetics exports to China doubled on-year to US$1.08 billion in 2015, which accounts for nearly 40 percent of global sales, according to the Korea International Trade Association. South Korea is the second-largest cosmetics exporter to China following France.

    “There hasn’t been an immediate impact so far as China hasn’t took any trade-related actions but we still have to keep an eye on the issue,” she said.

    If ties between the two countries weakens, China could tighten regulations on safety and tariff issues, experts said.

    Retail companies, which started to see a rebound in the number of Chinese tourists to Korea after a sharp drop due to the Middle East respiratory syndrome outbreak hit the country last year, are in panic mode.

    “We are worried over the possible drop in the number of tourists coming here if political conflicts drag on for long,” said an official at a duty-free store in Seoul.

     

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  • K-beauty spreads worldwide

    K-beauty spreads worldwide

    The ‘K-beauty’ market is expanding its sphere of influence beyond Asia, and reaching out to other global markets.

    According to Aju News, a Korean newspaper, Korean cosmetics brands are exploring new markets worldwide. As the global interest in K-pop and K-dramas is rising, women all over the world are now looking at K-cosmetics.

    Amore Pacific has been eyeing the international market since the 1990s. After establishing factories in France and China, the company continued to expand its influence worldwide, with products now being sold in the U.S., Malaysia, Indonesia, Vietnam, Canada, Thailand, the Philippines, Singapore, Myanmar, and Japan, generating global sales of 1.26 trillion won.

    Able C&C’s cosmetics brand Missha is following the lead, spreading K-beauty all over the world. Missha stores can now be found in Brazil, Germany, Mexico, Venezuela, Turkey and Spain. The Brazilian market in particular is expected to generate strong sales growth, as reports show that the local cosmetics market is the fourth largest in the world.

    LG Household & Health Care’s The Face Shop is focusing on the Middle Eastern market, opening 55 stores in five countries – Jordan, Saudi Arabia, UAE, Oman and Armenia.

    Cosmetics brands are using a number of different marketing strategies to aggressively target overseas markets.

    In areas where natural ingredients and safety are important, such as Europe and the US, businesses are attracting customers with their ‘natural’ brands. Some brands promote elements of Korean tradition to attract western consumers. Many are ‘blending in’ with the locals through collaboration with local businesses.

    To boost overseas expansion, the Korea Trade Promotion Corporation (Kotra) is taking steps to boost sales of Korean cosmetics through American and Chinese online shopping sites.

    Kotra will host a ‘K-beauty summit’ to help Korean cosmetics brands export their products. The agency’s ‘online export incubating program’ will be introduced, and is expected to help businesses sell their products through Amazon.

    Kotra is also seeking to secure new trading opportunities in China in collaboration with the online shopping site TaoBao, operated by Chinese eCommerce behemoth Alibaba. The two parties plan to host a K-beauty expo in China during the first half of the year.

    Innisfree store in Shanghi

    The cooperation with TaoBao is only the start, as Kotra is also planning to work with other online shopping portals such as JD.com.

    Officials at Kotra emphasise the importance of making inroads in the American and Chinese markets to prolong the popularity of the K-beauty trend. They expect to draw the attention of young consumers who are sensitive to fashion and style trends and familiar with online shopping.