At the end of last year, news emerged that the K-beauty brand Dr.G was acquired by the world's largest cosmetics corporation, L'Oreal Group. The acquisition of a K-beauty brand by L'Oreal Group comes six years after the acquisition of Style Nanda's cosmetic brand '3CE' in 2018.
Dr.G, operated by Goounsesang Cosmetic, is a derma (dermatology) cosmetic brand established in 2003 by dermatologist Dr. An Geon-young. Compared to newly emerging indie brands that are gaining popularity overseas based on short-form marketing, Dr.G is considered a traditional powerhouse with a relatively long history. Although L'Oreal did not disclose the acquisition amount of Goounsesang Cosmetic, the market expects it to be between 500 billion won and 600 billion won.
According to industry sources on the 2nd, there is attention on why L'Oreal chose Goounsesang Cosmetic as a target corporation for acquisition. This is due to the numerous K-beauty products that emerged last year, including Round Lab, known for its Dokdo toner, and brands like Tirtir and Lakacosmetic. Unlike K-beauty brands that are already popular overseas, Dr.G has a higher domestic awareness and sales share.
Recently, K-beauty indie brands that have gained popularity overseas have grown based on short-form marketing such as TikTok. In contrast, Dr.G has a unique growth story based on military supplies. Awareness increased as soldiers purchased the products at PX to give to their girlfriends and family, and it gained popularity at Olive Young, growing sales to around 100 billion won. Goounsesang Cosmetic’s revenue for 2023 is 198.4 billion won on a consolidation basis.
Industry analysis suggests that L'Oreal's choice of Dr.G was also due to its solid history. Dr.G is recognized as a first-generation derma cosmetic brand, popular across all generations from teens to seniors. There are many hit products, including the moisture and soothing solution 'Red Blemish' line suitable for sensitive skin and the 'Black Snail Cream,' which has accumulated over 30 million units sold. These products were all developed by the founder, Dr. An Geon-young, who became a dermatologist to overcome the complex of burn scars on his face from childhood.
On the other hand, while other emerging indie brands have succeeded through short-form marketing on platforms like TikTok, they may run the risk of being 'one-hit wonders' with only one successful product. This indicates that L'Oreal highly values the stability and sustainability of Dr.G.
The fact that Dr.G poses as a derma cosmetic brand is also an attractive point for L'Oreal. While L'Oreal owns derma cosmetic brands like La Roche-Posay, Vichy, and SkinCeuticals, there is a lack of brands specialized for the Asian market. Korean cosmetics have established themselves as strong players in skincare in the U.S., Japan, and Southeast Asia due to their cost-effectiveness and quality. L'Oreal noted that it will 'respond to the increasing demand for K-beauty and meet the demand for reasonably priced skincare.'
However, there are some skeptical views regarding the acquisition of Dr.G, which is at the beginning stage of its overseas expansion, as it is not a brand that has already succeeded in markets like North America. These days, the survival of a brand is determined by 'short-form marketing,' and it is considered difficult for brands that have never tried this method to enter the K-beauty market in North America.
Han Man-hwi, an executive at MMP, which specializes in K-beauty mergers and acquisitions, said, 'L'Oreal's acquisition of Dr.G is aimed at distributing the globally recognized K-beauty skincare through L'Oreal's global supply chain.' He added that 'the growth of K-beauty, which is focusing on markets in the U.S. and Japan, will pave the way for its expansion worldwide.'