Cosmetics Exports Projected to Grow 33% by 2026

Concerns about market interest rates increased after the recent Jackson Hole meeting, but dovish remarks from a director suggested the possibility of an interest rate freeze, leading to a market rally. Nevertheless, market uncertainties persist, as the probability of rate hikes increased and U.S. Treasury yields rose significantly after this week's Jackson Hole meeting. Therefore, it is necessary to closely monitor the economic indicators to be announced next week.

August export data showed a very positive trend. Total exports recorded $98.2 billion, a 68% increase year-over-year. This growth was primarily driven by strong export performance in the semiconductor and electronic device sectors. Although there are still many voices of concern in the market, export data serves as a positive indicator for the Korean economy.

Cosmetics exports increased by 29% year-over-year in the second quarter, achieving their highest-ever performance. This positive trend is expected to continue steadily in the third and fourth quarters. However, stable growth is anticipated rather than the rapid growth seen in Q2, and an overall positive trend is expected to continue.

APR's stock price temporarily declined due to reports of chemical component detection in cosmetics in Singapore, but the company immediately responded through an exclusive report, claiming the products were counterfeit. As a result, most of the negative issues that arose yesterday seem to have been resolved today.

Cosmetics sector exports in August rose by 29%, and if this trend continues, annual export growth could reach 33% by 2026. Amid this growth, not only is APR, a leading company, performing well, but ODM (Original Development Manufacturer) companies like Kolmar Korea and Cosmax are also making significant strides. The earnings of major ODM companies are reaching surprise levels, positively impacting the entire sector.

The increase in cosmetics sales is largely due to the diversification of export regions and the expansion of offline shelf space. Exports to Europe have significantly increased since 2025, and this trend is expanding to Europe and the Middle East, in addition to existing U.S. Walmart and Daiso stores. Furthermore, moving away from the online sales-centric trend during the COVID-19 pandemic, the proportion of offline shelf space is increasing again, driving overall cosmetics export growth.

Looking at the recent performance of the two major ODM companies, Cosmax is leading the growth with a significant increase in sales. Kolmar Korea, on the other hand, showed strength in profitability with a substantial improvement in operating profit.

Currently, 'shortage' phenomena, where products sell out quickly, are occurring at Olive Young stores. This, coupled with the sale season, testifies to the high popularity of cosmetics. In particular, the significant increase in foreign tourists at Olive Young stores in Seoul shows that foreigners are actively purchasing K-beauty products.

The production schedules of major ODM companies such as Cosmax and Kolmar Korea are already fully booked until the end of the year. This indicates very high demand for cosmetics, with strong sales continuing across various product categories, including pharmaceutical-based cosmetics.

Hydrogel masks have a fundamental difference from ordinary sheet masks. While regular mask packs are made by soaking a sheet in essence or ampoule, hydrogel masks are gel-type masks whose material itself is composed of essence and ampoule. Thanks to this unique structure, highly concentrated ingredients can be effectively delivered deep into the skin.

Unlike regular mask packs, hydrogel masks must be adhered to the skin for at least 3 hours to achieve optimal effects. This is because highly concentrated essence ingredients remain in close contact with the skin for an extended period, delivering deep nourishment. This usage method is an important factor in maximizing product effectiveness.

Hydrogel mask manufacturing has high entry barriers. Installing one equipment line can cost up to 500 million KRW, and securing 30m of equipment space is essential. Moreover, achieving a good yield during the product manufacturing process is very difficult, requiring complex process management. The shortage of R&D and production personnel specialized in hydrogel also makes manufacturing challenging.

Popular products like Biodance are currently experiencing persistent supply shortages, unintentionally creating a 'sold-out marketing' effect. It is difficult to find Biodance mask packs in stores like Olive Young. This phenomenon is leading to expectations of increased performance and stock prices for related companies like Genic.

Cosmetics companies each possess products with distinct strengths. Genic leads in the hydrogel mask sector, while Kolmar Korea is strong in sunscreens. APR is already leading the market with its famous beauty devices and skincare pad products. Cosmecca Korea specializes in developing products utilizing whitening ingredients like Dr. Melaxin, with each company targeting the market based on its core competencies.

The color cosmetics line is still showing less growth compared to skincare products. While Kolmar Korea, Cosmax, and Cosmecca Korea are active as representative color cosmetics companies, market expansion is currently centered on skincare product lines. New strategies and product development will likely be needed for the growth of the color cosmetics market.

K-beauty shows a significant advantage in price competitiveness when compared to L'Oréal, the global No. 1 company. It appeals to consumers with similar performance at a lower price. This cost-effectiveness is an important factor in raising the brand awareness of Korean cosmetics and changing their status in the global market.

Due to the high difficulty of access and scarcity of hydrogel masks, Genic has been suggested as the top pick in the cosmetics sector. Manufacturing hydrogel masks has high entry barriers due to expensive equipment and complex processes, allowing only a few companies to produce them. Genic holds a unique position in this hydrogel mask market, with operating profit expected to increase by 100%, and high expectations for additional growth due to product shortages. Currently, Genic is considered to have great potential as a leader in the hydrogel mask market.

The market trend in September after the supply and demand rebalancing at the end of August is very important. In particular, the U.S. employment report is scheduled to be released this week, making it a key observation point for the market. Market volatility could increase depending on the employment data results, so investors should pay close attention to this indicator.