The global cosmetics industry makes
a ton of money.
That includes shampoo, makeup,
perfume, cologne, deodorant, soap.
The list goes on.
Analysts expect the industry's revenue to
grow within the next four years
to more than t$379 billion.
But when you break down that number,
it's skin care that's driving much of
the growth.
And it's not slowing down.
I've used moisturizers upwards in
like 250 dollar range.
The most expensive single item
would be around 50 dollars.
I try not to spend more than
50 for in essence or moisturizer.
Probably like this really expensive moisturizer
that I kind of got conned
into buying for about 150 dollars.
Skin care is an increasingly
lucrative business for cosmetic companies.
That's why big names like Amazon and
the Kardashians are trying to cash
in. And there's one country that's been
playing an outsized role on skin
care. South Korea.
Here's why.
Skin care is a big
moneymaker for big beauty brands.
Over the last five years, skin care has
grown so much that it's become the
largest piece of the pie when you
break apart the beauty industry by
product category.
It makes up about 24.9
percent of a total $52.4
billion in annual revenue.
And the global skin care products market
size is expected to reach more
than $196 billion by 2024.
But what is making
skin care so popular?
And, why are these bottles of face wash
and tubs of lotion bringing in so
much money?
This is Larissa Jensen.
She's a skin care and beauty
industry analyst with the NPD Group.
Skin care has been growing very fast.
It's actually growing the fastest of
all the beauty categories that we
track, including makeup
and fragrance.
So, it's been the strongest performer
for the past couple of years.
What's really driving a lot of
that performance is actually wellness and
health, and you know,
really natural brands.
That's what's really driving
the performance of skincare.
Wellness doesn't mean
just being healthy.
In 2019, it means clean eating, the
latest fitness fads and the no-makeup
look, which actually does
involve some makeup.
At any rate, the wellness trend is
driving consumers to take better care
of their skin.
This skin-first philosophy did not
originate in the U.S.
Instead, it was born on the other side
of the world, where skin care is a
part of the culture.
It's where the latest skin care
innovations are concocted and where a
large chunk of manufacturing happens
in the first place.
South Korea.
Hi guys.
It's Charlotte.
This is Charlotte Cho.
She's an entrepreneur, Korean beauty guru
and the author of "The Little
Book of Skin Care."
She started Soko Glam, an online
marketplace full of curated K-beauty
products for U.S.
consumers.
I was born and raised in California.
I didn't know anything about skin care until
I started to live and work in
Seoul, South Korea, and I was
completely amazed at the product selection
there was in Korea.
And also the real focus
on a skin-first philosophy.
So, every woman and man in Korea it
seemed really knew how to take care of
their skin and at an early age.
They had categories that just simply
did not exist in the U.S.,
so it was really intriguing to me and
I saw results on my own skin.
I firmly believe that K-beauty
created a skin care wave.
They opened the door to innovations.
They've allowed indie brands to come to
the forefront of a lot of the
skin care trends.
They've also widened the appetite
for new products, new categories.
They've also been a big part
of the education around skin care.
South Korea's cosmetics exports have
exploded in recent years.
In 2014, exports were over 1.7
billion, and then in 2017, they
had grown nearly 5 billion.
Not only is South Korea a large exporter
of beauty products, but is also a
huge manufacturing hub, even
for American brands.
Local cosmetic production there
went from 8.5
billion dollars worth of goods in 2014 and
grew to more than 13 billion in
2017.
I think the impact of K-beauty goes
far beyond just brands that are now
introduced into this
global marketplace.
It's actually allowing Korean manufacturing
companies to grow rapidly as
well. For example, a lot
of European brands and U.S.-based
brands are formulating their products
with Korean R&D chemists and
manufacturing plants.
So, a lot of your favorite brands that
are not based in Korea, they are
sourcing their innovations from
Korea as well.
Now, when there's an innovative product coming
out of Europe, you have to
check the back of the product and
see if it's actually made in Korea.
So while South Korea is continuing to
grow as this hub of beauty innovation
and creation, consumers are taking more
time to educate themselves about
the ingredients in the
products they are purchasing.
The same way you might
check ingredients on food packaging.
I think it was very important for
American consumers to be educated about
skin care.
It brought empowerment to the consumers and
they now know how to take care
of their skin.
The skin care boom owes
a lot to social media.
Think of all the selfies people take.
People want to look good in their
photos, wherever and whenever they take
them.
What's more is skin care gurus and
makeup artists have become huge stars on
platforms like YouTube and Instagram.
Influencers and social media were key for
Korean beauty to take off and
for skin care to become
at the forefront of beauty.
It really took influencers explaining
to their followers and their
community why certain products were
incorporated into their routine and
what impact it had on their skin.
They loved showing what their skin
care routines looked like on social.
They loved sharing their shelfies, so they
had rows and rows of their
products displayed.
At the same time that consumers
are discovering more about different
ingredients and learning about how to
take care of their skin,
more and more products
are flooding the market.
Companies are strategically acquiring brands to
stay on top of beauty
market trends, like Unilever's purchase
of Japanese skincare brand Tatcha
for a possible $500 million.
And, some companies are even spinning
off their existing cosmetic lines to
include skin care.
Sephora has started their
own skin care line.
Kylie Jenner launched Kylie Skin, and
even Amazon is offering its own
line. Part of the reason?
Skin care is a higher
margin business than cosmetics.
That means companies keep more of
the profits when selling skin care
products than makeup.
For a very long time, makeup,
traditional makeup brands were purely
focused on color, but now they see
that American consumers are far more
educated about skin care, and so
they're here to capitalize on that
market.
Do I foresee that the category is
going to go into decline anytime soon?
I don't believe so.
It's doing really, really well and
it's continuing to be the strongest
performing category in
2019 year-to-date.
We believe there is going to continue to
be a lot of excitement around the
skin care category at least
for the next two years.
Though the shift to this
skin-first, makeup-second philosophy is still
expected to grow skin care industry
revenue for the next few years.
The question remains — how does skin
care continue to evolve in this
market?
I think there's a lot of noise in
the space right now because there's so
many people rushing to market with
their brands and their products.
So, it really takes a lot of
education, continuous education about how they
formulated the product, why it's a trusted
formula, what it's going to do
for their skin.
At the end of the day,
people want to see results.
