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[Photo by Lee Chung-woo]

Small and mid-size beauty brands in South Korea are expanding their presence by contributing to the country’s cosmetics exports amid changing industry trends.

According to sources on Sunday, the number of responsible cosmetics sellers has surged from 3,884 in 2013 to over 32,000 in October 2023. The actual number of brands created by these sellers is estimated to be even higher.

An analysis into individual corporate production performance shows a decline in the combined share of the top three companies ? Amorepacific Corp., LG Household & Health Care Ltd., and Aekyung Industrial Co ? from 62 percent in 2018 to 53 percent in 2022.

The trend indicates an increase in production from small beauty companies.

The rapid emergence of small beauty brands is fueled by increasing demand.

Analysis by Jam Face, a beauty curation service, found that 66 percent of the top 50 popular domestic beauty brand products last year were from small brands.

The number of small beauty brands with annual sales exceeding 10 billion won ($7.5 million), sold at CJ Olive Young, was up from 16 in 2019 to 34 in 2022.

Furthermore, 80 percent of cosmetics exports recorded by the Ministry of Food and Drug Safety in 2022 were products from small beauty brands.

The growth of small beauty brands is facilitated by original equipment manufacturer (OEM) and original design manufacturer (ODM) companies such as Kolmar Korea and COSMAX.

These manufacturers can swiftly produce products within one to two months based on ideas provided by entrepreneurs.

Companies like COSMAX and Kolmar Korea also offer original brand manufacturer (OBM) services, providing comprehensive support ranging from product development and manufacturing to branding, design, and marketing consulting.

In addition, the growth of CJ Olive Young and beauty e-commerce platforms has made it easier for new beauty brands to reach consumers.

CJ Olive Young’s rapid expansion, especially in offering same-day delivery services during the pandemic, is notable.

CJ Olive Young‘s sales in the past year came to 3.86 trillion won, up 40 percent from 2.77 trillion won in 2022. Its market share in the overall beauty market increased from 10 percent in 2020 to 15 percent last year.

CJ Olive Young’s growth has been closely linked to the expansion of small beauty brands. Dubbed the “gateway for new brands” by the industry, CJ Olive Young has successfully differentiated itself from traditional cosmetics stores by extensively featuring competitive small beauty brands.

As of March 2024, CJ Olive Young handles some 2,400 brands, with over 80 percent being small brands.

Furthermore, various online platforms such as Coupang, Market Kurly, and SSG.com strengthening their beauty categories have contributed to the significant growth of the beauty e-commerce market.

According to Bain & Company, the domestic beauty e-commerce market reached about 6 trillion won last year, up 40 percent from 2019.

Korea‘s beauty e-commerce penetration rate in 2022 stood at 51 percent, higher than China (44 percent), the United States (31 percent), Japan (20 percent), and Southeast Asia (17 percent).

Small beauty brands are also making strides overseas. Riding the Korean wave, they are captivating women worldwide with trendy concepts and high cost-effectiveness.

According to the Korea International Trade Association, Korean cosmetics exports during the first two months of 2024 increased by 36 percent compared to the same period a year ago, totaling $1.5 billion.

Exports to the U.S. jumped 69.2 percent and to Japan 31 percent during the same period.

By Chung Seul-gi, Kim Hyo-hye and Minu Kim

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]