CEO admits flagship products struggle in target markets
By By Park Si-soo
The country's leading cosmetics maker Amore Pacific recently decided to stop selling its top namesake premium products at duty free stores in Japan. It has also withdrawn Amore Pacific-branded products from several domestic duty free stores.
Instead, the Seoul-based company plans to bolster sales of Etude-branded products available at relatively low prices.
A major portion of the firm's sales are generated at duty free stores at home and abroad.
The company launched the high-end line in 2002 to compete with such international luxury cosmetics brands as L'Oreal, Lancome and Estee Lauder. But the withdrawal may signal failure of the mission. In addition, analysts say, Amore Pacific has found itself to be competitive only in the market of mid and low-priced products.
Last month, Amore Pacific CEO Suh Kyung-bae admitted that the high-end line was struggling in overseas markets, adding the company will focus more on lower-priced products.
Asked about the withdrawal from Japanese duty free shops, Suh told reporters that it was due to no growth there over the past ten years. "We will appeal to customers in Japan with a new brand that can lure young people," the CEO said.
The company has decided to drastically cut the number of domestic outlets exclusively selling the premium line for the same reason.
Amore Pacific has shown impressive performances in sales throughout this year, pushing up its share prices to an all-time high ㅡ its shares closed up 3.09 percent or 75,000 won at 2.5 million won ($2,255).
Suh's stake in the company was valued at around 6.7 trillion won as of early last month, which allowed him to join the world's 200 wealthiest people selected by U.S. business newswire Bloomberg.
Yet analysts say Amore Pacific has contributed little to this. They cited Sulwhasoo and Hera ㅡ two premium lines priced far lower than Amore Pacific ㅡ as the biggest contributor to the hike this year.
In addition, they said, sales in China quickly outgrew Japan, giving the firm an excuse to downsize its presence in the Japanese market.
"We will make Amore Pacific available only at a handful of stores," an Amore Pacific official said. "This policy shift will help improve our brand image."
By By Park Si-soo
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| Amore Pacific CEO Suh Kyung-bae |
Instead, the Seoul-based company plans to bolster sales of Etude-branded products available at relatively low prices.
A major portion of the firm's sales are generated at duty free stores at home and abroad.
The company launched the high-end line in 2002 to compete with such international luxury cosmetics brands as L'Oreal, Lancome and Estee Lauder. But the withdrawal may signal failure of the mission. In addition, analysts say, Amore Pacific has found itself to be competitive only in the market of mid and low-priced products.
Last month, Amore Pacific CEO Suh Kyung-bae admitted that the high-end line was struggling in overseas markets, adding the company will focus more on lower-priced products.
Asked about the withdrawal from Japanese duty free shops, Suh told reporters that it was due to no growth there over the past ten years. "We will appeal to customers in Japan with a new brand that can lure young people," the CEO said.
The company has decided to drastically cut the number of domestic outlets exclusively selling the premium line for the same reason.
Amore Pacific has shown impressive performances in sales throughout this year, pushing up its share prices to an all-time high ㅡ its shares closed up 3.09 percent or 75,000 won at 2.5 million won ($2,255).
Suh's stake in the company was valued at around 6.7 trillion won as of early last month, which allowed him to join the world's 200 wealthiest people selected by U.S. business newswire Bloomberg.
Yet analysts say Amore Pacific has contributed little to this. They cited Sulwhasoo and Hera ㅡ two premium lines priced far lower than Amore Pacific ㅡ as the biggest contributor to the hike this year.
In addition, they said, sales in China quickly outgrew Japan, giving the firm an excuse to downsize its presence in the Japanese market.
"We will make Amore Pacific available only at a handful of stores," an Amore Pacific official said. "This policy shift will help improve our brand image."
