K-beauty ranked 3rd in the US for 2 consecutive years... Brand power needs to be strengthened

Settled as a category in the market based on consumers’ favorability and reliability

Amorepacific⸱LG Household & Health Care, etc., spurring North American market penetration

Optimized branding and appropriate M&A strategy required for long-term growth

K-beauty is cruising in the US. Korea, which has succeeded in establishing itself in the US mainstream market, is now one of the top three cosmetics importers in the US, following France and Canada. K-Beauty recorded a 12.3% share in the US cosmetics import market (based on HS Code 3304) in 2020, surpassing China and Italy and ranking third for the first time, and has maintained the same position for the second consecutive year.

In 2021, exports of Korean cosmetics to the US reached $712.15 million, up 32.2% from the previous year. This is a figure that far exceeds the 22.5% growth rate of the entire US cosmetics import market during this period. The import market share also increased by 1 percentage point from the previous year to 13.3%.

The KOTRA New York Trade Center advised that for the growth of K-Beauty, which has chosen the US market as an alternative to lowering its dependence on China, it should set mid- to long-term goals and strengthen its brand power through proper preparation, planning, and execution rather than focusing on short-term export performance. .

In April, LG Household & Health Care acquired a 65% stake in The Crème Shop, an American color cosmetics brand, for $120 million. Through the acquisition of The Crem Shop, it is a strategy to target the MZ generation and strengthen the competitiveness of the cosmetics business in North America by utilizing local marketing and sales capabilities. Amorepacific is also accelerating its advance into the North American market by expanding the presence of flagship brands such as Laneige and Innisfree in Sephora and Amazon.

K-beauty once garnered a lot of attention in the United States to the extent that major retailers competed to establish a new ‘K-beauty section’ where Korean cosmetics were collected and displayed in online and offline stores. Although the topic has subsided somewhat now, it is evaluated that it has succeeded in settling as a category in the market based on consumers' high affinity and reliability.

In particular, various and exotic ingredients used to protect skin health, packaging that is full of ideas and easy to use, and reasonable prices are becoming a driving force in maintaining and increasing the demand for K-beauty in the United States. In addition, K-content such as Korean movies, dramas, and music has been receiving a great response in the United States in recent years, further expanding market opportunities.

Vivian Lee, CEO of Onesome Communications, an advertising and public relations agency that supports the entry of Korean cosmetics into the United States, pointed out that “it is difficult to seek entry in the US market with only K-beauty,” and added, “At the time when K-beauty was booming, Some products that were displayed in the K-beauty section of large retail stores were eventually withdrawn from the shelf because they failed to establish an appropriate brand in the United States.” He also advised, "For the success of K-beauty, a branding strategy is essential." Rather than prioritizing selling products right away, it is necessary to conduct market research for branding, set target customers, establish and implement strategies for entry such as promotion, marketing, and entry into distribution channels in order to survive in the US market.

In particular, he emphasized the need to recognize public relations and marketing expenses as investments and prepare for smooth entry into the US market. Representative Lee recently introduced the case of a Korean cosmetics brand's failure to enter a large US retailer, Company A. He lamented, “Each distributor is different, but in the case of company A, the company demands a certain amount of publicity expenses from the company along with entering the store.” He added, “Although there may be initial costs involved in entering a store, company A can prepare a foothold for market expansion in the US just by entering the store.” Explained.

There are also success stories through sample marketing. It was a case that received a great response by providing about 130,000 skin care products of Korean cosmetics company L to American consumers through Ipsy (a company that puts sample-sized cosmetics in boxes and sends them to subscribers every month). Representative Lee said, “At the time, I paid 50 cents per sample for the entrance exam and distributed samples. After that, the brand’s sales on Amazon as well as homepage visitors and purchases surged, so I saw the effect of the sample marketing.” As can be seen in the case of company L, a publicity method through sample marketing can be considered depending on the brand and product characteristics.

“The United States, Korea’s second-largest cosmetics exporter, is a market with great strategic value at the moment when K-beauty sales are experiencing a decline in China,” said KOTRA’s New York Trade Center. An appropriate M&A strategy is required.”

“Our exporting companies should also set mid- to long-term goals and strengthen their brand power through proper preparation, planning, and execution rather than dwelling on short-term export performance,” he said. It can also be a reason for branding investment.”

Source: Farm News (http://www.pharmnews.com)