#Power of Businesses l 2019-02-11
Today, we introduce you to LG Household & Health Care, the No.1 maker of high-end beauty products in Korea. Let’s hear from Lim Tae-eun at the company’s public relations team.
Our skincare brand “su:m 37°” uses naturally fermented ingredients in its products. Its characteristics are best showcased in one of its products called Secret Essence. In commemoration of the tenth anniversary of the launch of the brand, we have recently added three more products—toner, emulsion and cream—to the Secret line. Currently, a total of 11 Secret line products are available.
Making the most of the benefits of natural fermentation, these products are designed to enhance the skin’s innate strength and help users maintain balanced skin.
The company’s Secret product line represents Korea’s first naturally fermented cosmetics brand “su:m 37°” and contains the firm’s philosophy about beauty products.
Back in 1945, LG Group founder Koo In-hwoi set up a company that received trade approval from the U.S. Army Ministry Government in Korea. His company began to make beauty products in the belief that cosmetics would last forever as long as people pursue beauty. Koo set up a cosmetics factory in his own house and began to sell a new face cream called Lucky to challenge Busan’s cosmetics market that was dominated by foreign brands at the time. Lucky proved to be a great success, and he founded Lak Hui Chemical Industrial Corporation in 1947. The corporation is today’s LG Group.
LG Household & Health Care developed Korea’s first soap, toothpaste, synthetic detergent, shampoo and dishwashing detergent to bring about a major change in household items in the nation. The company came in 27th on the U.S. business magazine Forbes’ list of the world’s 100 most innovative companies in 2018.
At present, the firm produces and sells a variety of products, including cosmetics, daily supplies and beverages. But it is beauty products that make the company stand out.
Our signature brand is “The History of Whoo,” a royal-themed and traditional herbal medicinal skincare brand. This premium lineup is so popular that its annual sales surpassed 2 trillion won in 2018 for the first time in Korea as a single cosmetics brand. It is roughly 1.8 billion US dollars. This is indeed a new milestone in the local cosmetics industry.
Based on the royal court’s unique and time-honored beauty treatment, products under this brand boast outstanding quality and elegant packaging designs. Coupled with the company’s effective marketing, they have enjoyed steady popularity. All cosmetics are popular, but Bichup Ja Saeng Essence is the most iconic product of the brand.
Annual sales of “The History of Whoo” exceeded 1 trillion won in 2016, 13 years after its launch. Last year, its sales amounted to over 2 trillion won to propel the company to reclaim the top spot in the domestic cosmetics industry in four years, despite sluggish domestic demand and China’s economic retaliation against South Korea over the deployment of a U.S. missile defense system. And the company is expected to maintain its top position in the local market, thanks to its next-generation su:m brand that will succeed Whoo.
Su:m is a high-functional cosmetic brand that delivers the vitality of nature to the skin through fermentation technology. The concept of natural fermentation is applied to cosmetics, and fermented cosmetics can deliver the positive energy from herbs to the skin at an optimal condition.
One of the teams at the company’s research institute is dedicated to studying ingredients of cosmetics. While researching various functions of cosmetics, the team wondered if fermentation would be good not only for food but for the skin as well. Researchers discovered that through fermentation, healthful substances could be absorbed into the skin in a more stable way and proved to be more effective. They experimented with multiple fermentation techniques using numerous plants. After much trial and error, they found beneficial effects of fermented cosmetics on the skin.
LG Household & Health Care launched fermentation-based cosmetics in 2007. Fermentation reduces the size of molecules and thus allows the skin to absorb them in a more effective way, while maximizing nutrition. The company incorporated these benefits of natural fermentation into cosmetics in order to lead the saturated domestic cosmetics market.
The company made great efforts to tap into the unexplored area with this whole new concept. To exclude as many artificial elements from its products as possible, the Natural Fermentation Research Institute of the company completed the so-called “Ferm Origin Process,” an upgraded version of typical fermentation technology. For the new technology, a process of rhythmic fermentation characterized by the natural flow of light and sound is added to the four basic elements of conventional fermentation, namely, water, soil, temperature and air.
When researchers at the company heard about new substances that were naturally fermented, they were willing to travel anywhere in the world to collect the substances. It took a whole year to develop an ideal fermented ingredient. They analyzed 500 kinds of plants with excellent medicinal effects from around the world and selected some 80 seasonal plants as main ingredients.
Then, they figured out particular times of the year when roots, stems, leaves, flowers and seeds of the selected plants become most productive, and gathered them only at those times. In other words, the researchers patiently waited for the different parts of the plants to be full of life and energy.
The company faithfully followed the path of natural fermentation that requires time and devotion to finally develop the su:m brand’s core ingredient called Cytosis®. The cosmetic brand posted explosive growth from the first year of its release.
Different parts of about 80 plants were fermented separately at an optimal condition, and only the best ingredients were filtered out to create Cytosis®, the essence of su:m. All products of the su:m brand have this fermented substance. Thanks to the amazing substance, users feel comfortable as soon as su:m products touch their skin and see their skin tone and radiance improve.
Su:m gained popularity through word of mouth and became a million seller, just three years after its release. The water-type Secret Essence, in particular, drew an enthusiastic response from users.
Just a year after its launch, sales of su:m reached 40 billion won or about 36 million US dollars. Its annual sales in 2010 jumped to 100 billion won or about 90 million dollars and last year’s sales exceeded 400 billion won or 360 million dollars. The mega brand enjoys huge popularity in other countries as well, including China, Vietnam, Singapore and Hong Kong, to emerge as the company’s future growth engine.
Su:m is smaller and less flashier than our representative brand Whoo, but it attracts customers with a completely different concept. While Whoo is a premium and luxury brand featuring the theme of Oriental medicine, su:m gives users a more natural and healthier touch. With their distinctive concept, both brands have room to grow further and can appeal to different consumer bases. We consider Su:m to be our next-generation growth engine.
LG Household & Health Care is expanding the scope of cosmetics by creating a unique concept for skincare products, that is, natural fermentation. By taking up new challenges continuously, the company has contributed to improving the lives and health of Korean people. Based on its differentiation strategy and distinct competitive edge, it is now establishing itself as a global company that stands shoulder to shoulder with the world’s top three luxury beauty brands—Lancome, Shiseido and Estee Lauder.