Korean Beauty Trends & Industry News: 25-01-24

APR Hits 3 Million Beauty Device Sales: Growth Amid Challenges

    APR, a prominent K-beauty tech company, announced that its global beauty device sales surpassed 3 million units as of late 2024. This milestone was achieved just 45 months after the launch of its first beauty device, "Derma EMS," in March 2021. Impressively, the company reached 2 million units in April 2023 and added another million in just eight months—a significant acceleration compared to the 11 months it took to go from 1 to 2 million units.

The company has successfully expanded its international footprint, with overseas markets accounting for approximately 47% of total sales. The United States emerged as a key market, contributing 18% of sales, while regions like Japan, Europe, the Middle East, and Greater China also showed strong growth. The recently launched "Booster Pro" model, released in November 2023, has already surpassed 1 million units in sales, cementing its status as a best-seller.

Beauty devices have become the cornerstone of APR’s revenue, growing from 30.2% of total sales in 2022 to 43.8% by the third quarter of 2023. Combined with its cosmetics line, the beauty segment now contributes over 90% of APR’s total revenue. This led to a rapid increase in overall sales, from 397.7 billion KRW (approx. $317 million) in 2022 to 750 billion KRW ($600 million) in 2024.

However, this heavy reliance on beauty devices is considered a potential risk. The market for beauty devices is highly competitive and features low technological barriers, making it accessible to various players, including major corporations like LG Electronics and Amorepacific, as well as smaller brands such as Ceragem and Dalba. Many of these competitors are leveraging similar price points, rental services, and new marketing strategies to differentiate themselves.

To address these challenges, APR is focusing on diversifying its distribution channels, expanding its B2B business, and participating in global trade shows like CES to highlight the synergy between its Mediqube skincare line and beauty devices. Despite these efforts, APR’s stock price remains underwhelming. Its IPO price of 250,000 KRW per share has not recovered even after a stock split reduced the price to 50,000 KRW per share. While the company initiated a 60 billion KRW ($48 million) stock buyback program, market reactions have been tepid.

Industry analysts caution that while APR’s short-term growth is promising, long-term challenges in maintaining market share may arise due to intensifying competition. To sustain its position, APR must innovate further and reduce reliance on a single business segment.

Stricter Regulations Ban Misleading Skincare Claims in South Korea

    South Korea’s Ministry of Food and Drug Safety has introduced new regulations banning misleading claims in cosmetic advertisements, effective January 21, 2024. Phrases such as “Makes your skin 5 years younger” or “Reduces skin age by X years” are now prohibited. Advertisers must rely on scientifically proven metrics, such as “improves skin aging index,” instead.

The new guidelines also restrict terms that imply medical endorsement, such as “hospital-use” or “pharmacy-exclusive,” to prevent consumer confusion. Claims related to human-derived ingredients, like “exosome skincare,” are also banned unless the product explicitly states its origin (e.g., “plant-derived exosomes” or “milk-derived exosomes”). Additionally, advertising that suggests deep skin penetration using terms like “microneedle” or “needle shot” is now forbidden due to concerns about consumer misunderstanding.

These changes reflect a government effort to combat false or exaggerated advertising in South Korea’s booming beauty industry. Influencers and marketers are now required to adopt stricter standards to comply with the law, with non-compliance leading to administrative penalties under South Korean cosmetics law.

The government hopes these measures will enhance consumer trust and ensure that claims made by cosmetic brands are grounded in scientific evidence.

K-Beauty Powers Record SME Exports in South Korea

    South Korea’s K-beauty industry has significantly boosted exports by small and medium-sized enterprises (SMEs), achieving a record-breaking $115.1 billion in 2024. This marked a 4.9% year-on-year increase, making it the second-highest export figure in SME history. K-beauty was the star performer, with cosmetics exports growing 27.7% to reach $6.8 billion, making it the first single product category to surpass $6 billion in SME exports.

The United States became South Korea’s largest SME export market for the first time since 2010, overtaking China. Exports to the U.S. rose 11.2% to $18.7 billion, driven by cosmetics, automotive parts, and semiconductor equipment. In contrast, exports to China fell 4.7% due to decreased demand for beauty and plastic products, continuing a three-year decline. Other notable markets included Japan (+29.4%) and Vietnam (+17%).

Beyond cosmetics, other key export categories included automobiles ($5.1 billion), plastic products ($5 billion), and semiconductor manufacturing equipment ($4 billion), with strong growth across multiple regions.

Online exports by SMEs also surged 32.3% to $1 billion, with cosmetics and fashion leading the charge. SMEs now account for 73.2% of South Korea’s total online export market, underscoring their importance in digital trade.

While K-beauty’s success has diversified export markets, challenges remain, including global economic uncertainties and over-reliance on key markets like the U.S. and China. South Korea’s government has pledged to closely monitor market dynamics to support SMEs in addressing potential challenges.

CU Expands Affordable Beauty Line with Color Cosmetics

    CU, one of South Korea’s leading convenience store chains, is stepping up its game in the affordable beauty market with a new line of compact color cosmetics. The range includes lip tints, glosses, and an all-in-one skin lotion, priced under $3. The products are designed for convenience, featuring small, portable packaging that appeals to younger, on-the-go consumers.

This move builds on CU’s previous success with affordable skincare products, developed in collaboration with the Angel Luca brand. The chain has seen consistent growth in its beauty sales, with annual increases of 24% in 2022, 28.3% in 2023, and 16.5% in 2024. By targeting budget-conscious beauty shoppers, CU aims to compete directly with retailers like Daiso while establishing itself as a go-to beauty platform.

With plans to expand its product offerings and incorporate beauty trends like holographic patches and microneedles, CU is positioning itself to stay ahead in South Korea’s competitive affordable cosmetics market.