The global cosmetics industry makes a lot of money. This includes shampoo, make-up, perfumes, cologne, deodorant, soap, etc. Experts forecast that this will industry reach $463.5 billion by 2027. But if you break down the numbers, it is skincare bringing in much of the revenue, and there is no sign of slowing down. Skincare is a very lucrative business for big companies. Even Amazon and the Kardashians are cashing in.
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How Much Do You Spend on Skin Care?
I interviewed some people and asked about the most expensive skin care purchase they had. I can show their ages but not their real names.
"I've used moisturizers in the $250 range." - Mina, 35
"The most expensive item is $50. I don't want to spend more than $50 for an essence or a moisturizer." - Michael, 30
"I'd say this really expensive moisturizer that I got sales-talked into buying for $150." - Grace, 29
But there's one country playing a giant role in skin care...South Korea. Here's Why
Skincare makes big money for big beauty brands, and it has grown so much in recent years. It is now the largest piece of the pie if you break down the beauty sector into product categories. That's 24.9% of the $52.4 billion annual revenue of the beauty sector. The global skincare market is expected to reach $196 billion by 2024.
Why Skin Care is so Popular?
Skincare is growing very fast, faster than every other beauty category including makeup and fragrance. Wellness, health, and natural brands are driving all this performance. Wellness includes clean eating, fitness fads, and the no-makeup look, which actually involves some makeup. This wellness trend drives people to take better care of their skin. This skin-first philosophy originated in South Korea, where skincare is part of the culture. They make the latest skincare innovations. A large part of manufacturing also happens in South Korea.
How K-Beauty Took Over the World
K-beauty created the skin care wave, opening the world to innovations. Indie brands and influencers have gone to the forefront of skincare trends. They helped widen the appetite for new products and categories while helping educate people on skin care.
The Impact of K-Beauty on South Korea
The South Korean cosmetics export business exploded in recent years. In 2014, it was valued at $1.7 billion; in 2020, it has grown to $7.5 billion, despite how crazy that year was. South Korea is a large exporter and manufacturing hub for cosmetic products, even for American brands. Cosmetic production went from $8.5bn in 2014 to $14.4bn in 2020.
The impact of K-beauty goes beyond brands. It allows South Korean manufacturing companies to grow fast. Many American and European brands formulate products with South Korean R&D chemists and manufacturing plants. Your favorite brands in other countries source their innovations from Korea too.
If there is an innovative new product in Europe, check the back label, it might be made in Korea. While South Korea is continuously growing to be the hub of beauty creation and innovation, consumers are taking more time to educate themselves, especially with the ingredients of the products. It's like knowing how to read ingredients in food packaging. It's important for American consumers to educate themselves about skincare. It brings them empowerment. They now know more than ever how to take care of their skin.
Selfies, Skin Care, and Social Media
If you are in the skincare business, you owe a lot to social media, specifically the selfies people take. Everyone wants to look great in their photos. Skincare influencers and makeup artists have amassed huge followings, becoming stars on platforms like YouTube, TikTok, and Instagram. Influencers and social media were the keys to the growth of K-beauty, putting skin care at the forefront of beauty. Influencers explained to their followers what products they used for their skincare routine and how much impact it had. They share their skincare routines on social with videos, selfies, and shelfies, where you can see rows of products they used.
More Skin Care Products for Everyone
As consumers educate themselves, more products flood the market. Big companies are strategically acquiring brands to stay on top of beauty trends, while a few beauty companies make spin-offs to make skincare a priority. Here are some examples.
*Unilever acquired Japanese skincare brand Tatcha for a value approaching $500M
*Rihanna launched Fenty Beauty
*Canopy Growth acquired London skincare company This Works for 43 million pounds in cash
*Tarte relaunched its sister skincare brand Awake
*L'Occitane acquires Elemis for $900M
*ColourPop has a new sister company, skincare Fourth Ray Beauty
*P&G acquired First Aid Beauty
*Sephora started a skincare line
*Kylie Jenner launched Kylie Skin
*Amazon launched BELEI skincare
Part of the reason why companies are attracted to the skin care business is it has a higher margin than cosmetics. They keep more of the profits compared to makeup. In the past it was just about color, especially for makeup brands. But now that Americans are more educated about skin care, companies are here to capitalize on that market.
The Future of K-Beauty and Skin Care
I don't think it's slowing down soon. It's still the best-performing category as of writing. There will still be a lot of excitement in this category over the next few years. The question is, how does skin care evolve? There's a lot of noise in this sector right now. A lot of businesses are still rushing products into the market. People want to see results. The consumers will continue educating themselves on products and ingredients that work best for their skin.
Source: CNBC, YouTube Channels Pinoy Level UP and Alexandra Olesen
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