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— Since becoming Korea’s first modern cosmetics maker in 1947, LG Household & Health Care has stood at the fore in household products such as toothpaste and detergents, as well as cosmetics. Thanks to generous customer support, the company has achieved steady growth. Positioned as Korea’s leading company specializing in household products and cosmetics, LG Household & Health Care helps people enjoy healthier and more comfortable lives through a number of best-selling products, including Perioe, Elastine, Say, Tech, Jayonpong and Saffron. In cosmetics, the company preserves beauty through its signature brands like OHUI, Whoo, Su:m, ISA KNOX and SooRyeHan.
Sales: $4.2 billion
Comments: Corporate sales fell 11.2%. Operating profit plunged nearly 45%. By category, beauty sales sunk nearly 65% and home care and daily beauty sales fell 9.1%.
Beauty sales tanked as The History of Whoo reported a 38% sales decline, while sales of SU:M37 fell 16%. Some good news is that sales of O Hui rose 17%.
HCDB sales increased 7.4%, as sales of Veilment and Physiogel skincare products rose 22% and 17%, respectively.
In November, Lee Jung-ae was named chief executive officer. She is the first woman to lead LG Household & Health Care. She replaced Cha Suk-yong who led LG H&H for 18 years.
“Lee has a good understanding of all business areas of the company, from cosmetics to beverages and household goods,” the company said in a statement.
As a veteran marketer, Lee spearheaded the global growth of LG Household & Health Care’s luxury cosmetic brands, such as O Hui and Whoo, since 2015. The Whoo brand alone broke one trillion won in annual revenue a year later, the company explained.
Since 2019, Lee had been the head of marketing of the company’s beverage products, such as Coca-Cola and Seagram’s carbonated water.
For Q1 2023, sales rose 2.4%. Beauty sales rose less than 1% and operating profit fell 11.3%, which the company blamed on double-digit sales decline in China. Home Care & Daily Beauty sales increased 1.9%; operating profit fell almost 41%.
Sales rose 3.1% to a record. Both sales and operating profit have grown for 17 consecutive years.
Total beauty sales rose 3.2%. Premium beauty sales declined 0.4%. LG blamed the decline on the pandemic, but noted that business is expanding in China.
Home care/daily beauty sales rose 9.9% on the strength of brands such as Reen, Dr. Groot, Bamboo Salt and Physiogel. As ESG concerns grew into a megatrend, L&G rolled out eco-friendly fabric softeners that are free of microplastics, and paper packaged shampoo bars and powder toothpaste.
Last year, LG closed its deal to acquire a 56% stake in Boinca Inc., the US manufacturer that owns hair care brand Arctic Fox. The deal was valued at $100 million, according to Brutzkus Gubner, which represented Boinca in the deal.
Arctic Fox is best known for its vibrant, long-lasting, semi-permanent hair dyes that are vegan and cruelty-free. Launched in 2014, the range is a bestseller on Amazon and other leading beauty retailers and has strong social media presence, according to LG.
Sales: $5.3 billion for household and personal care products. Corporate sales: $6.6 billion
In 2019, LG Household & Healthcare (LGH&H) posted its 15th consecutive year of record sales, as sales and profits both rose 13.9%. Those gains came despite a slowdown in South Korea’s economy, the US-China trade war, China’s introduction of an e-commerce law and protests in Hong Kong. Through it all, LGH&H managed to post 10% in every quarter last year. Key included the Whoo, su:m and O Hui brands.
International sales jumped 48% thanks to gains in China and Japan. But even with those gains, Korea still accounted for 76% of corporate sales. China represented 13%, followed by Japan, 5%; North America, 3% and other, 3%.
The big news of 2019, of course, was the $125 million acquisition of New Avon, which enabled LGH&H to penetrate the North American market and prepare for global expansion.
Within the beauty business, sales increased more than 21%, led by luxury cosmetics, which posted gains in duty-free and China. Whoo’s sales topped 2.6 trillion won. Su:m and O Hui focused on their most high-end offerings and grew 9% and 12%, respectively. Sales of the CNP brand topped 100 billion won, a 29% increase over 2018. Internationally, sales rose 54%, led by a 52% increase in China, where consumers were hungry for luxury cosmetics.
Home and personal care sales increased just 1.8%. LGH&H executives admitted that the business environment remained challenging, but said improved business fundamentals enabled the company to become more agile to changing market conditions. Notably, premium brands such as Propolithera, Himalaya Pink Salt, Dr. Groot and On:The Body Veilment Natural Spa all had strong years. International sales increased 8.5%, led by China and Japan.
And, of course, LGH&H expanded its presence in North America with the purchase of Avon. At the time the deal was announced, the company said Avon North America would benefit from LG H&H’s world-class R&D capabilities in cosmetics, personal care, fragrance, packaging and design. The first collaboration was The Avon x The Face Shop, LGH&H’s flagship beauty brand and retailer. The skin care and makeup collection included new shades, new ingredients and new-to-Avon formats such as Korean cushion formulations of foundation, highlighter and blush. The second collaboration is a partnership with Chi, featuring three hair care products that utilize a blend of certified organic botanicals including aloe vera, pomegranate and hibiscus.
“We recognize Avon North America’s strong brand, leading market position in the region, and talented employees and Representatives,” said Chairman and CEO Suk Yong Cha. “Avon North America’s innovative social selling model builds deep connections with customers and we are excited to leverage this as we continue to expand. We look forward to building on Avon North America’s success to drive customer engagement and long-term growth in this market.”
The LGH&H/Avon combination seems to be working. The number of new Avon representatives jumped 375% in April. What’s more, Avon appears to be appealing to younger women. The average age of an Avon representative is over 40, but 60% of new reps are under 35, according to the company.
While other companies were impacted by the COVID-19 pandemic, there was no slowing down at LGH&H. In Q1 2020, sales rose 1.2%; it was the 58th quarter in a row for topline growth. More impressive, operating profit has increased for 60 quarters in a row. LGH&H noted that beauty minimized the impact of COVID-19 on sales and profits thanks to solid demand for luxury.
According to CEO and Vice Chairman Cha, LG Household and Healthcare follows three business policies in order to ensure fundamental competitiveness:
Sales: $5.2 billion for household and personal care products. Corporate sales: $5.6 billion.
LG H&H has increased sales every quarter for more than 13 years; now it hopes to grow faster via its acquisition of New Avon. In April, the company entered into a definitive agreement with an affiliate of Cerberus Capital Management, L.P. and Avon Products, Inc. to acquire New Avon, LLC (Avon North America) for $125 million in cash.
LG H&H will acquire the entirety of Cerberus’ majority interest and Avon Worldwide’s minority interest in Avon North America. The addition of Avon’s iconic brand, award-winning products, dedicated employee base and network of 250,000 sales representatives throughout North America will support LG H&H’s international growth plans, the company said in a statement.
Under LG H&H’s ownership, Avon North America will continue its strategy of product innovation, while strengthening its position as the leading social selling beauty company in the region. Avon North America is expected to benefit from LG H&H’s R&D capabilities in cosmetics, personal care, fragrance, packaging and design, according to company executives.
“We recognize Avon North America’s strong brand, leading market position in the region and talented employees and Representatives. Avon North America’s innovative social selling model builds deep connections with customers and we are excited to leverage this as we continue to expand. We look forward to building on Avon North America’s success to drive customer engagement and long-term growth in this market,” said Suk Cha, CEO of LG Household & Health Care.
“LG H&H respects and admires our strong community of representatives, and supports our mission to empower women through economic opportunity,” said Laurie Ann Goldman, CEO of Avon North America. “We are thrilled to welcome our new partner, who shares our commitment to innovation, and our clear focus on putting customers first. We have appreciated our partnership with Cerberus over the last three years and their support as we strengthened the company and reset our path toward long-term success.”
The transaction is expected to close on September 30, 2019 and is subject to certain customary closing conditions, including regulatory approvals in the US.
The acquisition comes at a time when LG’s model is working at home and abroad. Sales rose 10% last year thanks to gains within the luxury cosmetics business.
For Q1, 2019, the company reported sales rose 13% to a record. Demand for premium-priced cosmetics led beauty sales higher, and sales of detergents and home care products increased too.
Sales: $4.3 billion for household and personal care products. Corporate sales: $5.3 billion.
Corporate sales rose 2.9% to a record. Strong demand for luxury cosmetics lifted personal care sales by 4.9%. In fact, Whoo became one of Asia’s top cosmetics brands as its global sales surpassed 1 trillion won for two consecutive years, reaching 1.4 trillion won in 2017. Su:m’s global sales surpassed 380 billion won, strengthening its position as the second major brand. China cosmetics sales increased 34% year-over-year from continuous demand growth from on-shore consumers.
Sales of household products fell less than 1%. LG blamed the slight decline on lower inbound Chinese traffic.
Q1 2018 corporate sales rose 6.5%, and making it 50 quarters in a row of sales increases dating all the way back to Q3 2005, according to LG. Cosmetic sales increased 12% due to demand for luxury cosmetics, especially in China where sales soared 89%. However, sales of household products fell 4.5%, due to a mature and unpredictable domestic market. In April, LG agreed to acquire 100% of Avon Japan for about $93 million. Avon is ranked No. 21 in the market and the move dovetails with LG’s strategy of expanding in Japan via acquisition.
The company purchased Ginza Stefany in 2012 and Everlife in 2013.
Sales: $4.1 billion
LG continues to chug along, posting double-digit gains again. Corporate sales rose 24.6% last year, and operating profits jumped nearly 43%. Profit margin improved 18.3% and the company credited prestige cosmetic sales for much of the gains. Sales of luxury cosmetics grew 40% and its sales contribution increased to 69% within cosmetics. Prestige cosmetic sales were led by perennial topseller, Whoo, which achieved sales of more than $1 billion last year. Meanwhile, fermented cosmetics brand SU:M, which debuted in China last year, nearly topped the $300 million mark in sales, according to LG.
Household product sales rose 5.4% last year to $1.3 billion. Operating profit increased 9%, as consumers flocked toward premium formulas. LG’s household care market share reached 37%, as the company maintained its No. 1 position in Korea.
In October, LG expanded its presence in the hair care category by forming a joint venture with Farouk Systems (No. 49 in Happi’s Top 50, July 2017). The JV, LG Farouk, is expected to expand and enhance the presence in both Korean and international hair care market through synergy from R&D and marketing leadership. Under terms of the agreement, LG will have an access to Farouk’s network in North America such as hair salons and beauty specialty stores to introduce premium hair care products as well as a variety of cosmetics. In addition, LG Farouk will strengthen its brand portfolio in Korea by introducing more brands in shampoo, colorants and hair styling products. This isn’t the first time that LG has teamed up with Farouk. In 2013 LG introduced Farouk’s Silk Therapy brand into Korea.
Late last year, LG acquired the Reach oral care business in the Asia Pacific market from Johnson & Johnson. A purchase price was not disclosed. The move is expected to enhance LG’s oral care business in existing markets such as Korea, China, Taiwan, Japan and Vietnam, and in new markets such as Australia, New Zealand and India. According to LG, the global oral care market rose 5.5% CAGR during the past five years and global sales topped $40 billion in 2015.
In 1Q 2017, corporate sales rose 5.4%. It marked the 47th consecutive quarter that sales increased. Moreover, operating profit increased 11.3%. Cosmetic sales increased 7.2%, driven by big gains in luxury cosmetic sales. Household sales increased 2.7% in Q1.
Sales: $3.5 billion
LG is on a roll. The company reported another year of double-digit gains for its cosmetics business as sales increased 25% and operating profit rose 43%. Luxury cosmetics sales grew 60% on the strength of major brands, as the business recovered from a Middle East Respiratory Syndrome scare that killed 36 people in South Korea last year before the outbreak was declared over in July. As one might suspect, the duty free channel that impacted by MERS the most, but it bounced back strongly, with sales doubling.
LG said Whoo skin care continued to deliver high growth in domestic DFS and local China market as it did last year, and delivered global sales exceeding 800 billion won. In the US, the Belif skin care line was successfully launched in Sephora, and is currently sold at 85 stores in major cities.
Within the personal care business, six categories recorded 15% sales and the company’s market share reached 35.4%. LG’s personal care sales in China got a boost from the launch of ReEn Yungo last November.
Growth was good, but more modest in home care in 2015, as sales increased 6.3% 1.6 trillion won.
The growth trend continued in 2016, as first quarter sales surged nearly 17% to a record 1.5 trillion won. More impressive was the 31% gain in operating profit, which climbed to a record 234 billion won.
Every business unit outperformed the market. Cosmetic sales increased nearly 26% to 797 billion won, with prestige sales rising 39% due to strong growth of major brands like Whoo.
Sales within the personal and home care segment increased 6.5% to more than 400 billion won.
Sales: $3.2 billion
LG continues to make gains, as corporate sales rose 8% last year, helped to a large extent by sales of prestige cosmetics to consumers in China. In fact, sales of LG brands such as Whoo and SU:M doubled in the fourth quarter of 2014 and Whoo achieved the No. 1 spot in duty-free shopping, according to LG.
According to Euromonitor International, LG Household & Health Care retained the solid leading position in Korean home care in 2014 with more than double the value share of the second-ranked player by increasing its value share by one percentage point during the year. In contrast to global players, domestic manufacturers recorded strong performances by quickly adapting to South Korean consumer demand during 2014.
For the first quarter of 2015, the good times continued as corporate sales rose more than 15%. The company proudly noted that sales have risen for 39 consecutive quarters. During the period, household and personal care sales rose 3.5%, while skin care sales soared more than 34%.
Sales: $3.3 billion
LG brass said the economy weakened and, as a result, the domestic household and cosmetics market fell 4% and 5%, respectively last year. And yet, LG managed to increase corporate sales by 11% in local currency. Leading the way was the cosmetic, fragrance and toiletry business, where sales increased nearly 14% to almost $1.3 billion. Gains were attributed to the success of the Elastine and On the Body lines. The company said its home care business was challenged by a competitor’s aggressive discounts for fabric softeners. Still, demand for Nature Pong, and Han IP detergents was strong enough to lift sales of laundry detergent and dish detergents by 4% and 9%, respectively. To maintain momentum, LG entered the baby and child care business with the launch of Babience and is expanding its fabric care operations into China and the Middle East via joint ventures.
Beauty sales increased more than 12% to almost $1.5 billion and LG said its share of the domestic cosmetics market reached 20% for the first time. Prestige sales increased on the strength of the Whoo and Belif brands. Masstige business increased as well, as consumers approved Beyond’s anti-animal testing campaign. LG maintains consumer interest in eco-friendly brands is growing in Korea. Mass cosmetics sales also increased, driven by the success of CC cream formulas and the startup of direct operation of Coty’s perfume brands.
International sales jumped 50% last year, as beauty, personal care and home care all made contributions.
For the first quarter, personal care and home care sales rose 6.9% due to the success of Silk Therapy hair care products, as well as the oral care business, which now includes the No. 1 toothbrush in Korea. It was a mixed bag in beauty, however, as prestige cosmetics sales rose 16%, but sales within masstige channels fell 12%. Mass cosmetic sales increased 9% for the quarter. Overall, sales rose 5.2% to just over $1 billion.
Sales: $2.4 billion
The bulk of LG’s corporate sales (70%) come from household and personal care products, but the company is also a major player in the beverage category, marketing Coca-Cola and other products.
In 2012, sales of detergents, shampoos, toothpaste and similar household staples rose 6% to more than $1.1 billion—not bad, but LG’s cosmetics sales soared 20% to more than $2.4 billion.
Korea accounts for more than 85% of LG’s corporate sales, but the company has a growing presence in Asia. For example, sales in China jumped nearly 62% last year to $128 million. Sales gains were even more impressive in the rest of Asia, as sales soared 150% to nearly $195 million.
To grow even faster, CEO Suk Cha said LG has a four-point strategy that includes:
The plan seems to be working as the company reported first quarter sales rose more than 10% to $990 million and net profit rose nearly 13% to nearly $93 million. Household care sales increased 11% in the first quarter, as two joint ventures, one with Xibao in China and the other with Indevco in Dubai, are aimed at growing in China and the Middle East. Cosmetic sales increased 11% despite weak consumption in LG’s home market. Sales got a lift from the launch of Davi, a prestige cosmetics line. International cosmetics sales rose 49% due to the acquisition of Everlife and strong growth of The Face Shop brand. Sales in China and Japan surged 62% in the first quarter.
Sales: $2.1 billion
Corporate sales rose more than 20% last year. Skin care accounts for 85% of company sales, with color cosmetics representing a distant second with 15% of sales. But the company hopes to boost its color sales via the October 2011 acquisition of VOV Corp., which had sales of nearly $41 million in 2010. LG paid a little more than $50 million for VOV, which is the No. 3 player in the Korean color cosmetics market.
By segment, personal care and household care sales rose more than 15% to exceed $1 billion, driven by gains in skin care, oral care, laundry care and dishwashing products. Cosmetic sales increased more than 13% to about $1.1 billion, thanks to strong sales of Whoo and Su:m skin care products, the successful launch of Belif skin care and overseas expansion of TheFaceShop.
At the same time, CEO Suk Cha, who was named Best Korean CEO for the third consecutive year by Asiamoney, told shareholders and analysts that the company will expand via four avenues:
Unfortunately, for the first time in years, gross margin slipped below 50%, falling to 49.7% in 2011. Still, overall, the good times continued into 2012, as first quarter sales jumped 17%.
Sales: $1.8 billion
LG Household & Healthcare (H&H) reported all-time highs for annual sales at $2.4 billion (up 27.5%) and operating profit at $30 million (up 52.0%) in 2010. The company breaks its results into three main sectors—Healthy, Beautiful and Refreshing—representing household care, cosmetics, skin care and other HBA products in the first two, with beverages in the latter unit.
Within Happi’s scope, sales within the firm’s Healthy business unit rose 15.6% to nearly $950 millon—making LG the first household business in Korea to exceed sales of one trillion won, according to the company. Within this unit, the hair care category grew by more than 30% YOY, driven by a new brand called I Hee Care for Style and ReEn, an oriental herbal concept brand. Body care sales rose 20%, bolstered by LG’s eco line Beyond (up 40%) and Say brands. This category, which also includes diaper and sanitary napkin businesses, saw its operating profit increase more than 25%.
Sales within the Beautiful business unit jumped 52.4% to more than $880 million, exceeding the 1 trillion hurdle for the first time, and operating profit jumped 103.3%. The prestige segment maintained rapid growth, according to LG, with Whoo, SU:M and Belif (a new brand) faring well. Specifically, SU:M posted 70% growth year-over-year as LG expanded its counters from 22 to 40. Within masstige, Beaute de Beautiplex, billed as upgraded version of Beautiplex, opened 117 stores. LG acquired TheFaceShop in January 2010 and has upped the number of TheFaceShop stores, adding 160 domestic doors and 54 overseas shops during the year, pushing total stores in operation at the end of 2010 to 1,194.
In 2011, LG H&H’s overall strategic objectives are to continue to focus on a premiumization strategy to provide differentiated products with a unique value proposition, and strengthen its product portfolio by extending value-oriented product lines that maximize consumer value through minimizing unnecessary packaging and ingredients. On top of solid domestic business performance, LG said it will also expand its presence in overseas markets, especially in China, by enhancing product ranges and expanding channel coverage.
Sales: $1.2 billion
Sales rose nearly 13% last year for Korea’s No. 2 cosmetics maker (behind Amore Pacific). The big news at LG during the past year was the acquisition of The Face Shop, Korea’s No. 3 cosmetics maker for about $300 million. At the time of the acquisition, The Face Shop had annual sales of about $215 million. The move gives LG entry into the lower priced portion of the market.
According to LG, the acquisition puts it on par with Amore Pacific in the Korean cosmetics market. Moreover, the deal gives LG an opportunity to reach a new consumer base, women in their teens and early twenties. This year, LG expects sales to increase 10% on the strength of The Face Shop acquisition.
In January, LG rolled out new anti-aging skin care products, co-developed by CHA Bio & Diostech, a research affiliate of the CHA Medical Group. The new products include O Hui The First series, which contain a recombinant human stem cell protein (rHSCP), and Isa Knox Te’rvina, which contains the recombinant human placenta protein (rHPP-8TM). LG is the first Korean company to have access to CHA Bio & Diostech’s proprietary skin rejuvenation technologies for developing skin care products.
“Conventional stem cell cosmetics merely activate skin cells while O Hui The First is a revolutionary product made by reorganizing the key elements of embryonic stem-cell culture fluid which Cha Stem Cell Institute (CSCI) found to have extraordinary skin revitalizing effects,” said Chung, Hyung Min, PhD, researcher of CSCI.
Meanwhile the Cha Placenta Institute analyzed key functions and viable ingredients of the human placenta, recombined key agents of the placenta, and applied the new components into Isa Knox Te’rvina.
LG got off to a fast start in 2010, as first quarter sales jumped nearly 24% to more than $600 million and operating profit soared almost 40%. Household product sales rose 14% to nearly $250 million and cosmetics sales soared 44% to more than $230 million.
LG’s household and cosmetic units garnered sales of $1.26 billion in 2008. The company’s biggest sector, household care products, saw sales rise 9.7% to $768.2 million and operating profit increased 8.6%.
Despite historically high raw materials cost and foreign exchange rate fluctuations, gains came from the sustained growth of premium products. For example, sales of premium eco-brand Beyond rose 41%, fueled by new differentiated products, and a steady increase in the number of stores (up from 108 in 2007 to 155 in 2008), according to the company. In addition, LG said Saffron Aroma Sheet, which was launched in the end of 2007, captured a 2% market share in the fabric softener category.
The company’s cosmetics division scored big during the year, with sales rising 23.4% to $496.7 million. Operating profit rose 39.6%. Officials attributed the gains to the rapid growth of prestige brands as well as high-end premium lines in the mass market segment.
Despite overall consumption declines due to the economic downturn, LG said its premium brands OHui and Whoo maintained sales growth. Su:m, a newer brand in LG’s stable, continued its successful start, according to LG. In addition, LG reported that its mass brands Isa Knox and Sooryehan are “migrating toward prestige brand positioning” within mass channels, driven by high-end line extensions.
Sales rose 13.5% due to continued growth of high margin premium brands. Household product sales rose 8.9% and operating profit rose 21.9%. LG attributed the results to continued growth of new brands and renewals of existing brands.
LG said it continues to shift focus away from price-based competition to premium products. It has had success with Beyond, a high-premium household brand, which saw a 76% sales gain stemming from new product launches and a rapid increase in the number of stores where it is stocked.
The company has recently added Borrowing Earth, a line of environmentally-friendly natural household products that minimize the use of artificial chemical substances in the formulation and packaging. The six product line includes toothpaste, soap, liquid laundry detergent, dishwashing detergent and a fabric softener. The company will add kitchen and bathroom cleaners as well as hair care and body care products.
LG’s cosmetics business reported a 23.8% sales increase. According to LG, growth continues to come from premium cosmetics, such as its new naturally fermented brand called su:m 37. Su:m refers to the skin’s respiration, while “37” represents the optimal temperature for fermentation, according to the company. Launched in select department stores in October, LG plans to expand distribution throughout 2008.
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