Shiseido announced on August 26 that it will sell three of its prestige US-based make-up brands – Laura Mercier, BareMinerals and BUXOM – to private equity firm Advent International for U$700 million.
Shiseido cited its strategy to focus on its luxury skin care as the reason for shedding the trio of brands – the same reasoning it gave in February when it decided to sell off its personal care business to CVC Capital Partners.
“It’s a no brainer for them. COVID has hit most companies quite hard. Most consumers have cut back on using make-up, and that is a global trend, not just a trend in Asia,” Nicole Fall, founder of Asian Consumer Intelligence.
She added: “What maybe is most surprising is the fact that they have shed so many brands in one year. It’s unexpected for a Japanese business, which generally speaking are slow to move and tend to be more reactionary, rather than proactive. Then again, I think Shiseido is a little bit different from most Japanese companies.”
Speaking to CosmeticsDesign-Asia, beauty experts believe the latest moves will strengthen the company’s position in the long term.
“COVID-19 has proven the longevity of skin care, so the company will only strengthen its business by rebuilding its already powerful portfolio centred around skin care. In addition, considering their continuous R&D in beauty technology, we foresee a potential of Shiseido championing the beauty technology space and the global prestige beauty space,” said Sharon Kwek, associate director, SEA Beauty and Personal Care Industry, Mintel.
Fall added that Shiseido’s decision to zero in on skin care is a “smart idea”, especially now when having a singular focus is easier to manage among all the disrupted supply chains.
“Data and sales will demonstrate that in the majority of Asia, skin care is the focus. Historically, it's always been a region with consumers that really prioritise good skin. They rather figure how to get better skin, rather than have okay skin and cover the flaws with make-up.”
Losing colour?
This is not to say that there little post-pandemic potential in the colour cosmetics category.
“Colour cosmetics, in general, are not flat, just more challenged than other categories during the pandemic due to the lack of social interactions and pressure to look presentable in person,” said Kwek.
Mintel’s Global Consumer research study in March 2021 showed that 60% of consumers in Thailand agreed their beauty and grooming routine has simplified over time, while 64% of consumers in Singapore reported the same.
Additionally, product innovations for colour cosmetics have been sluggish. Based on Mintel GNPD, colour cosmetics launches dropped from 42% to 36% from 2019 to 2020.
Kwek expects an uplift in sales for colour cosmetics that adopt a minimalist approach and recognise “hybridisation and well-being” at the core of product development.
“There is still potential for colour cosmetics brands in the post-COVID world if they address these shifting attitudes towards makeup and prioritise more natural looks and faster application.”
She highlighted that BareMinerals has the opportunity to tap into consumer demand for clean beauty products.
“BareMinerals is known as a clean beauty brand for its mineral-based cosmetics… if the brand steps up on the competition within clean beauty, the brand will still hold potential in the post-COVID world. The three brands have their respective followers and should still uphold their positions in prestige beauty for their quality and proposition.”
