At the end of 2017, Su-Kyung-bae was the second wealthiest person in South Korea thanks to a surge in K-beauty products. He had a net worth of about $ 8 billion for his family’s cosmetics empire’s Amorepacific Group shares. Today, he has been losing more than 40% of the value of $ 3.6 billion as a result of his company’s shares since January. Although the COVID-19 epidemic has hit the company very hard, the truth is that the signs of conflict were clear before coronovirus hit the world. The fact that the epidemic has brought about a lifestyle change has reduced makeup for many women. After all, when you’re home and / or grocery shopping wearing a mask, why spend time and effort to create your face?
These epidemic-related lifestyle changes have inhibited the rapid wealth gains of Korean beauty products as well as the people behind the acquisitions of those companies. From 2010 to 2014, companies outside South Korea spent $ 215 million buying K-beauty brands. From 2014 to 2019, South Korea was the fourth largest exporter of beauty products in the world and the acquisition increased to $ 5 billion. Estée Lauder popularized Dr. In November 2019 for $ 1.1 billion. Behind Jart acquired the company which made its founder Chinook Lee a billionaire. Goldman Sachs bought a stake in the face mask maker GP Club, whose founder Kim Jung-woong is one of the richest people in South Korea.
Many industries are suffering in epidemics, but the K-beauty sector is facing a double or triple dhamma with it. Social disturbances and work from home have reduced demand for makeup and many retail stores have closed. The US is the third largest market for K-beauty products and down 7% in 2020. Travel restrictions have also hit K-beauty brands hard. They are Chinese tourists and personal business people who go to South Korea to buy tax-free goods in bulk and then take them back to their country to sell. On top of all this, Chinese customers have greater access to brands around the world and are focusing more and more on beauty products made in China. Whereas a few years ago the tag “Made-in-Korea” on a beauty product made a definite cache, now those days are gone. Case in point: GP Club plans to make its IPO in 2019. This did not happen and was not rescheduled.
Suh Kyung-bae and Amorepacifc saw their revenues drop 23% in the first nine months of 2020 compared to the same time period in 2019. The company is taking measures to reduce its overhead. For the first time, Amorepacific offered voluntary retirement to employees who have worked there for more than 15 years.
On the other hand, the epidemic has forced the beauty industry to move from brick and mortar retail stores to online. Amorepacific has grown significantly in this area and is prioritizing that part of the business. Amorepacific is closing several of its stores in China, but is confident that online sales in 2021 will make up half of its business. In South Korea, the company estimates that online revenue will grow from 20% to 30% in 2021.
Cosmetics cost less before Kovid. The epidemic exacerbated it. Only skincare products such as moisturizers and face washes are still selling at pre-epidemic levels.