Korean Beauty Trends & Industry News: 24-10-29

K-Beauty: As Demand Slows in China, U.S. Market Leads a New Boom

    Korean beauty (K-Beauty) exports are undergoing a significant shift. Once focused heavily on China, Korea’s cosmetics industry is now experiencing explosive growth in the U.S. market. Following the COVID-19 pandemic, China’s domestic market slowed, and with rising competition from local brands, Korea’s export share to China fell dramatically. According to Professor Kim Joo-deok from Sungshin Women’s University, while China once held up to 62% of Korea’s export share, this figure dropped to between 25-30% in the first half of this year.

Meanwhile, demand for K-Beauty products in the U.S. has surged, making the U.S. Korea’s top export market starting from the latter half of the year. Korean customs data from July shows exports to the U.S. reached $1.745 billion, surpassing China’s figures and continuing to climb. This shift reflects a strategic pivot within Korea’s beauty industry to reduce dependency on China and diversify its markets.

The popularity of K-Beauty in the U.S. is driven by its high quality and value, especially among Gen Z and Millennials who are passionate about Korean pop culture. During the recent Amazon Prime Day, Korean brands like COSRX, Laneige, and Biodance topped beauty sales, with revenues rising by 2.2 times compared to last year. Hye-jin Park from Shinhan Investment Corp. noted that American MZ (Millennials and Gen Z) are drawn to K-Beauty’s affordability and quality, leading to a rise in sales on major platforms like Amazon.

Japan has also embraced K-Beauty, especially as traditional Japanese brands struggle to connect with younger consumers. In the Japanese market, where conservative consumer culture prevails, Korea’s diverse and innovative beauty offerings resonate well with MZ consumers. Industry sources explain that Korean brands are capturing interest by rapidly releasing new products, a strategy that sets them apart from their Japanese competitors.

The growth of K-Beauty owes much to independent brands and ODM (Original Development Manufacturing) companies, which enable small and mid-sized brands to expand globally. The Korean Ministry of SMEs reports that exports from small and mid-sized Korean beauty companies have increased by 30.8% year-over-year, reaching record highs. By going beyond large-scale production, these ODM companies support niche brands in tailoring products for different markets, boosting Korea’s global beauty industry footprint.

The future of K-Beauty’s global presence looks promising, particularly in markets like the U.S. and Europe, where there’s a trend toward natural, understated makeup. This trend aligns well with the strengths of mid-priced Korean color cosmetic brands, which continue to gain popularity.

Olive Young Takes on Musinsa and Kurly with New Flagship in Seongsu

    In Korea’s highly competitive K-Beauty market, CJ Olive Young, Musinsa, and Kurly are vying for dominance. Olive Young, a staple in Korea’s health and beauty (H&B) market, has opened its largest experiential store yet, “Olive YoungN Seongsu,” in Seoul’s Seongsu-dong neighborhood. This new location is designed not only to serve as a retail space but as a lifestyle platform, featuring a popup shop and curated beauty and wellness products on the first three floors, while floors four and five provide VIP lounges and networking spaces for brand partners.

Olive Young’s move comes in response to aggressive beauty market expansions by Musinsa and Kurly. Musinsa recently held a large beauty festival in Seongsu, merging fashion and beauty to attract younger consumers. Musinsa’s private brand (PB), Oddtype, has gained traction among Gen Z and Millennials, growing tenfold over the past year. Similarly, Kurly’s “Beauty Kurly” targets luxury consumers in their 30s and 40s, banking on Kurly’s strong brand reputation for premium offerings and early morning delivery services. Their first offline event, Kurly Beauty Festa, saw a fourfold increase in brand transaction volume.

Despite the competition, industry experts believe Olive Young will maintain its stronghold, thanks to its extensive network of over 1,354 stores across Korea and its robust omnichannel strategy, which includes same-day delivery through “Today Dream” and video commerce via “Olyeong Live.”

As Olive Young’s future is intertwined with CJ Group’s succession plans, there is speculation around a potential merger, especially given that the company paused its IPO in 2022. Strengthening Olive Young’s market position would align with CJ Group’s objectives, setting the stage for strategic growth in both online and offline markets.

False Claims on Hair Loss Treatments in Korean Cosmetics Exposed

    South Korea’s Ministry of Food and Drug Safety (MFDS) recently cracked down on false advertising by companies promoting cosmetic hair-loss treatments. Out of 151 online posts reviewed, 67 were found to make exaggerated or false claims about the efficacy of their products, leading the ministry to request the Korea Communications Standards Commission to block access to these posts. For 27 of these posts, MFDS conducted on-site inspections and referred the cases for legal action.

Though cosmetic products can claim to “help with hair-loss symptoms” if they have undergone clinical testing, MFDS strictly prohibits them from implying medical effects similar to pharmaceuticals. Violations included unsubstantiated claims like “stimulating new hair growth,” “increasing hair thickness,” and “reducing inflammation.” Some products falsely claimed “no animal testing” to mislead consumers into believing the products were cruelty-free, despite Korean regulations already banning the sale of cosmetics tested on animals.

MFDS advises consumers to be cautious about advertising claims and to verify the legitimacy of hair-loss products before purchasing. The agency will continue to enforce strict regulations to protect consumers and ensure product safety.