K-beauty export boom lifts ODM giants Kolmar Korea, Cosmax

South Korea's cosmetics industry is setting new growth records as the global K-beauty wave continues to spread. SME cosmetics exports hit an all-time quarterly high in the third quarter of this year, and the country's two leading cosmetics ODM firms — Kolmar Korea and Cosmax — are expected to post strong earnings for the same period.

SME cosmetics exports reached $2.79 billion in the third quarter of this year, up 28.6 percent from the same period a year earlier, according to the Ministry of SMEs and Startups — the highest quarterly figure on record. Cumulative exports for the January-to-September period also hit a record $7.65 billion, a 26.4 percent increase from the same stretch last year.

The sector has maintained steep growth over the past three years. Quarterly exports stood at $1.72 billion in the third quarter of 2024, climbed to $2.17 billion in the same period last year, and surpassed $2.7 billion this year — an expansion of more than 60 percent in just two years.

A notable feature of this year's results is the diversification of export markets. Cosmetics exports to North America reached $690 million in the third quarter, up 33.1 percent year on year, while exports to Europe rose 58.6 percent to $670 million. Latin America stood out with exports of $100 million, a jump of 141.3 percent, signaling that demand for K-beauty products is rapidly spreading beyond the industry's traditional strongholds.

Online channels are also driving overseas expansion. Online cosmetics exports totaled $360 million, nearly doubling from a year earlier with a 97.5 percent increase. Cosmetics accounted for 75.3 percent of all SME online exports during the period.

The surge in K-beauty exports is raising earnings expectations for domestic cosmetics ODM companies. As small and indie cosmetics brands without their own production facilities gain traction overseas, orders flowing to ODM firms that handle product development and manufacturing have expanded in tandem.

Securities analysts are watching for Cosmax to post its best-ever quarterly results this year. Hana Securities projected Cosmax's third-quarter consolidated sales at 823.8 billion won ($617 million) and operating profit at 79 billion won — increases of 41 percent and 85 percent, respectively, from the same period last year.

The third quarter is typically a softer period for the cosmetics industry, as summer vacations weigh on demand relative to the second quarter. Analysts expect Cosmax to buck that seasonal trend, however, driven by growing orders from global clients.

Kolmar Korea is also expected to improve its earnings. Shinhan Securities estimated the company's third-quarter consolidated sales at 849 billion won and operating profit at 90 billion won, up 24 percent and 54 percent, respectively, from a year earlier.

While those figures would fall short of Kolmar Korea's second-quarter results, they would represent substantial year-on-year growth. Analysts cited an increase in domestic cosmetics manufacturing orders as a key driver of the improvement.

Analysts also point to a structural shift in how K-beauty is growing. Rather than being driven by a handful of large brands, the industry is increasingly powered by a diverse range of small and indie brands reaching consumers directly through global online platforms.

ODM companies stand to benefit from this shift, as they handle product development and manufacturing for multiple brands simultaneously — insulating them from dependence on any single brand's performance. Observers say this dynamic is giving rise to a more resilient industry ecosystem.

Industry leaders have expressed confidence in the trend. Yoon Sang-hyun, vice chairman of Kolmar Group, said at "Amazon Beauty in Seoul 2026," held Sept. 27 at the Grand InterContinental Seoul Parnas in Gangnam-gu, Seoul, that Yoon was "100 percent certain that K-beauty can sustain its growth."

Yoon cited the constant emergence of new cosmetics brands as the engine behind K-beauty's staying power. The competitive landscape in South Korea — where brands vie fiercely to bring innovative products to market and those products then reach overseas consumers through global distribution networks — is what gives K-beauty its edge, Yoon said. "We will work together to ensure K-beauty's continued growth," Yoon added.