In 2021, the statement “capital will no longer invest in beauty” resonates strongly in the industry. But this sentence seems to no longer hold true in 2022.
htmlIn November, investment company of LVMH Group invested in the skin care brand "AHRES"; in November, Unilever's venture capital unit Unilever Indonesian vegan cosmetics brand ESQA, led by Ventures, received more than 40 million yuan in financing ...
According to incomplete statistics from Yimei, in 2022, international beauty groups and investment companies frequently made investments, including 110 investment and financing events in the beauty industry in multiple tracks such as skin care, makeup, personal care and supply chain, with a total investment and financing amount of nearly 8 billion yuan.
What is hotter than the beauty track is the new retail, health and beauty track. Review data shows that there were more than 130 investment and financing events in this field throughout the year, with a total amount of more than 12 billion.
"Capital is the direction indicator of industry trends." In the global investment and financing events of the beauty industry in 2022, there is undoubtedly a traffic code for 2023 hidden.
Effective skin care is hot
Southeast Asian beauty makeup is coming
In the skin care category, from the perspective of brand characteristics, functional brands and personalized brands account for a high proportion. For example, HEPROA, which Mingfeng Capital invested tens of millions of yuan in, is positioned as a dermatology-grade skin care brand and focuses on skin allergic reactions and immunology research; Harmony Nectar, led by Partners, is positioning itself as an innovative allergy skin care brand. Uncover Skincare and Face Reality Skincare, which received financing, provide personalized beauty services and personalized acne skin care.
From the perspective of channels, DTC brands are favored by capital; from the perspective of countries, the Indian beauty market cannot be underestimated; and from the perspective of investors, e-commerce service providers have become new "financiers" in order to expand their own brand camp.
. "Three high" skin care brands have become popular: high efficacy/high technology/high-end
In the investment and financing of skin care brands, Ruo Yuchen's two investments are worthy of attention. They invested in "Suhua" and "YOUNGMAY" respectively. The above-mentioned brands are all focused on functional skin care with technology.
Among them, Xianmei was established in 2020 and is positioned as a biotechnology company specializing in the transdermal field. It has launched the "Ultra Water Light" beauty device (for home use) and supporting ultra water light original solution; Suhua, a mid-to-high-end skin care brand, was established in 2021 and claims to be based on high-end synthetic biotechnology and use humanized collagen as the core ingredient.
If Ruo Yuchen’s investment focuses on technology, then Shuiyang shares are mostly interested in mid-to-high-end and professional brands.
In July 2022, Shuiyang Shares invested in PierAuge, a niche French luxury skin care brand. The price of the brand and ranged from 300 to 2,000 yuan, positioning it as mid-to-high-end; also in July, Shuiyang Shares spent 50 million euros to acquire Ifidan, a brand Founded in 2007, the price of a single product is around 500-1,000 yuan; in September, Shuiyang invested again, targeting Demodok, a sub-brand of dermatology company Songyang. The brand's products focus on the skin concept of "immune repair", that is, through its own skin immune system , it completes skin repair and immune reconstruction. The unit price of the product is about 100 yuan.
. Overseas DTC brands are favored, and domestic DTC has turned to omni-channel
In the past few years, DTC beauty brands have experienced explosive growth in China. The so-called DTC (Direct-to-Consumer) refers to a brand that directly faces consumers. Through direct sales channels, it removes wholesalers, retailers and other intermediate links, and conducts product sales and brand communication to consumers. Domestically, , perfect diary, , Huaxizi, etc. are all DTC brands.
In 2022, investment and financing will still prefer DTC beauty brands. Yimeishang found that DTC brands accounted for 6 of the 47 investments and financings in the skin care category, and all were overseas brands, including the American brand Iris&Romeo, which received 5 million yuan in seed round financing, the Indian brand Ayurveda, which received 104 million yuan in series A financing, and Sugar Cosmetics, which received 50 million US dollars in series D financing.
However, it is worth noting that industry insiders pointed out that the current DTC model is no longer new in China, and many local DTC brands have begun omni-channel development. The typical example is Hua Xizi, which has just opened its first offline store in the world. In addition, the epidemic has also led to intensified competition in online channels and soaring traffic costs. The development prospects of DTC brands with heavy investment in capital may be questionable.
. Southeast Asian beauty brands are attracting money, and India may become a popular place to go overseas
When reviewing the investment and financing data in December, Yimeishang found that Southeast Asian beauty brands are bullish in attracting money (for details, see "The "New Favorite" of Capital Has Changed!"). Looking at the investment and financing situation throughout the year, this trend is still very conspicuous.
The above table shows that in 2022, among global beauty brands, many Indian brands such as Inde Wild, Plum, Sugar Cosmetics, Deconstruct, and Mother Sparsh have received capital attention. Among them, Plum, an Indian Internet vegan beauty brand, completed a US$35 million Series C financing led by A91 Partners; Inde Wild received US$3 million in seed round financing. In 2021, the brand launched its first product. Its star product, Day and Night Essence, combines Indian native herbal plants with skin care ingredients such as vitamin C, , squalane, and .
Unilever’s venture capital department also made its first beauty investment in Southeast Asia in November this year, investing approximately 41.86 million yuan in the Indonesian vegan cosmetics brand ESQA.
In this regard, Zhang Ye, founder of Tsingshan Capital , once publicly stated that the further penetration of e-commerce in Southeast Asia will bring opportunities to new brands. Other industry insiders also pointed out that, especially the Indian market, its population is expected to continue to grow in the next 40 years, and the continued demographic dividend will also bring a huge market. In the future, India may become a popular destination for beauty brands to go overseas.
Cosmetics and personal care gained 7.7 billion
The trend of pure beauty is set
In the cosmetics and personal care industry, a total of 52 brands will receive investment and financing in 2022, with a total amount of more than 7.7 billion yuan. Among them, pure beauty and brands focusing on female consumers are the focus of capital.
. Xiaohongshu invests in cosmetics for the first time, and the pure beauty market is heading towards 80 billion.
This year, many of the cosmetics brands that have received investment and financing are positioned as pure, environmentally friendly, and natural. A typical example is the aforementioned ESQA, which Unilever has bet on. According to ESQA's public information, all products of this brand have been certified as vegetarian and halal. Another example is the pure beauty brand Dewy Lab, which has invested tens of millions of US dollars in Huachuang Capital and Xiaohongshu, and the American organic certified beauty brand Ogee, which has received US$7.07 million in Series A financing.
It is reported that Dewy Lab Xinyi is the first cosmetics brand invested by Xiaohongshu. It claims to create classic makeup products with both "pure ingredients" and "excellent makeup effects" based on the pure beauty standards recognized by the brand's team of scientists and industry association experts and scholars. It has now formed a three-product matrix of powder, concealer, and loose powder .
"Spring River Water Warm Duck Prophet", capital is obviously the first to smell the infinite potential of pure beauty. In the early days, the concept of pure beauty appeared more in organically certified cosmetics. Now it covers a wider scope and the extended concept is more inclusive, such as additive-free cosmetics, natural plant cosmetics, non-animal testing cosmetics, halal cosmetics, etc. Pure beauty brands including Drunk Elephant, ILIA, TATCHA, etc. have performed well in the global market in recent years.
Beauty Research Institute's "2021 Pure Beauty Trend Analysis and Forecast" data also shows that the global pure beauty market is expected to reach US$11.56 billion (approximately RMB 80.6 billion) in 2027.
. Personal care home cleaning focuses on women and subdivides the needs again
in 37 Among the personal care home care brands that have received investment and financing, 5 brands have female groups as their core consumers, including the British female care brand WooWoo, which received more than 6 million yuan in seed round financing; the American brand Kushae, which also received seed round financing; and the female personal care brand "Find" which has completed two rounds of financing in a row. "Bud Ya Mi"; Rael, a Korean women's personal care brand that received 35 million yuan in Series B financing.
Among them, the domestic brand Yami was established in 2021 and focuses on women’s health care. The founder is Hao Yuan, general manager of Kuaishou Beauty. It has currently launched Yami Vitality Shower Gel, underwear cleansing beads and other products.
Three major upstart tracks: supply chain/new species/health products
It is worth noting that in addition to regular tracks such as skin care, makeup, and personal care, three major "upstarts" were also revealed in the 2022 investment and financing cases.
. More than 2 billion yuan of funds "slapped" into the beauty supply chain
In 2022, investment and financing events in the beauty supply chain sector showed characteristics such as high financing amounts and dominance by large groups. According to incomplete statistics, the total financing amount was as high as 2 billion yuan.
As shown in the table, among the 15 investment and financing cases, 7 investment targets exceeded 100 million yuan, among which the highest amount was the Chinese cosmetics packaging material manufacturer HCP. Carlyle Group acquired the former for US$1 billion (approximately RMB 6.975 billion). It is understood that HCP is currently one of the largest suppliers of cosmetic packaging materials in the world, and has cooperated with well-known cosmetics and skin care brands such as Estee Lauder , L'Oreal , Shiseido and other well-known cosmetics and skin care brands.
In addition, large beauty groups have also invested in supply chain companies, such as Nutrafol, an American hair care product supplier invested by Unilever; Chuangjian Medical, led by Shiseido Ziyue Fund, with an investment amount of nearly 200 million yuan; BASF invested equity in sustainable plant raw material supplier Inge Biotech.
. New species have entered a reshuffle, and HARMAY Huamei has received the highest single financing amount.
In the second half of 2021, the new beauty species that have been wildly competing for land seem to be collectively declining. But at the beginning of this year, two sky-high financings from HARMAY and WOW COLOR undoubtedly boosted the confidence of the entire new species market again.
According to public reports, the former has completed nearly US$200 million in Series C and Series D financing, which is also the highest single financing amount this year. WOW COLOUR also received hundreds of millions of dollars in Series A+ financing, with a market valuation of US$1 billion. In addition, Zhuanzhuan Group invested 690 million yuan in second-hand luxury e-commerce Hongbulin, which is also one of the few new retail platforms to receive hundreds of millions of yuan in financing.
Some analysts pointed out that such a large amount of capital is betting on the demand of Generation Z for new beauty shopping scenes. However, it should be noted that due to the epidemic, stores including the above-mentioned two new species have been stuck in the quagmire of store closures this year. The number of WOW COLOUR stores nationwide has been nearly halved compared with its peak period. This may be one of the reasons why no new beauty products have received financing in the second half of the year.
. More than 80 big health brands are "competing" on the capital table
In 2022, among the investment and financing distribution of Meishang brands, the big health category is absolutely "hot" in terms of quantity.
According to incomplete statistics from Yimei, more than 80 health food brands have received financing this year, most of which are characterized by functionality and health. Among them, "Week00", a vegetable protein food technology company invested by Primavera Capital, Joy Capital, Jingwei Ventures, Lightspeed China and Cloud Nine Capital, received the most financing, with an amount of US$100 million.
In addition, many new health food brands have also created many new consumption concepts.For example, Hanpan Venture Capital invested in active hydrogen functional drinking water hydrogen Xiaoqi; "Zhide Expectation", a brand focusing on plant-based meat ; "Haozhi Health", a new plant protein food manufacturer; "Partake Foods", a hypoallergenic snack brand; and "Ji Mi Bio", which is committed to the research and development of beef cell meat food.
At the same time, prepared dishes are also popular categories. Brands such as Lianyu Gongfang, Frozen Products Terminal, and Benweixianwu have all received tens of millions of yuan in angel and series A financing.
How to invest in the beauty market in 2023?
At the end of 2022, the three-year epidemic prevention and control policy was officially announced to be relaxed. This news is regarded as a signal that market economy is taking off again. Some people believe that this may stimulate the vitality of the capital market to a certain extent and the investment enthusiasm of capital parties.
However, Yan Ming, a managing partner of Xiuyuan Capital, denies this view. "The capital market will be more rational next year."
In his view, the domestic investment environment before the epidemic was overheated, and companies that were "cultivated to promote growth" had hidden dangers. The three-year epidemic has accelerated the end of these companies.
"The capital market has never been short of hot spots, but how to turn hot spots into success, I believe everyone will think more calmly in the future. Both capital and enterprises must know better what they want." Yan Ming predicts that the capital market will turn around in the second half of next year.
Chief Economist of CITIC Securities Mingming also judged that from the trend point of view, the epidemic will still cause certain disturbance to the economy at the end of this year and early next year, but the economic operation trend is upward, and the economy may see a relatively significant year-on-year and month-on-month recovery in the second quarter of next year.
However, focusing on the beauty market, Yan Ming still has promising tracks, such as functional cosmetics and products with Chinese cultural elements. He further revealed that brand founder, product value, corporate profitability and social responsibility are the dimensions that he pays special attention to when choosing a target.
"Investment strategy for the beauty industry in 2023: look at the post-epidemic recovery in the short term, and the growth matrix in the long term." CITIC Securities analyzed that improving purchasing power is the key to the continued recovery of beauty consumption, and that each company's enhancement of its comprehensive strength is a magic weapon for to hedge against external adverse factors. In the future, it is the joint efforts of high-quality leaders to increase investment in research and development, enhance product strength, consolidate large single products, build a multi-brand, multi-category and multi-price matrix, and promote groupization.
Text: Manxue
Editor in charge: Nanfeng
