What happened
Estée Lauder’s investment arm, New Incubation Ventures (NIV), is taking a minority stake in Chinese luxury fragrance brand Melt Season. This is the American beauty giant’s first investment in a domestic Chinese perfume brand, and second investment in a Chinese startup.
A local high-end fragrance brand, Melt Season was launched in 2021 by Lishi Ni via a WeChat mini program and has since expanded quickly offline. It currently has six brick-and-mortar boutiques, in Beijing, Shanghai, Shenzhen, and Hangzhou. Its collection, which pays tribute to Chinese culture through a modern lens, is priced between $180 (1280 RMB) and $135 (980 RMB). In 2022, the brand launched body care offerings.
The Jing Take
Earlier in September, Estée Lauder’s NIV made a minority investment in clean C-beauty brand Code Mint, founded by Chinese mega-influencer Grace Chow. Other investments made by NIV include Vyrao, Haeckels, and Faculty.
Estée Lauder’s is following in the steps of L’Oréal, which invested in Chinese fragrance label Documents in 2022. This month, LVMH-backed private equity firm, L Catterton, took a minority stake in the foundation brand Blankme.
Beauty giants are making sure that the brands in their portfolio are entering the lucrative Chinese market and investing in up-and-coming domestic brands specializing in specific sectors.
This trend showcases global beauty firms’ optimism about the long-term development of China’s beauty market. But instead of seeing the Chinese market simply as a sales growth engine like in the past, they are now paying more attention to the emerging brands that can tap into segmented needs as the market matures.
Major businesses that focus on vertical segments are more resilient, especially against the backdrop of slowing cosmetics retail sales growth in China over the past three years. This strategy allows international beauty conglomerates to quickly keep up with market developments and acquire deeper knowledge of homegrown consumer behavior and local brands’ operations.
Instead of considering emerging C-beauty stars as global skincare and make-up brands’ rivals, conglomerates are turning them into allies through collaborations and investment. It might only be the beginning.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.