Unilever bets £2bn on booming Korean beauty trend

Unilever bets £2bn on booming Korean beauty trend

By Ashley Armstrong, The Telegraph, Sept. 25, 2017

Unilever is splurging €2.3bn (£2bn) on a South Korean beauty business in the latest sign that the consumer goods giant is turning its focus towards its personal care division rather than its food business.

Unilever announced that it is buying Carver Korea, one of the fastest growing skincare brands in South Korea and maker of the AHC brand which sells moisturisers, face masks and sun creams.

The Anglo-Dutch company, which makes products ranging from Marmite to Dove soap, has recently stepped up its efforts to acquire upmarket beauty brands which offer higher growth and profit margins than its more mature food brands.

The group has already snapped up Dermalogica, Ren, Murad and Living Proof beauty brands and added it to its 'prestige' division which has a separate management team.

Unilever is attempting to overhaul its business in the wake of a failed £115bn takeover bid from Kraft Heinz at the start of the year. It has already started offloading some of its declining margarine businesses and is reviewing its long term dual structure, which could pave the way to a wider break-up of the business.

Carver, which was previously owned by private equity firm Bain and Goldman Sachs, made sales of €321m and underlying earnings of €137m last year, making it South Korea's third-largest cosmetics company. Meanwhile Mintel estimates that beauty spending will reach $13bn this year in South Korea.

Alan Jope, Unilever's president of personal care, described Caver as "an impressive business."

"It will significantly strengthen our position in North Asia, the largest skincare market in the world," he added.

South Korea has become a booming region for the beauty industry, becoming the fourth largest skincare market in the world. So-called "K-Beauty" has become shorthand in the industry for beauty products which are driven by unusual natural ingredients, such as snail gel, volcanic ash and green tea.

South Korean women are also happy to spend twice as much of their income on beauty products compared to American customers while South Korean men spend more on skicncare than any other in the world. This is partly driven by South Korean's goal to achieve "chok-chok" skin, which Mintel says is the term given for "bright, fair, plump, dewy and youthful" complexions.

The popularity of Korean beauty products on a global scale can be traced back to 2011 when so-called "BB cream" became on must-have beauty lists.

The product - a hybrid between foundation and moisturiser - had been used by Korean women for years but Western demand for the new product sparked cosmetics giants from L'Oreal, Rimmel and Mac to scramble to launch their own product.

Last year $7.1bn of Korean cosmetic products were exported with an annual 8.2pc growth rate over the last five years, according to South Korea's customs data.

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