Unilever Bets $2.7 Billion on South Korean Cosmetics Boom – Bloomberg

Unilever agreed to pay 2.27 billion euros ($2.7 billion) for one of South Korea’s biggest makers of beauty products, seeking a larger slice of a booming business fueled by its links to the country’s pop stars and TV actors.

Unilever plans to buy Carver Korea Co., maker of AHC skincare products, from shareholders including Goldman Sachs Group Inc. and Bain Capital Private Equity. It’s the biggest acquisition yet for the Anglo-Dutch company in the world’s fourth-largest skincare market, according to data compiled by Bloomberg.

For the owner of Ben & Jerry’s ice cream and Dove soap, the deal follows recent purchases in niche areas like organic tea and vegan mayonnaise as Chief Executive Officer Paul Polman pursues a commitment to sustainability. The company has also been building up a “prestige” arm within its personal-care business, targeting high-end brands founded in developed markets, such as Dermalogica, Ren and Murad. 

Skincare sales in South Korea are expected to reach $6.3 billion this year, according to research firm Euromonitor. Export demand has been boosted by ads featuring pop musicians and television actors endorsing the cosmetics.

“The Korean wave, driven by K-pop and TV series, created a desire among Asian consumers to look and feel like Korean celebrities,” said Sunny Um, a Singapore-based analyst at Euromonitor.

As Korean companies take on Japan’s Shiseido Co. and Kose Corp. as well as western brands, investors are taking notice. Bain Capital agreed to invest about $816 million in beauty-products maker Hugel Inc. in April, after Goldman and Bain bought a majority stake in Carver last year. Carver, with sales of 321 million euros last year, makes moisturizers, toners and sun protection creams.

Korean cosmetics companies have borrowed from the strategy of fast-fashion brands like Zara, speeding up the product development cycle to keep a sense of freshness, Um said. They’ve also appealed to Chinese consumers by using herbal ingredients that are popular in that country.