Recently, Shiseido announced that it has officially signed a contract with private equity fund CVC to sell its entire stake in FineToday Holdings Co., Ltd. (hereinafter referred to as “FineToday”). The transfer is planned to be completed on June 30, 2024.
It is understood that FineToday, formerly known as Shiseido’s personal care business established in 1959, includes 10 brands such as fino, KUYURA, SUPER MiLD, AQUAIR, and others. FineToday is seeking independent listing, with a potential valuation of up to 21.7 billion yuan.
It is noteworthy that this year, Shiseido, Unilever, and Procter & Gamble seem to have targeted their personal care businesses, primarily focused on hair care and skincare, for streamlining purposes.
Shiseido took three years to complete the sale of its personal care business
Shiseido began the process of divesting its personal care business on February 3, 2021, announcing its decision to sell the business to CVC Capital Partners. The transaction was reported to be worth a staggering 160 billion yen, making it the first major PE acquisition in the beauty industry in 2021.
However, at the initial stages of the sale, Shiseido did not completely separate from the business. Instead, it remained involved as a shareholder in the new company to ensure a smooth transition.
On July 1 of the same year, the joint venture company Fine Today Shiseido Co., Ltd. (later renamed FineToday Holdings Co., Ltd. in November 2022) was established by Shiseido and CVC, and it began its operations. At that time, Shiseido held an indirect 35% stake in FineToday.
In China, Shanghai FineToday Cosmetics Operations Co., Ltd. was officially established, with the company name derived from the initials of each English word in the new company’s name (F, T, S).
In 2022, Shiseido further transferred ownership of two manufacturing facilities associated with its personal care business assets, namely the Shiseido Kuki Factory and the Shiseido Vietnam Factory, to FineToday. As of June 20 this year, Shiseido’s stake in FineToday had been reduced to 20.09%.
In a recent announcement, Shiseido stated that it has signed a share transfer agreement with CVC and plans to complete the transfer of the remaining shares of FineToday on June 30, 2024. However, the transaction price was not disclosed.
It is worth mentioning that on June 18 this year, FineToday China also released a statement, indicating that with the continuous improvement of the group’s structure, starting from June, the labels of its 47 SKUs will undergo changes in the manufacturing company and the registrant, shifting from Shiseido to FineToday.
In other words, as of July 1, 2024, FineToday will be completely detached from Shiseido.
Established for three years, FineToday aims for an IPO
Public information reveals that CVC, the new owner of FineToday, has extensive experience in driving business growth, brand development, organizational structure, and personnel advancement in its invested companies since its establishment in 1981. As early as 2000, CVC had become one of Europe’s largest private equity firms, currently managing assets worth over 1.25 trillion yuan.
In the related sale announcement, Shiseido expressed confidence that CVC could provide significant assistance in the development of this business in the global cosmetics and retail sectors, as well as in personnel management.
In fact, with the backing of such a capital giant, FineToday has ambitious goals. According to the FineToday official website, since taking over Shiseido’s personal care business in 2021, its corporate objective is to become the “Asia’s leading personal care products company.”
Since its establishment, FineToday has been expanding consistently in the Asia-Pacific region. On the production and research front, in addition to acquiring Shiseido’s existing personal care factories, FineToday established the FineToday Beauty Innovation Center in Tokyo, Japan, in July 2023, primarily for the research and development of FineToday personal care products.
In terms of brands, FineToday currently owns at least 20 brands. Apart from inheriting Shiseido’s major personal care brands such as AQUAIR, KUYURA, Sanko, and Fino, it also includes FineToday’s first original brand, “+tmr,” covering categories such as hair care, skincare, body care, and beauty tools.
In terms of performance, according to data previously released by Shiseido, the personal care business achieved sales of 4.781 billion yuan in 2019. Prior to the sale, the business had liabilities of nearly 11.656 billion yen. However, according to FineToday’s 2023 Sustainability Report, the company’s consolidated net income exceeded 100 billion yen in 2022.
In a time when the global beauty market is generally contracting, especially with the decline of Japanese beauty brands, FineToday’s ability to maintain stable performance is commendable.
It is worth mentioning that in May of this year, news emerged that FineToday is preparing for an initial public offering on the Tokyo Stock Exchange, with a potential valuation of up to $3 billion. This news has been confirmed once again in Shiseido’s recent announcement. Shiseido stated that FineToday’s core reason for preparing for an IPO is that the company has steadily expanded its business and established an effective management structure under its own leadership.
With three years of establishment, the pursuit of an IPO, a doubling of brand quantity, and steady performance growth, the transaction between Shiseido and CVC has reached a satisfactory conclusion.
Giants Slimming Down, Is Personal Care on the Chopping Block?
It is worth mentioning that earlier this month, Unilever also completed the sale of its personal care business, Elida Beauty. Elida Beauty owns over 20 non-core beauty and personal care brands, including Q-tips®, Caress, Ponds, and St. Ives (limited to North America and Europe), generating approximately $760 million in revenue in 2022.
In May of this year, Procter & Gamble (P&G) also sold its high-end hair care brand, VS Sassoon, and its related hair care business in Greater China to Henkel. Regarding the sale of this business, P&G responded to the media stating, “P&G will continue to optimize its product portfolio structure, and based on this, we have decided to sell the VS Sassoon brand to Henkel.”
Overall, this year, Shiseido, Unilever, and P&G seem to be targeting their personal care businesses, primarily focused on hair care, for slimming down.
In contrast to this trend, CHAILEEDO’s analysis reveals that in recent years, several leading Chinese cosmetic groups, including Proya, Shangmei, Juzi Biotechnology, and Fuerda Biotechnology, have launched new brands in the personal care sector.
“The difference lies in profit orientation and sales orientation,” said an industry insider, referring to the different attitudes of top beauty companies, both domestic and international, towards personal care.
In terms of product categories, consumers have relatively low loyalty to personal care products and are more easily swayed by factors such as price, making brand switching common. This characteristic presents greater challenges for beauty giants in maintaining market share and improving profit margins.
Therefore, industry insiders believe that by selling relatively low-profit personal care brands, beauty giants can free up funds and management resources to invest in core business expansion and innovation, such as developing new products and expanding into new markets.
On the other hand, in the Chinese market, there is a stable demand for personal care products, with increasing emphasis on product functionality, customization, and diversity. This has led Chinese brands to see an opportunity to enter the personal care sector and create a second growth curve for their companies.
In fact, when Chinese brands launch new personal care products and brands, they often have clearer positioning and innovative features. For example, in May of this year, Proya officially launched the AWAKEN SEEDS brand, which specializes in scalp microbiome research for hair care. CHICMAX held the “One Leaf Hair Care Conference” and announced plans to achieve 10 billion yuan in revenue from its hair care business within five years. The One Leaf series of hair care products was also unveiled at the conference, focusing on sensitive scalp care.
However, this does not mean that foreign beauty companies are giving up on personal care. FineToday, for instance, has openly stated its plans to make China its largest market by 2026. Furthermore, FineToday is establishing local production and research facilities in China. Brands such as AQUAIR, hadasui, and Riclin have already achieved localization in terms of research and production.
Similarly, Henkel, which acquired the VS Sassoon brand, has its sights set on the Chinese market as well. Henkel China previously stated, “VS Sassoon is a brand with a salon-inspired image in the retail market. Its addition will complement Henkel’s consumer brand portfolio in the Chinese market and fill the gap in the high-end hair care sector.” Senior industry experts also believe that through the acquisition of VS Sassoon, Henkel not only gains a globally renowned hair care brand but also expands its market share in the hair care products sector, especially in China, a key consumer market. The addition of VS Sassoon strengthens Henkel’s competitiveness in the hair care industry.
Therefore, it appears that significant changes are brewing not only in the Chinese market but also in the global personal care market.
