Last December, LG Household & Health Care (LG H&H) brand O’HUI announced price increases ranging from 1,000KRW (USD0.69) to 5,000KRW (USD3.45) in the new year.
The company also announced price increases for Beyond, ranging from KRW500 (USD0.34) to KRW2,000 (USD1.37).
K-beauty brands Missha and A’pieu from Able C&C and Etude from Amorepacific similarly announced that it would be increasing prices for its brands in 2025 as well.
This comes as Korea’s Ministry of Food and Drug Safety (MFDS) confirmed that K-beauty exports surpassed the USD10bn milestone for the first time in 2024.
According to the report, 2024 cosmetic exports increased by 20.6% year on year to USD10.2bn from USD8.46bn in 2023. The previous record set was USD9.2bn in 2021.
The largest importer was China with total export value of USD2.5bn, accounting for 24.5% of total exports.
However, exports to the US and Japan increased significantly by 57% and 29.2% respectively and is expected to continue rising in 2025.
An economy on the edge
While the demand for K-beauty is expected to surge, the production costs are expected to rise as well, said Mike Sohn, chief executive of REACH24H, a cosmetics regulatory consultancy.
“Korea actually imports a lot of cosmetic ingredients, and the Korean exchange rate is going so bad right now it just adds to the manufacturing costs.”
In December, the South Korean won was driven to a historic low in the wake of the political turmoil triggered by President Yoon Suk Yeol’s short-lived declaration of martial law and subsequent impeachment.
The political crisis has the economy on edge and the cosmetics industry is the only bright spot.
“Cosmetics is the only industry doing well in Korea at the moment. The rest – like semiconductors, automobiles – are not doing well overall. But cosmetics is growing and breaking records and we’re expecting even more exports to come. So, the price increases were expected. It’s being increased artificially,” said Sohn.
Even with the raised prices, the demand for K-beauty will continue to grow globally, Sohn believes.
“The demand for K-beauty is bigger than ever now. Not just in the US and Japan but in markets like ASEAN, the Middle East, and Europe. An even though the export amount has been decreasing in China, these companies are not going to abandon the China market. The demand will still be high especially in many of these markets where they are not so price sensitive.”
He also believes that the price increase will not affect the domestic market as the intense competition has already kept prices low in the first places. Furthermore, brands tend to offer promotions regularly.“The competition domestically is so intense which is why many of the brand want to go overseas. They don’t want to focus on bargain sales but expand into the overseas markets. They know they can’t cling onto the Korean market. So I don’t think the price increases will have any serious impact on the market.”
