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Shiseido to Acquire U.S.-Based DDG Skincare for $450 Million

Japanese Cosmetic Giant Shiseido Expands into U.S. Market, Diversifying Beyond Chinese Focus
Japan
s 4911.TSE Blue Chip 150 Consumer 250 Beauty 40
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Japanese cosmetics leader Shiseido is set to make a significant investment in the U.S. market, announcing its acquisition of DDG Skincare Holdings for approximately $450 million. This strategic move is part of Shiseido’s efforts to diversify its growth avenues beyond its primary market in China.

Shiseido will complete the purchase through a U.S. subsidiary, with the transaction expected in the first quarter of 2024. DDG Skincare, renowned for its luxury Dr. Dennis Gross Skincare brand, was founded in 2000 by a dermatologist. The brand’s portfolio, including popular at-home facial peels, aligns with the growing trend of “dermacosmetics” – dermatologically grounded products focusing on skin health.

This acquisition positions Shiseido to tap into the lucrative U.S. cosmetics market, one of the largest globally. Despite the fierce competition in the U.S., Shiseido sees potential for growth, especially in the expanding segment of dermacosmetics, which resonates well with consumers in developed markets like the U.S. and Japan.

China has been Shiseido’s most crucial overseas market, generating significant sales in 2022. However, 2023 has seen a slowdown, attributed to the economic downturn and increased local competition. Additionally, the brand has faced challenges in China due to political issues related to Japan’s environmental decisions.

Shiseido’s foray into the U.S. is not its first. The company previously acquired the cosmetics brand bareMinerals in 2010 but later sold it due to underperformance amidst tough competition. With the acquisition of DDG Skincare, Shiseido aims to bolster its presence in the U.S. market, a critical step in its global expansion strategy and a move to balance its heavy reliance on the Chinese market. This acquisition is a pivotal move for Shiseido, indicating a strategic shift in focus and a renewed emphasis on diversification in its global portfolio.

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