South Korea professional skin care category shows market-leading growth

The growth has been boosted thanks to a marked economic recovery since the downturn of 2009, together with a change in the regulation of beauty institutes, according to the latest report from market researcher Kline Group.

“Previously beauty institutes were mainly operated by individuals trained and certified by any number of educational institutes, however the regulation required national qualification of estheticians,”​ said Karen Doskow, industry manager at Kline’s Consumer Products Practice.

“This standardization subsequently drove investment in beauty institutes and significantly encouraged greater patronage.”​

On a global basis it looks good even against some of the other high growth markets for professional skin care, particularly in China where the growth rate in 2011 was 9.5 percent.

Growth rates beats western markets hands down​

Overall the global growth for professional skin care was 5.3 percent in 2011, which includes a rate of 4.0 percent in Europe, where the market was deemed to have recovered, and a more modest growth of 1.3 percent in the United States.

With the market currently valued at just over $200m, the growth in professional skin care brands is also being driven by the rapid evolution of the spa category, together with a continued interest in the medical category, which includes dermatologists and plastic surgeons.

The spa category had also been previously undeveloped until recent years, until the recent introduction of western style spa chains by companies such as Yon-Ka and the distributor of Comfort Zone, CMA Cosmetic.

Evolution of the retails channels feeds growth​

The retail channel dedicated to the professional skin care category have also proliferated, particularly in the e-commerce segment, where online websites, together with other platforms such as G Market and Home Shopping helped drive growth for this segment by 18 percent in 2011.

The market remains fragmented, however, with Kline pointing out that the top five brands still only account for less than 20 percent of the total market sales, while the market consolidation still varies by channel too.

Foreign brands still lead the way, though, accounting for roughly 20 percent of all sales, led by names such as Klapp, La Roche-Posey, but the report also points to significant domestic brands such as the leader, CNP as well as Dr. G and Anacli.

Significant gap between domestic and foreign brands​

“There is a significant gap between local and foreign brands in terms of product quality and market positioning. Unlike many local brands focusing primarily on medical care providers, foreign brands adopted a multi-channel strategy, choosing beauty institutes, spas, and salons as their major professional channel,”​ Doskow said.

“Most local brands are designed for and target the low-priced and mid-priced segment, while foreign brands are generally carried by the luxury or up-scale segment.”​

Moisturizers are the largest product category for take-home sales, and continue to be the best selling products in all retail channels and retail stores, while targeted products for signs of aging and pigmentation are also increasingly popular.

However, looking to the future, growth is developing for more targeted products, particularly in the body care segments, while a higher standard of consumer education is resulting in increased sales of take home products.

All of this is expected to drive a CAGR of 8 percent for the professional skin care category in South Korea until the year 2016, which compares favorably to Kline’s overall market of 5 percent CAGR for the same forecast period.