THREE years ago, Suh Kyung-bae was the second-richest person in South Korea. Today he’s barely Top 10, a stark reversal in a K-beauty boom known for minting billionaires, not breaking them.

Suh’s US$3.6 billion fortune, down from roughly US$8 billion in 2017, is largely comprised of shares in his family’s cosmetics conglomerate, Amorepacific Group, which have fallen more than 40 percent from a mid-January high. The parent of brands like Innisfree, Laniege and Sulwhasoo, Amorepacific was struggling even before COVID-19, and the pandemic has ushered in a slew of lifestyle changes that have made cosmetics less central to women’s daily routines.

That’s brought a halt to the wealth created by the rapid rise in popularity of South Korean beauty products and the deal-making frenzy that followed. From 2010 to 2014, foreign companies spent at least US$215 million acquiring cosmetics firms in the country, according to a September report by Samjong KPMG.

In the five years that followed, the country became the world’s fourth-largest exporter of beauty products, and the deal volume ballooned to US$5 billion, not including transactions for undisclosed sums.

Estee Lauder Cos. made Have & Be Co., widely known for its Dr. Jart+ line, its first acquisition of an Asian beauty brand in November 2019. That deal, worth US$1.1 billion, turned founder ChinWook Lee into a billionaire. Goldman Sachs Group Inc. bought a minority stake in GP Club Co., best known for face masks, making founder Kim Jung-woong one of the country’s richest people. Unilever Plc, L’Oreal SA and other global firms also got stakes in South Korean cosmetics firms, creating massive windfalls for their founders.

But the pandemic has taken a double hit on K-beauty. Social distancing and remote work have lessened demand for makeup and led to store closures. Beauty retail sales in the United States, the No. 3 market for South Korean exports, will be down more than 7 percent in 2020, according to market research firm Mintel.

For South Korea, coronavirus travel restrictions have also cut off the flow of big-spending Chinese tourists and individual merchants who buy tax-free goods in bulk and sell them back home. Meanwhile, China’s customers have more access to global brands and are increasingly interested in products made locally.

(SD-Agencies)