L Catterton, the private equity arm of luxury conglomerate LVMH, has recently invested in Shanghai Yongxi Information Technology Co., Ltd., the parent company of Chinese beauty brand Blankme. This move signifies LVMH's growing confidence in the Chinese beauty industry and marks another strategic step in L Catterton's investment portfolio, which already includes a variety of consumer sectors.
Blankme, a domestic makeup brand launched in 2016, specializes in base makeup products such as foundations, primers, and concealers. The company has carved out a niche for itself in the competitive Chinese beauty market by focusing on quality and customer experience. This approach has clearly paid off, attracting the attention of international investors like L Catterton.
According to reports, LVMH Catterton No. 1 (Chengdu) Equity Investment Partnership (Limited Partnership), L Catterton's first RMB fund established in Chengdu, now holds approximately 10% of the shares in Shanghai Yongxi Information Technology Co., Ltd. The investment underscores the potential L Catterton sees in the growing Chinese beauty market and Blankme's unique position within it.
While international beauty conglomerates such as L'Oréal, Shiseido, and Estée Lauder have been actively seeking opportunities in the segmented Chinese beauty market, LVMH's investment in Blankme signals a shift towards supporting emerging brands with the potential to tap into niche demands. As the Chinese beauty market matures, top brands focusing on vertical segments demonstrate resilience through economic cycles, a trend that large groups are keen to capitalize on.
However, Blankme's journey hasn't been without challenges. The brand, known for its mid-range pricing strategy, has had to navigate the complexities of customer service, warehousing, and logistics, particularly when it comes to its innovative approach to helping users find the right foundation shade. Moreover, despite claiming to have established its own skin optics laboratory in China for product research and innovation, Blankme still relies on OEM production, a common yet potentially limiting path for small makeup brands.
The investment comes at a time when China's cosmetics retail market has seen a slowdown in growth, with the sales growth of face, lip, and eye makeup on e-commerce platforms like Taobao showing a marked decline. Despite this, Blankme's focus on base makeup, a relatively stable and less competitive track in the market, has allowed it to maintain a strong position and even attract substantial external investment.
As Blankme continues to grow and evolve, the backing of L Catterton could provide the resources and expertise needed to expand its product offerings, improve quality control, and further establish its brand in the Chinese and potentially international markets. With this new investment, Blankme is well-positioned to become a significant player in the beauty industry, reflecting the broader trends and shifts in the Chinese consumer market.
