[Asia Economy Reporter Yujin Cho] Fashion powerhouse Hansome is entering the cosmetics business by acquiring a stake worth approximately 10 billion KRW in a cosmeceutical specialized company.
Based on the patented cosmetic manufacturing technology secured through this equity acquisition, the company plans to launch a "premium skincare" brand in the first half of next year.
Hansome, a fashion specialist company affiliated with Hyundai Department Store Group, announced on the 11th that it has signed a contract to acquire 51% of the shares of Cleanzen Cosmeceutical (hereafter Cleanzen), a functional cosmetics specialist company. The acquisition price is about 10 billion KRW.
Cleanzen, whose shares were acquired, is a company jointly established by Clean Dermatology Clinic in Cheongdam-dong, Gangnam-gu, Seoul, and Progen, a new drug development specialist company. It possesses know-how in developing high-functional cosmetics effective for whitening, wrinkles, and elasticity. Cosmeceuticals refer to functional cosmetics that add medicinal ingredients to cosmetics.
Hansome's entry into the cosmetics business is aimed at diversifying its business structure, which has been concentrated on fashion, and securing new growth engines. Through entering the cosmetics business, Hansome expects to diversify its sales structure focused on fashion and improve performance and financial structure, such as increasing operating profit margin. This is the first time since its founding in 1987 that Hansome has ventured into a business outside of fashion.
The reason for targeting the premium skincare market within the cosmetics sector is to continue the high-end image of Hansome, which has been built through operating existing premium fashion brands such as Time and Mine, into the cosmetics business, the company explained.
A company official said, "Fashion and cosmetics businesses share similar core competitive factors such as differentiated product development capabilities that lead trends and advanced product manufacturing know-how, making it easy to utilize Hansome's accumulated 'premium brand cultivation capabilities.'" He added, "In particular, owning premium cosmetics core distribution channels such as Hyundai Department Store and Hyundai Department Store Duty Free allows us to expect synergy maximization."
Hansome plans to collaborate with Clean Dermatology Clinic and Progen, major shareholders of Cleanzen, on cosmetic manufacturing patent technology and raw material supply systems to develop and produce cosmetics.
To target the premium skincare market, Hansome plans to utilize the patented technology of the pharmaceutical substance "Super EGF" owned by Progen in cosmetic manufacturing.
EGF, discovered by Dr. Stanley Cohen in the United States and awarded the Nobel Prize in Medicine, is a protein substance with excellent skin regeneration effects. The Super EGF that Hansome will use in cosmetics significantly enhances skin absorption compared to existing EGF effects. The Super EGF ingredient will be supplied by Genexine, a new drug specialized development company.
Hansome's first skincare brand is scheduled to launch early next year. The product line will be expanded to include color cosmetics and perfumes in the future. In particular, the company plans to infuse Hansome's sophisticated and trendy "high-end fashion DNA" throughout the cosmetics business, from brand naming to product and package design development.
A Hansome official said, "The domestic premium skincare market, worth 1.5 trillion KRW, is an emerging market with high future growth potential, growing more than 10% annually, but there is no domestic brand that can represent cosmeceuticals yet." He added, "If Hansome applies the 'high-end image' accumulated through its fashion business to the cosmetics business, brand differentiation will be possible."
Hansome's premium skincare brand, scheduled to launch early next year, will first be sold at major department stores such as Hyundai Department Store Apgujeong Main Store, Trade Center Store, and Yeouido Store (tentative name), then expand sales channels to online and duty-free shops.
A Hansome official said, "We are currently collaborating with several domestic and overseas companies to additionally secure raw materials and specialized technologies, which are core elements of the cosmetics business," adding, "We plan to establish differentiated business competitiveness by proactively applying new bio technologies."
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