Samil PwC "Beauty Tech Era... Home Beauty Devices Show High Growth"

As beauty tech utilizing advanced technologies such as artificial intelligence (AI) and big data gains attention, the digital innovation of the cosmetics market is accelerating. The ‘home beauty device’ sector, which is the fastest to commercialize, is expected to lead the related market with an average annual growth rate of 26.1% until 2030.

[Provided by Samil PwC]

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On the 9th, Samil PwC Management Research Institute published a report titled ‘Changes in the K-Beauty Industry’ revealing these findings.

The report identified recent product trends in the beauty industry as the ‘6S’: ▲beauty tech ▲home beauty devices ▲skinimalism ▲functional cosmetics ▲sustainable beauty ▲social networking service (SNS) marketing and distribution. Cosmetic brands are being renewed focusing on hybrid, anti-aging, and clean beauty products, and traditional beauty companies such as L’Or?al and Est?e Lauder are transforming into tech companies by investing in beauty devices and AI software.

The global home beauty device market size is expected to grow from $14 billion (approximately 18 trillion KRW) last year to $89.8 billion (approximately 119 trillion KRW) by 2030, with an average annual growth rate of 26.1%. In Korea, not only cosmetics companies but also pharmaceutical companies and beauty medical device sectors have entered the market, resulting in the home beauty device market size growing about 20 times from 80 billion KRW in 2013 to 1.6 trillion KRW in 2022.

The Korean cosmetics industry, which was mainly developed through duty-free channels and exports to China, is shifting towards online and H&B (Health & Beauty) store channels and exports to North America and Japan. Although consumption of domestic products in China has increased, leading to a decrease in Korean product consumption, Korean indie brands with distinctive products are gaining popularity in the U.S. and Japan based on the soft power of K-culture. The report emphasized, “Demand for K-beauty driven by the Korean Wave remains solid, but due to a lack of global distribution networks, it has not been monetized,” and stressed the “need to secure global distribution networks through mergers and acquisitions (M&A) of cosmetic brands and distributors for the sustainable growth of the cosmetics industry.”

Sales Growth Rate by Cosmetics Value Chain [Data Provided by Samil PwC]

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In the domestic cosmetics market, the growth of original design manufacturing (ODM) companies is expected to continue. When comparing growth rates of companies by value chain sector (based on sales from 2011 to 2021), ODM and original equipment manufacturing (OEM) companies showed a growth rate of 19%, significantly higher than that of raw materials (6%), brands (8%), and materials (12%). The report added, “The domestic ODM industry has world-class competitiveness, and it will take time for Chinese companies to catch up. Furthermore, with the recent rise of venture brands, it will continue to benefit for the time being.”

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