Cosmetics
Republic of Korea
Overview
2004 2005 2006 (estimated)
Total Market Size 6,238.6 6,359.7 5,767.1
Total Local Production 5,796.7 5,990.0 5,431.9
Total Exports 276.6 331.2 300.4
Total Imports 718.4 700.9 635.6
Total Imports from U.S. 180.6 152.9 138.7
(Unit: USD million)
[(USD1= 1,200 Won (2004), 1,100 Won (2005), 950 Won (2006)]
(Source: Korea Pharmaceutical Trade Association, Korea Food & Drug Administration)
Over the past few years, Korean women have become more receptive to western products, especially foreign health and beauty items. As more Korean women enter the labor force and experience rising incomes, they have become avid users of imported cosmetics, yielding significant gains for U.S. suppliers. In tandem with the continued strong expansion of the Korean market for imported cosmetics, other important trends have developed , including the introduction of cosmetics in pharmacies/drug stores, continued growth in market demand for imported cosmetics in non-traditional retail channels, such as on-line shopping malls and television home shopping channels, and the further expansion of cosmetics use by Korean men.
New developments include the introduction of cosmetic franchises targeting the lower end of the market and continuous modifications to the Korean government’s regulations on testing new cosmeceuticals (a new classification by the Korea Food & Drug Administration (KFDA) covering "functional cosmetics," such as whitening, anti-aging and sun care SPF products). Newly-introduced cosmeceutical products are gaining widespread consumer acceptance since they often provide for a wide variety of skin care needs. Most cosmetic companies have added these items to their product lines. According to the KFDA, as of July 2006, a total of 6,877 cosmetic products have been approved and registered as cosmeceuticals since KFDA registered the first cosmeceuticals product in February 2001.
Sales of men’s cosmetics in Korea have increased significantly and additional market outlets such as men’s skin care salons, opened in many Korean office buildings, providing one-stop total beauty and hair care services, including hair cutting, perms, treatments, as well as facials. Cosmetic companies also have broadened their line of men’s cosmetics to include not only after-shave and lotions but also men’s cleaning foams, facial scrubs, facial packs, essences, and other functional cosmetics.
According to research from the Korea Cosmetic News, skin care products make up about 15 percent of the total cosmetic market, or about USD 865 million. About 50 percent of the USD 865 million was contributed by imported cosmetic skin care products, which totaled about USD 411.9 million. The most sought after products by consumers are cosmeceuticals such as whitening and anti-wrinkle products. Also, as more consumers become aware of natural ingredients, and as their preference for natural/organic products increases, local industry is focusing on developing natural/organic products.
Best Prospects/Services
- Men’s Cosmetics
- Natural/organic Skincare Products
- Cosmeceuticals
Opportunities
The cosmetics/cosmeceuticals industry's retail distribution channels have expanded in the last few years. The recent introduction of on-line shopping malls, television home-shopping channels such as QVC, pharmacies/drug stores and catalogue orders have emerged as challengers to traditional retail channels such as direct selling, multi-level marketing, "mom and pop" stores, specialty retail establishments, department stores, discount stores, etc.
There are currently three major franchised drug stores competing with each other, Olive Young by CJ, W-Store by Kolon, and GS Watson’s by GS in partnership with Watson’s. These retailers target customers focusing on wellness products by providing organic/natural cosmetics, nutritional supplements, OTC drugs, and general consumer goods. U.S. companies should seek opportunities in line with this new retail concept.
Resources
Major Show
Name: Cosmobeauty Seoul
http://www.cosmobeautyseoul.com/kr/down/2007cosmobeauty-en.pdf
Key Contacts
Korea Food & Drug Association (KFDA)
Korea Pharmaceutical Traders Association (KPTA)
http://www.kpta.or.kr/E_main.asp
Local Contact
Grace Sung
Commercial Specialist
Commercial Service Korea
U.S. Embassy in Korea
32 Sejong-ro Jongro-gu
Seoul 110-710 Korea
Tel: 82-2-397-4324
Fax: 82-2-739-1628
Email: grace.sung@mail.doc.gov
Website: www.buyusa.gov/korea