Estée Lauder buys out Korean brand Dr. Jart+’s parent company, praising innovation and brand concept
On November 18 last year, Estée Lauder announced its purchase of South Korean cosmetics company Have & Be Co. Ltd., which owns skincare brand Dr. Jart+ . This was the American cosmetics giant’s first acquisition of a beauty brand from Asia.
The Estée Lauder group agreed to buy two-thirds shares of Have & Be, completing an acquisition process that began in 2015, when it took a minority one-third stake in the Korean company. The amount spent hasn’t been disclosed. Industry insiders, however, have valued the buyout at around 1.8 trillion won (US$1.5 billion), given that sales at Have & Be reached 469.1 billion won (US$397 million) in 2018 while net profit hit 91.6 billion won (US$76 million). Estée Lauder has praised Dr. Jart+ for its innovative concept, one that combines effective skincare solutions and strong research with creative packaging.
The popularity started with BB cream
Have & Be was founded in December 2004 by Lee Jin-wook, who previously worked at an architecture firm in South Korea. He had been inspired to start a skincare business after seeing some women rave about a BB cream at the dermatology clinic where he had been going for skin treatments. At the time, BB cream was originally a functional cosmetic developed in Germany; it was expensive and only available from dermatologists.
Realizing the great potential of BB cream, Lee did some research and a series of tests. He soon saw how its commercialization would be a competitive edge in the market and began his business, putting in a modest 50 million won (US$46,000). In 2005, he and a dermatologist Sung Jae Jung launched Dr. Jart+. Its first product, Dr. Jart+ BB Cream, proved to be a huge hit that quickly cemented the company’s popularity.
Lee focused on safe ingredients, formulating products that did not irritate the skin with no added fragrances, colors or alcohol. In terms of design, the brand chose containers akin to ointment tubes, an unusual look in the cosmetics world. By differentiating itself from the competition with simpler packaging, Dr. Jart+ aimed to convey the idea that its products were based on dermatological science. The brand’s name is a portmanteau of the words “Doctor Joins Art”, meaning “doctors becoming involved in art”.
An interesting episode was the reaction to the launch of Dr. Jart+ Ceramidin Cream in 2012. Many consumers could not tell if it was a medical or cosmetic product. But Have & Be welcomed the uncertainty and even prepared for the reaction, drawing attention to its innovativeness as a company.
Then for the 2016 launch of Dr. Jart+ Cicapair skin regenerative cream, Have & Be ran an intriguing advertising campaign to illustrate the product’s effect on skin prone to daily bumps and bruises. It showed a battle-weary tiger in a dense forest rubbing its body on the leaves of a plant known as Centella Asiatica (also Asiatic pennywort) to heal its wounds. The campaign’s eccentric design was featured prominently in its flagship store and on product packaging, showing that the brand was well attuned to cool culture.
Aiming for the US, not China, in overseas expansion
From its early days, Have & Be has actively worked on expanding overseas. It first targeted Asia, including Taiwan, Hong Kong, Malaysia, and Singapore. Then came the K-beauty boom in 2010, with many South Korean cosmetics brands and makers expanding into China. However, Dr. Jart+ chose to venture in the other direction instead — the United States.
This was a savvy decision. In 2011, Dr. Jart+ products were introduced into Sephora stores; by 2017, its entire line-up was available in up to 868 Sephora stores across the US. Have & Be later went on to build an export network in China and Europe, and now exports its products to 39 countries worldwide. Its biggest export regions are the US, China, and Europe.
Dr. Jart+ products are known for their use of science and technology as well as their clarity of concept. Its marketing prowess can also be seen in how it has easily built brand recognition and popularity in the US, along with a steady global strategy involving cleverly timed moves into large markets such as China. These factors have contributed to the Estée Lauder group’s acquisition. Estée Lauder has also pointed to Dr. Jart+’s original and unique concept of combining dermatology with art, its innovativeness that has attracted millennials in the US and Asia, and the release cycle of new products.
Similar to Unilever’s acquisition of AHC and L’Oréal’s purchase of Style Nanda, Estée Lauder’s takeover of Dr. Jart+ was a huge K-beauty purchase made by a major Western cosmetics company. With the December 9 announcement that German company and Nivea owner Beiersdorf Aktiengesellschaft had also bought a significant stake in Seoul-based LYCL, that trend looks likely to continue well into 2020.
Text: Denyse Yeo
Original text (Japanese): Jonggi HA
