Another domestic cosmetics company is about to IPO.
On January 17, Shanghai Shangmei Cosmetics Co., Ltd. (hereinafter referred to as "Shangmei Group"), the parent company of Han Shu and Yiyezi Mask, handed over the main board of the Hong Kong Stock Exchange.
The IPO of Shangmei Group is a little late. As early as 2015, Lu Yixiong, founder and CEO of Shangmei Group, had planned to complete the listing in 2018, but the listing process was only launched in 2021, during which he also signed A-share listing counseling, but then he did not go away. Now suddenly from A to Hong Kong, impacting the Hong Kong stock IPO.
During the period, a number of domestic beauty and skin care companies have been listed one after another. "The first share of functional skin care" Bethanie sits on a market value of tens of billions, and many companies that focus on medical beauty masks, Chuanger Biology, Shierjia, and domestic makeup Mao Geping, are also impacting IPOs.
At the same time, the 100 billion market domestic cosmetics track, new brands emerge in an endless stream, venture capital has also come down. How should Shangmei Group, which started with fancy marketing, break through?
A domestic makeup brand that made a fortune in fancy marketing
The current achievements of Shangmei Group are inseparable from the keen business sense of founder Lu Yixiong.
In 1995, Lu Yixiong, who was still studying in Guangzhou, worked hard and set up stalls and opened small shops. Four years later, Lu Yixiong came to Xi'an, opened a specialty store specializing in cosmetics wholesale and retail in the wholesale market, and earned the first pot of gold in his life with the innate business genes and past experience of Chaoshan people.
At the end of 2001, Lu Yixiong traveled to Shanghai on business, and the favorable business environment impressed Lu Yixiong. Back in Xi'an, Lu Yixiong immediately handed over the store to his brother to take care of, and turned to Shanghai alone to start a business.
Two years later, Lu Yixiong began to independently develop and establish a cosmetics brand. Coinciding with the popularity of Korean dramas such as "Blue Life and Death Love", the Hallyu is popular, Lu Yixiong named the cosmetics brand "Han Shu", many consumers think it is a Korean brand, and buyers flock to it.
Relying on the brand name of "edge ball", Han Shu is very popular in third- and fourth-tier cities. In order to enhance the brand image, Lu Yixiong opened offline stores in high-end shopping malls in Shanghai, but the first and second lines were occupied by overseas brands and local big brands for a long time, and Han Shu could only find another way out.
In 2008, Han Shu's figure continued to appear on the TV shopping channel of the "sinking market", and the low-cost but high-conversion channel marketing made Han Shu burst into flames. In 2010, Han Shu achieved the first place in the TV shopping industry.
But China's cosmetics market is large and fragmented, with foreign brands occupying the top spot. According to the Frost & Sullivan Report, from 2020 to 2025, the compound annual growth rate of China's domestic cosmetics market will be 11.1%, and the market size will reach 661.6 billion yuan in 2025. At the same time, this market is more fragmented, with the top five all belonging to international cosmetics groups with a combined market share of only 19.8%.
In the face of the impact of international brands, Shangmei Group has implemented a multi-brand strategy, and since 2014, it has successively launched brands such as the herbal skin care brand Yiyezi and the maternal and infant care brand Red Elephant.
In order to quickly expand its popularity and seize market share, Shangmei Group, which has tasted the sweetness of TV shopping, has also begun a radical marketing strategy.
Since 2014, Shangmei Group has switched from TV shopping to variety show sponsorship and offline placement, spending 500 million yuan to name Jiangsu Satellite TV "Non-sincere Do Not Disturb" to become the "first big order in the history of Chinese advertising" at that time, and offline has launched Wanda cinemas nationwide, opening a big screen "hegemonic screen" for up to 4 years.
Shangmei Group has also tried the micro-business model. In 2014, Shangmei Group established the Micro-business Division, which once set a record of "100 million sales in 40 days" and was named the "First Micro-Business". Although it was questioned about the "pyramid scheme" storm and the cancellation of the micro-business division, Han Shu still suffered a wave of "dividends" - some reports pointed out that in 2015, Han Shu's retail sales reached 9 billion, close to L'Oréal Paris's sales in China.
In 2020, the company officially changed its name to shanghai Shangmei Cosmetics Co., Ltd., and its marketing model is also advancing with the times, seizing the outlet of live streaming with goods, and cooperating with head anchors including Li Jiaqi, a King Kong mask under Han Shu has set a record of 8 minutes and 12 seconds of wild sales of 400,000 + boxes.
Han Shu supported half of the country, and the sales cost was 1.5 billion yuan a year
Relying on the continuous iteration of marketing strategies, Han Shu's performance is also improving year by year.
According to the prospectus, in the first three quarters of 2019, 2020 and 2021, Shangmei Group achieved revenue of 2.874 billion yuan, 3.382 billion yuan and 2.596 billion yuan respectively, and adjusted net profit of 114 million yuan, 265 million yuan and 285 million yuan, respectively.
It is worth noting that although Shangmei Group has launched a number of mid-to-high-end brands, the old products are still the pillar of revenue growth.
Specifically, Han Shu, Yiyezi and Red Elephant are the main sources of income of Shangmei Group, accounting for 86.6%, 91.8% and 91.1% of the company's total revenue. Among them, the revenue contributed by Han Shu is still increasing year by year, accounting for 43.8% of the first three quarters of 2021, almost supporting half of the revenue of Shangmei Group.
It is worth mentioning that maternal and child care has become the second growth curve of Shangmei Group. In the first three quarters of 2021, the red elephant contributed about 22% of revenue.
According to the Frost & Sullivan Report, the market size of maternal and child care grew at a COMPOUND annual growth rate of 15.1% from 2015 to 2020 and is expected to reach 82.7 billion yuan in 2025.
As the main brand in the mother and baby series of Shangmei Group, the retail sales in 2020 have exceeded 1.5 billion yuan, ranking first in the domestic brand maternal and child care products, and the red baby elephant has won the top 1 of the Tmall maternal and infant cosmetics category for several consecutive years.
What is more characteristic of Shangmei Group is its large-scale marketing. Founder Lu Yixiong once said: "Advertising, not necessarily able to make a brand, without advertising, it is difficult to make a brand." ”
Shangmei's marketing expenses are not cheap. In the first three quarters of 2019, 2020 and 2021, sales and distribution expenses were $1,325 million, $1,536 million and $1,119 million, accounting for 46.1%, 45.4% and 43.1% of the company's total revenue, respectively.
Taking out nearly half of the revenue for promotion has always been the style of Shangmei Group. It is reported that as early as 2014, Shangmei had spent 55 million yuan to name variety shows such as Tianjin Satellite TV's "Nothing But You" and "Every Day Upward", and popular dramas such as "Three Lives and Three Worlds and Ten Miles of Peach Blossoms" and "Thirty Only" also had the figure of "Han Shu" and "One Leaf".
Shangmei Group also spent a lot of money to sign top stars as spokespersons, Lin Zhiling, Lu Han, Nicholas Tse, Yang Ying, etc. have all cooperated with brands.
The founder holds more than 90% of the shares, and the skin care track capital grabs the beach
Compared with the lively brand marketing, Shangmei Group has relatively few financing moves.
According to public information, Shangmei Group has only raised two financings. In 2015, Shangmei Group completed a 400 million yuan angel round of financing, invested by Lianxin Capital, CITIC Capital and Ge Wenyao, former general manager of Shanghai Jahwa. This was the largest single financing in the local cosmetics field at that time, and it once caused a sensation in the industry. In 2020, Shangmei Group completed a financing of 500 million yuan, and the investors were Youngor, Rising Sun Zijin, Shanghai Yingfu and so on.
Shangmei Group's shareholding is also highly concentrated. According to the prospectus, before the IPO, Lu Yixiong, chairman of Shangmei Group, directly held about 40.96% of the shares, and held about 50.31% of the shares indirectly, controlling a total of 91.27% of the company's interests, Youngor Investment held 2.31%, and Ximei Capital, founded by ge Wenyao, former general manager of Shanghai Jahwa, held 2.12%.
In stark contrast is venture capital's enthusiasm for the beauty and skincare track.
According to incomplete statistics, there were 122 financing incidents in the domestic beauty industry in 2021, with a financing amount of more than 10 billion. Subdivided into various tracks, the track that attracts the most attention from capital is skin care, with 30 investment and financing cases, while the makeup track financing is about 16.
The investment and financing of the skin care track is very lively. Black Ant and Source Code have successively invested in PMPM; the previous hot Youshiyan, Sequoia has invested two rounds in a row; this year's explosive AAOO has obtained more than 100 million yuan of A round financing, and Sequoia and Tiger Global Fund have jointly invested; Pure Skincare LAN has also obtained 200 million yuan of financing jointly invested by Source Code, Tiantu and Introverted Funds.
There are also many CVCs in this track.
Tencent and Yanmei followed Black Ant and Source Code and invested in PMPM; Lin Qingxuan, who said that there were still 67 days left to go bankrupt during the epidemic, received hundreds of millions of yuan of B round financing, Country Garden Venture Investment Bureau; today's fresh skin care brand Phase I will receive angel financing from Red Star Macalline in June 2021; Meitu also participated in the angel round investment of HBN Yan Research.
It is worth noting that with the expansion of the proportion of people with problem skin and the prevalence of ingredients, functional skin care has become one of the popular subdivisions of current skin care consumption.
Positioning the high-end anti-aging brand Zhi KaMei, by today's capital, challenger capital at the same time; the main antioxidant, whitening of the face of PUskinology behind the figure of Gao Rong, Tiantu and other figures; the main soothing and calm seed declaration won the favor of Shunwei Capital, dangerous peak evergreen, and previously obtained the first round of financing led by lightspeed venture capital.
It is worth mentioning that the functional natural skin care product Ximuyuan has obtained 7 rounds of financing in the 2 years of establishment, Zhen Fund has invested 5 rounds in a row, and Hony Capital, H Capital, and Coatue have also entered the game.
On the other hand, the trend worth paying attention to is the "male face economy".
The men's skincare market is on the rise. At the end of 2020, the dear boyfriend of the men's grooming brand obtained tens of millions of yuan of A round financing, Black Ant Capital and Jinding Capital entered the market, and the old shareholder GSR Venture Capital continued to raise bets. Established in 2019, Li Ran has completed 6 rounds of financing, with a total financing amount of more than 450 million yuan, and investors have industrial capital with a significant proportion of male users such as Bilibili and Tiger Sports in addition to investment institutions such as Tiger Global Fund and Wuyuan Capital. (Text/Lü Pin, Source/Touzhong Network)