The K-beauty industry is experiencing a dynamic shift as Korean indie beauty brands gain international traction, while established premium labels face mounting challenges.Â
Indie K-Beauty Brands Grow: Flexibility and Innovation Drive Global Appeal
In the first quarter of 2025, Korea’s cosmetics exports reached a record-breaking $2.6 billion, marking a 13% increase from the same period in the previous year. This increase is largely because of the global success of indie beauty brands. They are resonating with consumers seeking affordable, innovative, and trend-responsive cosmetic products.
K-beauty presents a distinct market landscape where independent brands demonstrate exceptional performance. Cosmetics brands registered as licensed sellers have experienced a notable surge, increasing from 15,707 in 2019 to 27,932 in 2024.
These independent brands have capitalized on the agility offered by Korea’s robust original design manufacturing (ODM) infrastructure. Companies like Cosmax and Kolmar Korea are their go-to with comprehensive services available. Indie brands can get all the assistance from formulation to packaging. It enables startups to bring products to market swiftly and efficiently. This ecosystem has lowered entry barriers, allowing even individual entrepreneurs to launch beauty lines with minimal investment.
Cosmax, for instance, reported a 21.9% year-on-year increase in consolidated sales, reaching 2.1661 trillion won in 2024. The company’s operating profit also grew by 51.6%, underscoring the profitability of supporting indie brands.
Premium Brands Face Headwinds: High Costs and Market Misalignment
While indie brands are flourishing, several high-end Korean beauty labels are encountering difficulties. Shinsegae International’s luxury brand Poiret, launched in 2021, has suspended production of certain products due to disappointing sales, despite utilizing high-quality ingredients.
Similarly, Shihyo, a premium brand introduced by Hotel Shilla in collaboration with L’OrĂ©al in 2022 is facing challenges. It started liquidation proceedings in January 2025 after failing to achieve profitability.Â
Hyundai Department Store Group’s Oera is also struggling to gain market traction. It is until now failing to reach 10 billion won in annual revenue.
These challenges showcase that there is a lot of disconnect between premium brands’ offerings and current consumer preferences. Today’s consumer favors value, innovation, and accessibility over luxury positioning.
Market Dynamics: The Role of ODMs and Consumer Behavior
The success of indie brands is closely linked to Korea’s advanced ODM sector. By outsourcing product development and manufacturing, indie brands can focus on branding and marketing. It gives them a chance to rapidly respond to market trends and consumer demands.
Consumer behavior has also shifted, with a growing emphasis on transparency, sustainability, and social media engagement. Indie brands often excel in these areas, leveraging platforms like Instagram, Shorts, and TikTok to build communities and foster brand loyalty.
Economic Indicators: Contrasting Fortunes
The divergent paths of indie and premium brands are reflected in broader economic indicators. Aekyung Industrial reported a 63.3% decline in operating profit in Q1 2025, totaling 6 billion won, while LG Household & Health Care saw a 5.7% decrease in operating profit to 142.4 billion won.
In contrast, Cosmax’s impressive financial performance underscores the profitability of aligning with indie brands and adapting to evolving market dynamics.
Regulatory and Trade Considerations: Navigating Tariffs and Global Markets
Under the Korea-United States Free Trade Agreement (FTA), K-beauty products enjoyed duty-free access to the U.S. market. It gave them a competitive advantage by offering high-quality products at affordable prices.
The international success of Korean beauty products is now not without challenges. Recent U.S. tariff policies have introduced a 10% base tariff on Korean cosmetics, with the potential for an additional 25% reciprocal tariff. These measures could impact the competitiveness of Korean products in the U.S. market, particularly for small and mid-sized companies.
However, some analysts suggest that Korean brands may benefit from higher tariffs on Chinese cosmetics, potentially redirecting consumer demand toward K-beauty products.
The Korean beauty industry’s evolving landscape presents both opportunities and challenges. By embracing innovation, understanding consumer behavior, and navigating regulatory environments, Korean beauty brands can continue to thrive on the global stage.
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