'1 Trillion Won Bet' Global Luxury Brands Collapse under K-Beauty Onslaught

Est?e Lauder Moves to Sell Dr.Jart+, Once Valued at 1 Trillion Won
K-Beauty Brands Surge as Growth Slows for Global Giants

Global luxury cosmetics company Est?e Lauder has reportedly begun the process of selling three underperforming brands, including the Korean beauty brand Dr.Jart+, which it acquired for around 1 trillion won a decade ago. The global spread of the 'K-beauty trend' now appears to be posing a crisis for traditional luxury brands.

According to British fashion magazine BOF on January 14, Est?e Lauder recently bundled Dr.Jart+, Too Faced, and Smashbox into a package deal for sale. The sale is being managed by investment banks Evercore and J.P. Morgan, and it is reported that they have contacted major private equity funds as potential buyers. The estimated sale price is in the hundreds of millions of dollars. Given that Est?e Lauder paid about $1.45 billion to acquire Too Faced as a standalone brand in 2016, this represents a significant discount.

Analysts say Est?e Lauder has shifted to a 'selection and concentration' strategy, focusing on its core brands as the market share of its existing brands continues to decline. This is interpreted as a result of Korean indie cosmetics brands rapidly rising in the global market, leaving traditional brands behind in terms of buzz and relevance.

Dr.Jart+, a Korean brand launched in 2004, made headlines in 2019 when it became the first Korean brand to be acquired by Est?e Lauder. At the time, its corporate value was estimated at about $1.1 billion (around 1.3 trillion won), earning it the title of a 'K-beauty success story.' Est?e Lauder had actively pursued mergers and acquisitions (M&A) of brands popular among younger consumers to strengthen its position in the Asian market.

However, as K-beauty indie brands have spread globally, especially through social networking services (SNS), Dr.Jart+, now under Est?e Lauder, has lost its competitive edge. According to the Financial Supervisory Service's electronic disclosure system, Dr.Jart+'s operator, Have & Be, recorded its highest-ever sales of 634.6 billion won in 2019, but has since been on a downward trend. For the 2025 fiscal year (July 2024-June 2025), sales are expected to fall to 178.8 billion won, a decrease of about 23% year-on-year, and the company posted an operating loss of 23.1 billion won, marking two consecutive years of declining profitability.

Est?e Lauder has responded by cutting duty-free prices to boost demand. Starting January 1 this year, duty-free prices for select products from Est?e Lauder, La Mer, MAC, and Jo Malone London were reduced by around 5%, with price adjustments focused on Advanced Night Repair serum (-5.2%) and Cr?me de la Mer (-5.4%). This move contrasts with the usual pattern of luxury brands raising prices multiple times at the start of each year, citing currency fluctuations.

Est?e Lauder's performance in the Korean market has also slowed recently. The Korean subsidiary, ELC Korea, saw its sales drop from 503.1 billion won in the 2024 fiscal year (July 2023-June 2024) to 463.1 billion won last year, a decrease of about 8%. During the same period, operating profit plunged 52%, from 74.5 billion won to 35.9 billion won. While fixed costs such as rent and labor remained unchanged, the decline in sales hit profitability hard. Globally, Est?e Lauder saw sales rebound by 3% in the quarter ending September last year after four quarters of decline, driven by a 13% increase infragrance sales.The makeup division, however, fell by 2%.

Meanwhile, K-beauty brands are advancing at a remarkable pace. According to the Ministry of Trade, Industry and Energy, cosmetics exports hit a record $11.4 billion last year. In particular, Korean cosmetics exports to the United States surpassed those of France, making Korea the top exporter to the world’s largest cosmetics market.

Leading domestic K-beauty companies such as Amorepacific and APR are steadily increasing their overseas sales share. Amorepacific’s overseas sales ratio rose from 34.1% in 2021 to 43.4% in the third quarter of last year. The company plans to raise its overseas sales proportion to 70% in the future. APR’s overseas sales ratio also surged from 40.7% in 2021 to 76.9% in the third quarter of last year. Notably, U.S. sales through the third quarter of last year reached 753.7 billion won, far exceeding total U.S. sales for 2024 (399.8 billion won).

An industry insider commented, "When Dr.Jart+ was acquired by Est?e Lauder, entering department stores was considered the benchmark for success. Now, Korean indie brands are building fandoms through social networking services like TikTok, and a new, pragmatic consumption pattern has emerged that emphasizes ingredients and cost-effectiveness, making the old formula obsolete."