Code Mint, a Chinese homegrown beauty brand, has secured early-stage investments and incubation support from The Estee Lauder Companies and venture capital firm New Incubation Ventures. . Specific details about the move remain undisclosed.

Code Mint, founded in 2021 by influencer Grace Chow, boasts a core team with members hailing from renowned institutions like Harvard University and the University of California, Berkeley. The brand, with its name symbolizing “pure signals,” aims to bring a scientific approach to beauty products, emphasizing health, nature, and purity. Notably, this marks Estee Lauder’s inaugural investment in a Chinese beauty brand, following reports of Code Mint’s early partnership with Korean cosmetics contract manufacturer Cosmax.

Code Mint has entered the beauty market at a time when overseas influencer brands are flourishing. For example, Rihanna’s Fenty Beauty, acquired by LVMH, raked in substantial revenue totaling USD 440 million in 2021, while Kylie Jenner’s Kylie Cosmetics sold USD 420 million worth of products within just 18 months.

In contrast, many Chinese influencer-driven beauty brands, after initial growth, struggled due to a lack of product competitiveness and overreliance on short-lived celebrity endorsements. Those who persevered often have ties with professional makeup artists like Mao Geping, or are affiliated with established brands like Colorkey is with China’s largest skincare company Pechoin.

Code Mint is betting on the nascent clean beauty segment in China, an area still in its early stages of development. Clean beauty products are typically known for their simplicity and higher ingredient standards, often avoiding the use of preservatives, alcohol, and controversial additives. However, this results in Chinese consumers perceiving them as lacking in efficacy. In 2021, the clean beauty market in China was estimated to be worth less than RMB 10 billion (USD 1.38 billion), according to Jinggu Agricultural.

Recognizing the limitations of influencer brands and the unique characteristics of the Chinese clean beauty market, Code Mint aims to leverage Estee Lauder’s R&D capabilities to emerge as a competitive brand. Code Mint’s strategy focuses on developing products with effective ingredients and in its third year, launched the “Ice Americano” series, which features caffeine as a key ingredient.

Caffeine, when used in beauty products, is primarily known for its ability to reduce puffiness. Code Mint’s “Ice Americano” series include eye and face masks that contain high-concentration caffeine powder extracts, complemented by an exclusive patented caffeine penetration technology that enhances transdermal absorption. Both products currently clock monthly sales volumes exceeding tens of millions of units.

Code Mint sells its products directly to consumers online, while partnering with upscale hotels to showcase its products offline, aiming to attract new customers and strengthen brand recognition through in-person product experiences.

Globally, as international travel restrictions are lifted, high-end hotels have become a valuable platform for skincare and beauty brands. Euromonitor International data suggests that sales generated from branded hotels are projected to reach USD 600 billion this year, up from USD 494 billion in 2022. According to 36Kr, Jenni Benzaquen, vice president of luxury brands in Europe at Marriott International, explained why brands choose hotels as exposure channels: “After the journey, the products in hotels may become part of consumers’ fond memories and subsequently enter their daily lives.”

Currently, Code Mint’s user base primarily comprises sophisticated mothers and white-collar workers from first-tier and second-tier cities, with a portion belonging to Generation Z. The brand is aiming to expand its reach to similar demographics in new first-tier and second-tier cities through targeted online influencer marketing and offline partnerships with hotels.

Despite a slowdown in the growth rate of China’s beauty market post-pandemic, Estee Lauder remains a significant player.

Jefferies Financial Group analysts estimate that approximately 36% of Estee Lauder’s annual revenue comes from the Chinese market. To continue capturing consumers, beauty giants like Estee Lauder are strategically investing in and acquiring Chinese domestic brands to enhance their competitiveness.

Looking back at the group’s recent investments in entrepreneurial brands, it’s evident that minority equity investments, similar to Code Mint, are not isolated occurrences. In 2015, itEstee acquired a portion of the shares of Have & Be Co., the parent company of Dr. Jart+. Subsequently, in December 2019, Estee Lauder acquired the remaining two-thirds of the shares, marking its first acquisition of an Asian beauty brand.

When discussing investment pathways that involve “minority equity investment, gradual ownership increase, and eventual acquisition,” Shana Randhava, vice president of Estee Lauder’s early-stage investment and incubation arm, explained to Business of Fashion that getting involved in a brand’s early stages lays the foundation for developing an end-to-end acquisition strategy.

In such cases, Estee Lauder typically provides technology, human resources, and channel guidance and support to the investee, which can remain mostly independent and follow its own business logic and development pace for an extended period.

Randhava noted that investments in new brands are targeted at enhancing Estee Lauder’s brand portfolio, and expanding its capabilities into new categories, regions, niche consumer groups, channels, and business models. She believes that Estee Lauder will continue to invest in the Chinese market and explore more innovative brands similar to Code Mint in the future.

According to Estee Lauder’s fourth-quarter financial report, the Asia Pacific region has witnessed organic growth, with its share in all major product categories continuously expanding, achieving a 36% increase.

KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by He Zhexin for 36Kr.