Beyond K-beauty: Inside Amorepacific’s fight for global dominance

This story is part of Next in Asia, a series exploring the impact of technological and economic transformations across Asia-Pacific and the influence on local style, community and culture. Read part one on the enduring appeal of Japan's luxury market, part two on South Korea’s next big fashion import, part three on why fast fashion is flooding Japan, and part four on the fashion opportunity for Asia’s largest metaverse platform. Sulwhasoo, Laneige and Innisfree — these three flagship brands of Amorepacific may not yet be global household beauty names, but the company has plans to change that. The South Korean cosmetics giant is accelerating its push into other markets, including the US, the UK and Japan. New international stockists, high-profile ambassadors and splashy marketing activations — including a boat party on London’s Thames river next week — are all on the cards. The shift in focus for Amorepacific comes as the beauty company’s revenues fell 15.6 per cent to KRW 4.5 trillion (£2.7 billion) in 2022 — a result of a slowdown in sales in China and a sluggish performance in the duty-free business. In the first quarter of 2023, its overseas business fell 16.8 per cent to KRW 349.4 billion (£210 million), largely due to China. However, sales in North America grew 80 per cent and now account for 18 per cent of the total, up from an 8 per cent share in the same period last year. Europe, Middle East and Africa grew 94 per cent. Despite the dip in revenues last year, in January 2023 Amorepacific was named by Deloitte as among the 100 biggest global luxury companies by sales. It was the only Korean firm to make the list, which included the likes of Farfetch and Unilever Prestige Beauty. Jinpyo Lee, who became chief strategy officer in April 2022 after eight years in senior strategy and business development roles, has another goal in mind: to make Amorepacific the seventh largest beauty company globally by sales, rising above the likes of Coty, Natura & Co and Beiersdorf (it is currently 12th). It won’t be easy. Amorepacific, which was founded in 1945, leveraged the popularity of Korean pop culture to drive sales and become one of Asia’s most powerful cosmetics empires. However, K-beauty has begun to lose some of its lustre in recent years in a much more crowded and competitive market. Competition is also heating up from foreign competitors too, with groups such as The Estée Lauder Companies placing bigger bets on K-beauty. Even if China recovers, Amorepacific runs the risk of being squeezed by lower-cost homegrown brands and more glossy European labels. “With the increasing interest in K-beauty driven by the global expansion of K-content, huge numbers of consumers from China have entered the Korean beauty market, leading to the rapid influx of numerous players,” observes Tae Hwan Kim, consumer industry leader of the Deloitte Korea Group. “Almost all brands are facing the challenge of differentiating themselves through quality and concept.” Bigger bets on M&A The new vision is to diversify the group’s presence through the global expansion of its existing brands as well as through strategic acquisitions. For decades, the firm has cautiously avoided large-scale acquisition deals that could entail big risk. “The company has been a little shy, but in the last two years, we have become more active in M&A,” says Amorepacific’s Lee. One of Amorepacific's most notable deals to date is the acquisition of US premium skincare brand Tata Harper in September 2022. Tata Harper was looking for a partner for the next chapter of its growth, co-founder and co-CEO Henry Harper told Vogue Business at the time. Tata and Henry Harper visited Amorepacific’s $470 million headquarters in Seoul, which opened in 2018 after eight years in development, and came away convinced that the Korean group aligned with their beliefs on clean formulation and responsible growth. The two companies are currently in the middle of integration, explains Lee. For Amorepacific, the deal was an opportunity both to invest in a brand with high growth potential and to “acquire talent, experience, consumers and knowledge” with the potential to benefit its wider ecosystem, says Lee. Tata Harper, meanwhile, benefits from Amorepacific’s extensive regional knowledge. “They have very limited presence in Asia,” says Lee. “Our plan is to bring the brand to China, Korea and across travel retail channels.” Helping Amorepacific in new markets Florence Bernardin, founder of Asia Cosme Lab, an agency specialising in Asia beauty trends and product development, is keeping track of how Amorepacific is evolving. “The biggest struggle for Amorepacific will be to provide Western markets with really clean products that meet international standards. Acquiring Tata Harper will help the group to move in the right direction.” M&A will be fundamental to future growth, notes Lee. “A key differentiation of Amorepacific is that we are vertically integrated. The previous strategy was to build brands in-house. We have been able to launch and support our brands with success, but at the same time, there is a limitation. Going into a global market rapidly requires different skill sets, so we decided to look at different paths.” Lee is keeping an eye out for potential acquisition targets in North America and Europe, particularly in categories such as fragrance or makeup. More than 60 per cent of the group’s sales currently come from skincare. “We [want to] acquire where we don’t have a competitive advantage or strength,” he says. He also sees opportunities in haircare, a sector that has experienced more innovation in recent years, and in technologies that can help the company personalise its offer. “Nowadays, a lot of hair products are not necessarily focused on shampoo. It’s more about scalp care, which I believe is an extension of skincare.” Sprucing up its image A marketing rethink is being rolled out across Amorepacific’s three flagship brands — Sulwhasoo, Laneige and Innisfree — which account for around 50 per cent of total group sales. While many brands in Amorepacific’s portfolio are considered solid and trustworthy and have a place on many Korean women’s dressers, they lack the glamour of foreign cosmetics brands such as Chanel and Dior and also face competition from more playful homegrown brands such as Amuse and Clio. The rethink is in evidence with the choice of brand ambassadors, aiming for global recognition. Sulwhasoo, which has a premium price point, named actor Tilda Swinton and Blackpink singer Rosé as global brand ambassadors earlier this year. Laneige, which is mid-range, tapped Euphoria actor Sydney Sweeney as its ambassador in 2022, marking the brand’s first US celebrity partnership. Innisfree, a more accessible offer, stays focused, for now at least, on trendy K-pop stars: its faces are Ive’s Jang Won Young and Seventeen’s Mingyu. A big shift is notable in the company’s readiness to cast more diverse models to promote its products. “In the past, we put more focus on Asia, but our consumers are global, so for us to become a truly global company, inclusivity and trying to show these differences are very important for us,” says Lee. Amorepacific is focused on making its products more inclusive, too, he adds. “We’re putting a lot of research into personalisation to fully meet the demands of customers with different skin types, tones, issues and needs.” At its Amore store in Seongsu, which spotlights key products from its 31 brands, a dedicated robot makes up customised foundations after a one-on-one consultation with an in-house makeup artist. Over 100 shades are available. Bigger scale partnerships that bring the company closer to culture are also in the works. In March, Sulwhasoo linked up with New York’s Metropolitan Museum of Art on a year-long agreement to support various museum programmes and activities. A launch event drew actor Yuh-Jung Youn, model Paloma Elsesser, designer LaQuan Smith, TV personality Antoni Porowski, singer Charli XCX, and Emily in Paris stars Ashley Park and Paul Forman. At New York Fashion Week, Amorepacific provided its tea brand Osulloc at shows and at events by make-up artist Gucci Westman, Jessica Alba, actor and founder of personal care brand The Honest Company, and designer Gabriela Hearst. Osulloc also hosted an afterparty at its store for VIP customers that attended Louis Vuitton’s pre-fall collection in Seoul. “A lot of people who didn’t know about the brand had a new understanding. [These activations] created lots of buzz and generated a lot of followers [on social media],” says Lee. “Moving forward, we want to translate that increased brand awareness into sales. New customer acquisition is something that we still need to work on.” New retail opportunities Amorepacific has traditionally had a strong direct retail business alongside fully managed operations within department stores. Today’s shoppers show less loyalty to one brand and prefer to mix and match, Lee observes. Amorepacific has begun prioritising specialty multi-brand store environments. In June, it partnered with Watson Group, one of the world’s largest health and beauty retailers with more than 16,000 stores in 28 markets globally. “Understanding different sales environments, providing the right selection of products and having a good relationship [with our retail partners] is very important,” he says. Besides the US, Japan is a market with high potential, says Lee. Long-standing historic tensions between Japan and South Korea are easing. Many young Koreans now go on holiday in Japan; just last week, popular Korean influencers Park Min Joo and Lee Hyun Ha posted snaps of their summer in Tokyo. Japanese consumers also take an interest in Korean culture: South Korea became Japan’s biggest cosmetics importer in 2022, overtaking France, according to the Korea International Trade Association. “We are getting a lot of attention from Japanese beauty retailers,” says Lee. Beauty specialist @Cosme and drugstore Matsumoto Kiyoshi have been strong drivers of sales, he notes. “In Japan it’s about the offline stores. Online penetration is still not that high; there’s not really a free shipping service and it takes at least one or two days to deliver a product. It’s just better to visit the shop.” While K-beauty is recognised for pioneering the latest beauty products, Lee would prefer for Amorepacific to not be closely associated with trends. “In Korea, every week, there are many new beauty brands coming to the market because it’s very easy to launch new products. They’re often from value chains with a similar proposition, prepackaged with slightly different colours.” That’s not the Amorepacific way, he says. “We do our own R&D, develop our own formulas and manufacture most of our own products.” The result? Unique products, he says, with “better efficacy and benefits”. Quality products will always succeed, he insists. “People are collecting information from digital media, which is now universal. If you post content on TikTok, suddenly anyone in the world can see it. [But] a successful product is what leads to virality.” Not the other way round. To receive the Vogue Business newsletter, sign up here. Comments, questions or feedback? Email us at feedback@voguebusiness.com. More from this author: Dries Van Noten on why he’s opening a beauty store Paco Rabanne launches makeup and names beauty creative director Kering Beauté to acquire fragrance house Creed in ‘major step’

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