Sales: $5.7 billion.
Key Personnel: Suh Kyungbae, chairman and chief executive officer; Bae Donghyun, president and chief executive officer.
Major Products: Skin Care—Sulwhasoo, Laneige, Mamonde, Innisfree, Hera, Iope, Happy Bath, Primera, Odyssey, Illi, Lirikos, Aestura, Makeon; Cosmetics—Etude, Hanyul, Espoir, Aritaum; Fragrance—Annick Goutal; Inner Beauty—Vital Beauty; Hair Care—Ryo, Mise-en-Scéne; Oral Care—Median.
New Products: Laneige Layering Cover Cushion and Stained Glasstick; Mamonde All Stay Foundation; Ryo Hair Loss Care Shampoo; Sulwhasoo Concentrated Ginseng Renewing line; Innisfree My Foundation, Bija Cica Balm and AA Band; Etude Mini Two Match, Shine Chic Lip Lacquer and Double Lasting Serum foundation.
Comments: Corporate sales rose less than 1% last year. AmorePacific beauty sales rose 3%, driven by an 8.2% increase in international sales, which accounted for 35.5% of revenue in 2018. Within AmorePacific’s domestic business, Luxury division sales rose 3.6% due to gains in travel retail and the success of several products including Sulwhasoo Bloomstay Vitalizing line, Hera Rosy-Satin cream and Vitalbeautie Jaeumbo Ampoules. Premium channel sales fell 11.3% due to adjustments in home shopping channel’s brand portfolio, according to the company. In contrast, the Daily Beauty business reported solid revenue growth within the digital channel, yet total revenue declined due to lower sales in hypermarkets and other offline channels. Within AmorePacific’s international business, sales in Asia rose 8.2% as the company expanded new market entry. Sales in North America rose on the strength of skin care sales; however, sales in Europe declined due to the termination of the Lolita Lempicka license.
Innisfree sales fell 7%, due to a decline in “roadshop” sales; yet, online revenue increased. Similarly, declining roadshop sales were blamed for a 16% drop in Etude division sales. Roadshops are simply shops on roads instead of high-end department stores.
During his New Year speech in January 2019, chairman Suh Kyungbae proposed this year’s management policy by saying, “Changes are golden opportunities for new innovations. We should not fear or hesitate and enjoy all changes happening now.”
In particular, Kyungbae mentioned changes of times and customers such as the 4th Industrial Revolution, Millennials and Generation Z, emphasizing, “Amorepacific must become a company that makes cosmetics with a better understanding of cosmetics than anybody rather than a company that merely produces good products.” He also added, “Let’s concentrate all our commitment and capabilities on creating and spreading Asian Beauty, which is a fundamentally new-level goal that goes beyond the K-Beauty trend.”
Kyungbae stressed the importance of “customer-centricity,” while focusing on three major tasks:
- Development of innovative products;
- Improvement of customer experience; and
- Digital changes.
“Based on deep understanding and research, we have to develop the world’s first and world’s best products that are highly differentiated and could not be copied by others,” Kyungbae said.
Later, he proposed that in this omni-channel age that breaks the boundaries between online and offline, the group should offer infinitely multifarious customer experiences in and outside of stores while striving to create fandom based on interactions with customers.
Finally, Suh called for company-wide maximized use of digital media. Noting that “Digital and mobile have the largest impact on today’s cosmetics industry,” he emphasized that the group “should communicate with customers on all levels through multi-brands, multi-categories and multi-channels utilizing AI, big data and cloud computing from various angles.”
Still, Q1 2019 corporate sales fell 1.3%. Sales of beauty products declined just 0.4%. Taking a closer look at cosmetics results, AmorePacific’s sales rose 1%, but sales of Innisfree dropped 5% and Etude’s sales fell 23%.