Shinsegae Inter Acquires Overseas Luxury Cosmetics Brand 'Swiss Perfection' (Comprehensive)

[Asia Economy Reporter Yujin Cho] Shinsegae International has become the first company in the domestic cosmetics industry to acquire the overseas luxury skincare brand 'Swiss Perfection.' It is interpreted that Shinsegae International, which had expanded the scale of its cosmetics division through successive mergers and acquisitions (M&A), is reorganizing its business portfolio by withdrawing from manufacturing and strengthening its brands.

◆ Acquisition of Swiss luxury brand = On the 14th, Shinsegae International announced that it had signed a contract to acquire 100% of the shares of the Swiss cosmetics brand Swiss Perfection. This is the first time a domestic company has acquired an overseas luxury skincare brand. From early next year, when the acquisition process is completed, it will begin full-scale business operations for Swiss Perfection.

Swiss Perfection is a premium skincare brand launched in 1998, famous for producing all products based on Swiss tradition and technology as '100% Swiss Made.' It develops cutting-edge anti-aging solutions and provides services and products through spas and private clinics in luxury hotels and yachts in about 20 countries across Europe, Asia, and the Middle East. The prices of its main products, serums and creams, range from 500,000 to 1,000,000 KRW.

The core technology of Swiss Perfection is a plant-based cell regeneration complex called 'Cellular Active Irisa,' extracted from the iris root. Through this acquisition, Shinsegae International has also secured the original technology for raw material manufacturing.

Shinsegae International plans to expand Swiss Perfection, which currently operates mainly in business-to-business (B2B), into the retail market by placing it in major domestic department stores and duty-free shops, and to enter the Chinese market within three years. It also intends to strengthen the overseas expansion of its own cosmetics brands, Vidivici and Yeonjak.

This acquisition is part of a strategic reorganization of the cosmetics business focusing on selection and concentration amid the COVID-19 crisis. Earlier this month, Shinsegae International sold its entire 50% stake (about 17.2 billion KRW) in Shinsegae Intercos Korea, a cosmetics manufacturing ODM company established in partnership with Italy's Intercos, to Intercos. The plan is to completely withdraw from cosmetics manufacturing and focus on acquiring new cosmetics brands and product development.

◆ Expanding territory from China to Europe and the United States = Shinsegae International took its first step into the cosmetics business by acquiring Vidivici in 2012. Despite continuous losses for five years after acquiring Vidivici, it renewed Vidivici in 2014 as a total beauty brand covering from color cosmetics to skincare, and achieved results in the Chinese market, recording sales exceeding 210 billion KRW last year.

It actively continued acquiring exclusive sales rights for overseas brands such as Byredo in 2014, Santa Maria Novella in 2015, Diptyque in 2017, and Hourglass in 2018. At the end of 2018, it strengthened its cosmetics business by launching Yeonjak, a brand combining traditional Korean herbal ingredients with proprietary scientific technology. Through successive M&As, Shinsegae International's cosmetics sales increased from 1.9 billion KRW in 2012 to 62.7 billion KRW in 2017, 221.9 billion KRW in 2018, and 368 billion KRW last year.

The acquisition of Swiss Perfection is expected to serve as a catalyst for expanding overseas business, which had been focused on China, to Europe, the United States, and other regions. Shinsegae International has been intensifying its efforts to target the Chinese market with Vidivici and Yeonjak. In March this year, Vidivici entered Tmall's domestic channel, the largest online channel in China, and Yeonjak plans to secure seven channels on Chinese online malls such as Tmall Global, Xiaohongshu, and JD.com within the year. An industry insider predicted, "One or two additional acquisitions besides this one are expected to be made to target the North American and European markets."

A Shinsegae International official said, "The cosmetics business portfolio, consisting of Vidivici, Yeonjak, and Swiss Perfection, is optimized to target the rapidly growing luxury skincare market," adding, "We will increase our global market share through expanding distribution channels and developing new products."