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BFD Expert Voices - Retail Deals

BFD Expert Voices

Japanese beauty giant Shiseido wants to be on the ground floor of beauty innovation.

Why it matters: It's tasked Shiseido Americas CEO Ron Gee with giving the 150-year-old-plus company a fresh face through M&A and investment.

Driving the news: The company in December launched Long Term Investments for the Future (LIFT) Ventures, its first fund targeting emerging Western investments.

LIFT, which invests in early-stage beauty and wellness companies, has already made investments in American probiotic skin care brand Phyla and Australian male grooming brand Patricks.

Details: LIFT's investments will tend to be "smaller in nature," Gee tells Axios, adding it doesn't have a steadfast dollar range.

"Some of these early-stage technologies could be interesting to be part of that journey, where we bring not only our science background, but our go-to-market expertise," Gee says.

Between the lines: The venture fund is in its fledgling stages, he says, and Shiseido hasn't yet had the opportunity to discuss whether some of its investments could be a candidate for the larger company.

The big picture: Strategics in the beauty space have gone "downward in sizing," in terms of identifying smaller, high-growth brands earlier in their life cycle.

It used to be that targets had to hit $100 million in net revenue, and that was the "demarcation line for certain assets to say, 'I'm ready to go to market,'" Gee says.

He believes what has moved the market downward is beauty startups' ability to get access to growth capital at earlier stages in their journey.

"LIFT is square on in that area, in that ability to kind of get [them] that smaller framework of support," Gee says.

"That would not typically be on our radar" a few years ago, he says.

Of note: Rivals Estée Lauder Cos. and L'Oréal have also established venture capital arms to identify and invest in emerging brands.

Context: Shiseido has made several moves to strengthen its positioning in the Western hemisphere over the past few years.

The company acquired skin care favorite Drunk Elephant for $845 million in 2019. In September 2022, it acquired London-based microbiome skin care brand Gallinée for an undisclosed price.

In April 2022, the company launched Ulé, a prestige, eco-conscious skin care upstart, in France.

Meanwhile, alongside heading LIFT Ventures, Gee is also the global head of M&A at Shiseido Group.

He keeps the firm's broader M&A strategy and LIFT ventures in two separate compartments, he says.

But LIFT serves to help it understand where some of the market opportunities are for its brands and where it should allocate resources in the future, he adds.

For its part, Shiseido has been mostly focused on building its prestige business, most recently adding prestige skin care brand Dr. Dennis Gross to its family of brands.

Yes, but: Shiseido divested several brands during the pandemic, including selling its low-cost personal care business to CVC Capital Partners for about 160 billion yen, and its Asia-Pacific professional hair care business to Henkel.

The company also sold bareMinerals, Buxom and Laura Mercier to Advent International's Orveon Global for an undisclosed price.

What's next: Shiseido has struck partnerships in the supplements and drinks area, especially in the Asian markets, Gee says.

"No doubt that those are areas of opportunities that we would consider globally," he says.

"It's, 'how do we bring that concept of inner beauty and make that part of who we are as a company?"

Shiseido goes West: Americas CEO Ron Gee talks buying early beauty innovation

The company launched LIFT Ventures in December to target early-stage beauty brands.

Photo illustration of Ron Gee surrounded by abstract shapes.

Photo illustration: Gabriella Turrisi/Axios. Photo: Teddy Maki

Expert voices

Japanese beauty giant Shiseido wants to be on the ground floor of beauty innovation.Why it matters: It&#x27;s tasked Shiseido Americas CEO Ron Gee with giving the 150-year-old-plus company a fresh face through M&amp;A and investment.

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Shiseido goes West: Americas CEO Ron Gee talks buying early beauty innovation

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