Viral Buzz, Empty Shelves: Inside Shiseido’s $310 Million Drunk Elephant Debacle
In November 2025, Shiseido delivered shocking news: it revised down its outlook for the fiscal year ending December 2025 and forecast a consolidated net loss (IFRS) of ¥52 billion—roughly $345 million. The main driver was an impairment loss of about ¥46.8 billion (approximately $310 million) on goodwill in its U.S. business. This one-time, massive loss flipped the company’s earnings outlook into the red.
The cause was clear: the underperformance of Drunk Elephant, the U.S.-born skincare brand Shiseido acquired at a premium in 2019. Once expected to be a cornerstone of Shiseido’s global strategy, why did the brand stumble this badly? This article looks behind the scenes.
Drunk Elephant: A Clean-Beauty Darling That Sparked a Frenzy in the U.S.
First, a quick look at Drunk Elephant’s trajectory. Founded in Texas in 2013, the brand gained attention as a pioneer of “clean beauty,” rigorously excluding ingredients considered harmful—such as parabens. Its pop, colorful packaging stood out, and it earned explosive support primarily among Gen Z through digital channels like Instagram and YouTube. Its distinctive “skincare smoothie” method—mixing products like a cocktail—also became a talking point, and at Sephora it rose into the top tier of best-selling brands.
Shiseido took notice and acquired Drunk Elephant in 2019 for about $845 million (approximately ¥92 billion). At the time, Shiseido positioned it as one of its “Next 5,” with an ambitious plan to grow it into a mega-brand targeting annual sales on the scale of ¥100 billion (roughly $660 million). It was an M&A move aimed at capturing an American dream—yet, ironically, what followed moved in the opposite direction.
Influencer Activations and SNS Buzz Created Unexpected Demand
After the acquisition, Shiseido pushed Drunk Elephant’s global rollout and brand awareness. Influencer tie-ups and SNS campaigns were deployed aggressively, and on TikTok and Instagram the brand’s skincare products began going viral one after another. Especially around 2023, the popular product “Bronzing Drops” (a tanning serum priced around $39) caught fire on TikTok, with word-of-mouth spreading among younger audiences: “Mix this and your skin glows!”
But this frenzy produced an ironic result. As SNS-driven demand exploded, production and logistics failed to keep up. In the first half of 2024, Drunk Elephant saw temporary, significant drops in production and shipments, and stockouts became frequent across channels. Products disappeared from shelves, and “Sold Out” banners piled up online—slamming the brakes on the momentum the brand had built. Specialist media also pointed out that “the 2024 supply trouble caused customer churn and dragged down performance in the U.S. and Europe.”
The clearest example was the Bronzing Drops shortage. The frustration of “it’s too popular—so you can’t buy the product that matters” was enough to cool the hearts of once-enthusiastic customers. Shiseido’s CFO struggle also acknowledged that inventory problems were a factor behind the sales decline, noting that while the roughly $39 bronzing serum became a viral hit, it went out of stock and didn’t reach the brand’s core customers sufficiently—one factor behind the slowdown. Drunk Elephant, once centered on beauty-savvy Millennials and Gen X, was also analyzed as having started to look like a brand “for Sephora kids (teen shoppers),” contributing to the defection of existing fans.
In short, the worst-case scenario occurred: marketing created demand that supply couldn’t satisfy. Stockouts aren’t just missed revenue—they can also damage brand image. The most passionate fans are often the most disappointed, and a missed purchase opportunity may never come back. Drunk Elephant’s slowdown revealed how severe that risk can be.
The Vicious Cycle of Production Delays and Stockouts—and Why Recovery Is Hard
Of course, Shiseido didn’t do nothing. It moved quickly to ramp up production and resolve the shortages. By the second half of 2024, production recovered—but the reality waiting on the other side was that even if production returns, sales don’t automatically bounce back. Once lost, customer enthusiasm isn’t easily restored, and the brand can end up needing to rebuild its appeal itself.
In Drunk Elephant’s case, the initial supply shortage appears to have significantly damaged trust and brand heat. Customers who couldn’t buy the product moved to competitors, meaning the “seeds” planted by marketing could end up making competing brands bloom. And by the time production ramped up to fill the gap, demand had already cooled—creating the opposite problem: “excess inventory,” another demand–supply mismatch. When the gears between marketing and supply chain teams slip, growth opportunities can evaporate in an instant.
The “Logistics Panic” Phenomenon Spreads to Japanese Companies
This tragedy—“we want to sell, but we have nothing to sell”—is not only about Shiseido’s U.S. business and Drunk Elephant. In recent years, Japan has also seen a string of cases where unexpected SNS-driven demand spikes outpace supply, forcing temporary sales suspensions.
One example is Nestlé Japan’s malt beverage Milo. After a poster wrote that a doctor told them their iron level was “only one-seventh of the average,” and that “drinking Milo brought it back to the average,” a tweet about improving anemia went viral and demand reportedly jumped to 7× year-over-year. Stable supply became difficult, and the product was temporarily pulled from sale—an episode many still remember. As sudden stockouts spread, surprised reactions appeared on Twitter as well, like: “No way… I can’t believe I can’t buy Milo!” (「嘘だろ…ミロが買えないなんて！」)
Similarly, Yakult’s lactobacillus drink Yakult 1000 became a hot topic after Matsuko Deluxe, appearing as a guest on “Shabekuri 007,” said: “Recently, Yakult 1000… since I started drinking it, I’ve been sleeping so much better” and “They say one bottle a day is enough, but just in case I drink two.” (「最近さぁ、ヤクルト1000……あれ飲んでからすごく眠りが良くなった」「1日1本でいいって言われてるんだけど念のため2本飲んでる」) The result: online retailers stopped taking new orders, and store shelves were depleted. Even in the probiotic-drink aisle, only the Yakult 1000 shelf was empty, with apology notices posted.
Distribution analyst Hiroaki Watanabe commented on the Milo incident as follows: “Inventory control for buzzed products is difficult, and SNS stockouts happen.” (「バズった商品の在庫コントロールは難しく、SNS欠品が起こってしまう。」) In other words, in today’s digital era, consumer demand can explode overnight—while real-world production and logistics speed has limits. The gap between digital hype and physical supply capability is creating a new challenge for marketers.
Japan’s consumer-goods manufacturers are facing this issue too. If SNS marketing succeeds and a product goes viral, that’s good news. But if production planning and inventory strategy can’t match the speed of that buzz, the business opportunity doesn’t just get lost—it can turn into a brand-damage risk. If the moment you generate attention through ad spend you’re forced to say “we don’t have enough product,” you can lose consumer trust. In fact, some cases in Japan have reportedly become so strained that consumer-goods makers asked ad agencies to “arrange trucks” because logistics capacity was tight. Marketing and logistics are now inseparable.
The Lesson: “Logistics Is Marketing”
Finally, here’s the strategic lesson that emerges from this chain of events. It’s simple, but often overlooked: “Logistics is marketing.” No matter how skillfully you create demand through promotion and branding, it means nothing if you can’t deliver products to customers, meet expectations, and satisfy them.
In the Drunk Elephant case, the marketing team successfully created buzz and demand on SNS. But because the supply chain couldn’t keep up, the demand didn’t fully convert into sales. As a result, brand momentum faded—and Shiseido ended up paying a steep price in the form of an impairment on the order of hundreds of millions of dollars.
For modern marketers and brand managers, demand forecasting and building a supply structure are also part of marketing strategy. Behind a flashy ad campaign, are the unglamorous basics—inventory planning and supply chain management—being neglected? That check system may decide whether a brand wins or loses.
Drunk Elephant’s failure was a rare case where “the joy of products selling like hotcakes” turned into “the fear of having no product.” But in any industry, true marketing success only happens when demand creation and demand fulfillment mesh as two wheels. There is no marketing success without supply (logistics).