Please, tell us about yourself.

My name is Jong-ha Kim. I joined Amorepacific this year after working in the cosmetics industry in Europe and other Asian countries for the past 18 years. As the head of Amorepacific Luxury Division, I am in charge of our entry-level luxury brand Primera and high-end luxury brand AMOREPACIFIC. My role is to work with our teams to rejuvenate the Primera brand for our Millennial and Gen Z customers and build a strong presence for AMOREPACIFIC in China, which is emerging as the most prominent luxury skincare market in the world.

How do you define ‘luxury’?

I was asked the same question when I first started managing the luxury sector while working in Europe. It is also the question I continue to ask myself. At this moment, I would define luxury as a purchase made because it is desirable, not because it is essential. If someone buys something because they ‘want’ it, for their pleasure and satisfaction, it is luxury even if it costs only ten dollars. But if someone buys something because they ‘need to,’ this wouldn’t be a luxury even if it costs thousands of dollars.
There are many sectors in the luxury industry – from personal luxury goods, luxury cars, luxury hospitality, fine wines & spirits, etc. – and there are affordable alternatives in almost every sector. Casio Quartz may be more accurate than Patek Phillippe, and Tesla may be faster than Ferrari on a 0-100km/h scale. But people buy things not only because they need them but because they want to have them. This desire is the foundation of luxury.
Of course, there are some luxury items that we cannot immediately find alternatives for, especially in the experience-oriented sectors like cruises several decades ago or trips to the moon in the near future. But even these sectors will have affordable alternatives someday, and the products will need to provide differentiated value to survive and remain irreplaceable. For example, in the past, a painted portrait was the only way to record the appearance of someone. But after the invention of the camera and photography, it became just one of several luxury options. As the camera technology spread, professional photoshoots emerged as the new luxury option; then, with the arrival of the smartphone cameras, high-end cameras became a luxury option. In a world where trends and technologies evolve faster and faster, a way to define luxury may be whether people buy it because they need it or because they want to have it.

How is the luxury beauty market doing? How has the pandemic affected the market?

Last year, the global luxury industry showed negative growth for the first time since 2009. Sales of luxury goods fell by 23%. There were many changes in the market landscape as well. Online sales went above 20% for the first time (nearly doubled from 11% in 2019), the luxury car sector boomed (as high as KRW 700 trillion), while experience-oriented sectors plunged 70-90% in sales. International travel used to play a big part in luxury retail, but it was restricted with the COVID-19 outbreak. In reverse, it has allowed the rise of domestic luxury shopping.
In the post-pandemic era, I think three things can happen in the luxury market. First, there will be renewed growth in the luxury market. Governments and central banks worldwide have unleashed nearly KRW 7,000 trillion, and when the pandemic ends, the long-waited revenge shopping will kick in. It will consequently affect the luxury market. Second, the experience will be the key to luxury. Once travel restrictions are lifted, consumers will travel again and go back to shopping for luxury internationally rather than at home. Third, online luxury shopping may take a brief pause, but it will continue to grow in the long run. In particular, products that are frequently bought, for example, cosmetics, will sell well online as they do now and perhaps better when their online channels are successfully differentiated from offline.
And in the mid to long term, I believe that the luxury sectors are likely to grow dramatically as Gen Z, the leading consumers of luxury goods from an early age, emerge as key spenders in the economy. They are drawn to brands that reflect their values and identity. Therefore, brands should adapt to them and live up to their expectations to survive.

What is unique about Amorepacific’s luxury offerings?

Take as an example AMOREPACIFIC. It has all the traits of a luxury beauty brand: authentic ingredients, heritage story, and science and technology to boost the benefits. The pristine Jeju Dolsongi Tea Garden, our original green tea variety Jangwon No.3, the green tea harvested during a particular time of the year, and its anti-oxidant property, which is about 20 times more potent than vitamin C – these are all distinctive luxury brand traits. And while having these traits is essential, it is critical to weave these factors into a brand story and communicate effectively with our customers. This is why we are focusing on unfolding this story in a ‘new Korean way.’ In the past, cost-effectiveness was a key feature of Korean goods – Korean brands were known for quality at competitive prices. Today, however, Korea is taking center stage globally with creative, dynamic content from film to K-Pop. Successfully incorporating this sense of new Korean-ness into the code of luxury will become our strength. Luxury has always been centered around the idea of exclusivity, about offering a unique experience. With these strengths, AMOREPACIFIC will be able to provide unique and exclusive brand experiences.

Tell us about some of the recent highlights from Amorepacific’s luxury business.

Primera is currently going through a process of rejuvenation. It is about making the brand young again by communicating its star skincare products to Millennial and Gen Z customers. We are also preparing its shift from department stores to online and new offline channels and the development of new products specifically targeting Millennial and Gen Z customers. This month, we ran a new communication campaign for our star skincare product, the Alpine Berry Watery Soothing Gel Cream. The 3-minute films featuring the Korean comedian Cool J and celebrity Ong Sungwoo aimed to appeal to Korean Millennial and Gen Z viewers and recorded more than 200,000 views on YouTube in just two days and nearly 600,000 views in six days. Some may think that skincare content is less intriguing than makeup content. Still, we took a communication approach that our target consumers prefer and proved that skincare could also deliver and raise awareness with online content.

*Primera Watery Soothing Gel Cream EP1. Cool’s Destination, Dongdaemoon (YouTube link)
*Primera Watery Soothing Gel Cream EP2. True Bromance, Temptation of J (YouTube link)
*Primera Watery Soothing Gel Cream EP3. Until it’s Moist, Until the End (YouTube link)

What will the luxury beauty market look like in the future?

The next few years will be important for the luxury beauty market. The overall market size will increase, and in the short term, both high-end and entry-level luxury categories will grow continuously, but I would approach them separately.
Until now, high-end luxury was more of a niche market. Chinese consumers, however, are increasingly taking an interest in high-end anti-aging products, which the market will accordingly respond with a rush of new offerings.
Entry-level luxury will grow as well but in a different way. The current skincare category growth will soon be affected by consumers trading down to premium or switching up to high-end. The 'department store customer' is now dispersed to other offline channels or online. Accordingly, a brand should find the right balance of online and offline channels and gain public awareness of its name and products to grow further in this market.
In addition, we look forward to luxury makeup bouncing back when the pandemic ends. Millennial and Gen Z consumers have enjoyed luxury makeup as a treat for themselves until 2019, and I think this trend remains. Because these are 'carry-on' items, their 'luxury' look plays a big part, not only their formula. That's why a makeup brand capable of making itself readily accessible, keeping up with the trends, and fulfilling consumers' different wants and values has a good chance of success.

What is in store for the future of Amorepacific’s luxury business?

For AMOREPACIFIC, we are preparing to expand in China, targeting the high-end market. We plan to blend the idea of Korean-ness with the brand’s concept in a way that is appealing to the market. Positioned more as an entry-level luxury brand, Primera is preparing to reach out to more Millennial and Gen Z consumers. Korea is recognized as a cool, trendy country to them, and we hope to use this image to reach out to them directly through global platforms.
Today, countless indie brands and products are introduced in the market. Some of them disappear quickly too. Now that the foundry model has become common in cosmetics, anyone can easily launch a cosmetic product when they have an interesting concept. That, however, is the manufacturing side of cosmetics. I think that the luxury industry is more about service. Amorepacific excels at luxury branding, backed by long years of experience and technology. We’ve been looking into what customers want and have the expertise, channel advantage, and global network to provide luxury solutions. By adding compelling story content, I think our luxury brands will have a competitive advantage in the new luxury beauty landscape.