Japanese cosmetics giant Shiseido is grappling with its biggest challenge in decades, stemming from a costly misfire in North America and eroding market share to nimble Asian rivals. Six years ago, the company spent $845 million acquiring the American brand Drunk Elephant to tap into younger customers, but has since written off more than half the investment due to falling profits and sales.
Shiseido, once a formidable challenger to L’Oreal and Estee Lauder Companies, is now navigating its most significant hurdles in decades. The Japanese cosmetics maker has been hit by a costly blunder in North America and the loss of ground to agile Asian competitors.
Six years ago, Shiseido invested $845 million to acquire the American brand Drunk Elephant, aiming to attract a younger demographic. However, declining profits and sales have forced the company to impair more than half of that investment. This setback underscores broader challenges in the North American market.
Shiseido’s difficulties highlight the rapid shifts in the global cosmetics industry, driven by evolving social trends, accelerated product cycles, and competition from South Korean and Chinese rivals. Companies like Amorepacific and Kolmar Korea have surpassed Shiseido, becoming the largest exporters of cosmetics to the U.S. These agile players have outmaneuvered the Japanese firm, illustrating how quickly beauty brands can falter in a dynamic market.