Unilever Bets $2.7 Billion on South Korean Cosmetics Boom

Goldman, Bain selling stakes they bought in Carver last year, Unilever to buy cosmetics maker for 2.27 billion euros.

Unilever Bets $2.7 Billion on South Korean Cosmetics Boom
A customer pays for her purchase at the check-out counter of a store. (Photographer: SeongJoon Cho/Bloomberg)

(Bloomberg) -- Unilever agreed to pay 2.27 billion euros ($2.7 billion) for one of South Korea’s biggest makers of beauty products, seeking a larger slice of a booming business fueled by its links to the country’s pop stars and TV actors.

Unilever plans to buy Carver Korea Co., maker of AHC skincare products, from shareholders including Goldman Sachs Group Inc. and Bain Capital Private Equity. It’s the biggest acquisition yet for the Anglo-Dutch company in the world’s fourth-largest skincare market, according to data compiled by Bloomberg.

For the owner of Ben & Jerry’s ice cream and Dove soap, the deal follows recent purchases in niche areas like organic tea and vegan mayonnaise as Chief Executive Officer Paul Polman pursues a commitment to sustainability. The company has also been building up a “prestige” arm within its personal-care business, targeting high-end brands founded in developed markets, such as Dermalogica, Ren and Murad. 

Skincare sales in South Korea are expected to reach $6.3 billion this year, according to research firm Euromonitor. Export demand has been boosted by ads featuring pop musicians and television actors endorsing the cosmetics.

“The Korean wave, driven by K-pop and TV series, created a desire among Asian consumers to look and feel like Korean celebrities,” said Sunny Um, a Singapore-based analyst at Euromonitor.

Unilever Bets $2.7 Billion on South Korean Cosmetics Boom

As Korean companies take on Japan’s Shiseido Co. and Kose Corp. as well as western brands, investors are taking notice. Bain Capital agreed to invest about $816 million in beauty-products maker Hugel Inc. in April, after Goldman and Bain bought a majority stake in Carver last year. Carver, with sales of 321 million euros last year, makes moisturizers, toners and sun protection creams.

Korean cosmetics companies have borrowed from the strategy of fast-fashion brands like Zara, speeding up the product development cycle to keep a sense of freshness, Um said. They’ve also appealed to Chinese consumers by using herbal ingredients that are popular in that country. 

While strong Chinese demand has fueled growth, sales in China have weakened recently amid geopolitical disputes in the region. Operating profit of Amorepacific Corp., South Korea’s largest cosmetics company, dropped 58 percent in the second quarter.
Tensions with China have flared over South Korea’s hosting of the U.S.’s Thaad missile system, meant to protect against a possible nuclear attack amid saber-rattling between North Korean leader Kim Jong-Un and U.S. President Donald Trump. China opposes the system and, in the immediate aftermath of its deployment, travel agencies stopped selling tour packages to South Korea.

While the price Unilever is paying seems “superficially high,” the deal makes sense strategically, said Martin Deboo, an analyst at Jefferies with a “buy” rating on Unilever shares. Unilever rose as much as 0.8 percent in Amsterdam.

‘Top End’

“It’s right at the top end of what Unilever’s paid for things but it’s pretty profitable and 35 percent of the sales go to China, so they’re acquiring right in the heartland of current beauty trends,” he said by phone. 

The company has said investors should expect it to spend between 1 billion euros and 3 billion euros on takeovers every 12 months to accelerate its push beyond mainstream products and into healthier or ethically sourced brands.

Many of Unilever’s recent acquisitions have focused on its food arm, where it’s also moving to sell its slower-growing spreads division. But the company has also been adding to its personal-care with deals like the purchase of brands such as Savital shampoo from Latin America consumer goods giant Quala, in May, and Dollar Shave Club last year.

--With assistance from Shinhye Kang

To contact the reporters on this story: Thomas Buckley in London at, Sterling Wong in Singapore at

To contact the editors responsible for this story: Eric Pfanner at, Thomas Mulier