Estee Lauder firstly invest on Chinese beauty brand Codemint

On September 7, domestic beauty brand Codemint officially announced that it had received minority equity investment from New Incubation Ventures, an early investment and incubation venture capital company of the Estee Lauder Group. Specific details were not disclosed.

On September 6, Codemint, a beauty brand founded by Grace Chow(Zhou Yangqing), held an important brand event on the Bund in Shanghai, announcing the strategic cooperation between Codemint and Estee Lauder.

It is worth noting that this is Estee Lauder’s first investment in domestic brands. When Codemint was founded, it also accepted a shareholding from Cosmax, a Korean cosmetics foundry.

01

With celebrity’s effect，Grace Chow created Codemint

Codemint was founded in 2021, and its founder is Zhou Yangqing, a chinese online celebrity, a fashion influencer. According to the brand, members of Codemint’s powerhouse team come from Harvard University, University of California, Berkeley, etc.

Codemint means "pure signal", and it specializes in clean beauty.

Judging from the timeline, Codemint was also born in an era of KOL , when overseas celebrity-led brands blossomed in the cosmetics market.

In 2016, Kylie Cosmetics, a brand founded by Kylie Jenner. It only took the brand 18 years to reach sales of 420 million.

In 2017, Rihanna founded her personal brand Fenty Beauty. In 2021, brand revenue reached 440 million yuan.

It can be said that during this period, the internal strength of major groups has begun to be relatively saturated, and they have also begun to seek fresh blood from the outside.

Such market transformation have also offered these DTC with celebrity effect a unique development advantage.

However, in the domestic beauty market, many celebrities have run their own cosmetics brands across borders, such as “AH” founded by Huang Xiaoming and AB, “Miss Zhang” founded by Zhang xinyu, "NAYOUNG" founded by Xie Na, and "Jingling Mask" founded by Liu jialing, etc. Most of these brands failed in the fierce competition early because of lack of core competitiveness.

However, in such an unsaturated market, as a brand created by non-professional makeup artist, Grace Chow's Codemint survived because of the selection of the prospective business track.

Although “clean beauty” track that Codemint bet on is still in an early stage of development in China, it’s an absolute promising market positioned in the big picture.

According to Tmall data, the market clean beauty cosmetic brands in tmall is expected to reach more than 4 billion yuan in 2024.

In efforts to highlight the product strength, Codemint chose to develop products with functional raw materials, and launched the “Ice American” series in the third year after its establishment, with caffeine as the core-functional ingredient.

In addition, Codemint also utilizes the exclusive patented caffeine penetration enhancement technology to accelerate the transdermal absorption of caffeine, then applied it on the dermis.

At present,At present, the monthly sales of the two products are above 10 million.

At present, Codemint's user portraits are mainly exquisite mothers and urban working women in first-and second-tier cities, as well as some Z-generation users.

In the future, the brand is in the endeavor to gradually radiate more similar people in new first-and second-tier cities through online accurate delivery of KOLs and offline hotel cooperation .

02

Estee Lauder is welcoming its era of investing in China

There is no doubt that China is still a very important market for Estee Lauder. Jefferies Financial Group analysts estimate that about 36% of Estee Lauder's annual revenue comes from the China market.

The Group's financial report for fiscal year 2023 shows that Chinese mainland's sales not only resumed organic growth, but also continued to expand in all major product categories, with an increase of 36% in the fourth quarter.

Meanwhile, in the fourth quarter, Estee Lauder's e-commerce business in Chinese mainland achieved excellent performance every month, achieving an organic growth of over 30%, and its market share in high-end beauty products increased by 2 percentage points.

It can be seen that the sales of Estee Lauder in China market are gradually recovering. At the same time, more importantly, Estee Lauder is exploring a new development mode for the China market: research and development is one, trade is the second, and investment is the third.

On December 15th, 2022, Estee Lauder China Innovation R&D Center (hereinafter referred to as "R&D Center") was officially unveiled in Shanghai.

Besides, in terms of trade, Estee Lauder announced in April this year that the Group's Asia-Pacific Logistics Center for Tourism Retail and its headquarters in China have landed in Hainan Free Trade Port, which indicates that it is laying out more efficient and accurate tourism retail business in the Asia-Pacific region.

As for investment, Estee Lauder is also actively exploring. Fan Jiayu, president of Estee Lauder China, once said in an interview that the group's strategy of "refinement" is to meet the increasingly sophisticated needs of consumers with diversified aesthetics.

Looking back to the investment cases of Estee Lauder Group in recent years, Beauty NEXT found that besides the shocking acquisition of TOMFORD, minority equity investment like Codemint is not a unique case.

In 2015, Estee Lauder acquired part of the shares of parent brand Have & Be Co of Dr. Jart+, and then acquired the remaining two-thirds of the shares in December 2019. This is the first time that Estee Lauder acquired an Asian beauty brand.

Shana Randhava, global senior vice president of the early investment and incubation department of Estee Lauder Group, said in an interview with the fashion media Business of Fashion: "Being able to participate in the brand creation earlier will lay the foundation for us to formulate an end-to-end acquisition strategy."

Investment-R&D-production-sales, Estee Lauder's goal is to establish a closed-loop business in China. Observe the market demand through investment, and then affect the following three links.

"The Chinese market can bring more innovative inspiration to the Group. The Group also hopes to improve Estee Lauder's brand portfolio by investing in new brands, and expand its capabilities in brand-new categories, regions, consumer segments, channels and business models, "Shana Randhava once said firmly in an interview.

She believes that in the future, Estee Lauder will continue to enlarge its investment in the Chinese market and explore more "cutting-edge brands similar to Codemint."