Why did Shiseido's Drunk Elephant acquisition fail?

The acquisition failed due to declining profits and sales, facing intense competition and changing consumer preferences for natural ingredients.

Which Asian rivals are challenging Shiseido?

Korean companies like Amorepacific and Kolmar Korea, along with Chinese brands, are increasingly dominating the global cosmetics market.

What is Shiseido's turnaround strategy?

Shiseido is implementing drastic cost-cutting, refocusing on luxury brands like Clé de Peau Beauté, and aiming for future sales growth.

Home / Business and Economy / Shiseido's $845M Gamble Fails: Asian Rivals Surge Ahead

Shiseido's $845M Gamble Fails: Asian Rivals Surge Ahead

19 Jan

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Summary

Shiseido wrote off over half of its $845 million Drunk Elephant acquisition cost.
Agile Asian rivals from Korea and China are gaining significant market share.
Shiseido's stock is at one-third of its 2019 peak value.

Shiseido's $845M Gamble Fails: Asian Rivals Surge Ahead

Shiseido Co. is grappling with its most significant challenge in decades, marked by a costly failure in North America and erosion of market share to agile Asian rivals. Six years ago, the Japanese cosmetics giant invested $845 million in acquiring American brand Drunk Elephant to appeal to younger consumers. However, this strategic move has resulted in a substantial write-off, exceeding half of the initial investment, due to declining profits and sales of the acquired brand.

The beauty landscape has evolved rapidly, with social trends, accelerated product cycles, and strong competition from Korean and Chinese companies reshaping the global market. Korean firms like Amorepacific and Kolmar Korea have become major exporters to the US, outmaneuvering Shiseido. In response, the 154-year-old company has initiated a turnaround plan involving severe cost reductions and a strategic refocus on its high-end brands, such as Clé de Peau Beauté, aiming to regain stability post-pandemic.