K-Beauty Boom Drives Generous Bonuses... "On Par with Large Corporations"

As K-beauty gains global popularity, cosmetics companies have started paying record-breaking bonuses based on strong performance.

According to the cosmetics industry on the 20th, Korean Kolmar and Cosmax, domestic cosmetics manufacturers (OEM·ODM), paid bonuses equivalent to an average of 374% and 190% of the monthly base salary, respectively. This is an increase from the previous bonus levels. In 2022, Korean Kolmar paid bonuses of around 200%, and Cosmax, which pays bonuses twice a year in the first and second halves, increased its bonus from 150% in the second half of last year.

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With the rapid growth of domestic and international small and medium-sized indie brands, these two companies producing their products are also experiencing unprecedented prosperity. Although neither Korean Kolmar nor Cosmax has disclosed annual performance figures, estimates from the securities industry suggest operating profits of approximately 140 billion KRW and 126 billion KRW, respectively, representing growth of 90% and 137% compared to 2022. The improvement in performance is driven by the increase in sales volume of domestic small and medium-sized brands, their major clients, in the global market. Additionally, global indie brands are sending numerous love calls, and it is expected that the performance improvement trend will continue this year. A beauty industry insider said, “Thanks to the heightened interest in K-beauty,” adding, “It is unprecedented for a regular company, other than large cosmetics corporations, to pay bonuses exceeding 300%.”

Clio also sold 426.3 million KRW worth of treasury shares last month to pay bonuses to its employees. The company’s salary expenditure in 2022 was 14.2 billion KRW. This year, the total amount is expected to increase further depending on the incentive payment decision. The bonus payment follows the company’s record-breaking annual performance last year. Clio’s sales last year reached 330.5 billion KRW, a 21.3% increase from the previous year, and operating profit rose by 89.1% to 33.8 billion KRW. This marks the highest performance for 11 consecutive quarters since the third quarter of 2021 in terms of sales.

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Growth in the health & beauty (H&B) channel, centered on online and Olive Young, significantly boosted the company’s sales. On an annual basis, sales in the H&B channel alone reached 108 billion KRW, a 35.8% increase from the previous year, while online sales recorded 112.1 billion KRW, growing 24.5% during the same period. The increase in profitable products was key, with ‘Clio Kill Cover Cushion’ and ‘Peripera Ink The Velvet’ leading in the cushion and color makeup categories, and ‘Goodal Green Tangerine Vita C Serum’ showing significant sales growth in skincare products.

Olive Young also reportedly paid the largest bonuses ever, having already broken its record for highest performance. Although annual results have not been disclosed, CJ Olive Young’s cumulative sales for the third quarter reached 2.8 trillion KRW. On an annual basis, it is estimated to have exceeded last year’s sales of 2.7774 trillion KRW, reaching over 3.5 trillion KRW.

Despite recording less-than-stellar performance this year, LG Household & Health Care also paid bonuses equivalent to 200% of the base salary. Although operating profit last year shrank by 31% to 487 billion KRW, the bonus amount was set higher than the 100% bonus paid the previous year. An LG Household & Health Care official said, “It was not paid as a form of encouragement,” adding, “Although performance declined, the decision to pay bonuses was made based on internal judgment.”

Meanwhile, in the case of Amorepacific, the management cycle changed to July starting in 2022, so the decision on bonus payments is expected to be confirmed after June.

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