Indie cosmetics brands have become a cornerstone of K-Beauty's growth, largely due to the support of Original Design Manufacturers (ODM). These ODM companies, equipped with advanced technology, have lowered the barriers for new brands to enter the market, fostering the emergence of competitive indie brands. This has led to an increase in K-Beauty exports and a growing global demand for domestic ODM services, creating a positive feedback loop within the ecosystem.
According to industry sources, Cosmax has been investing 60 billion won since June to expand its Pyeongtaek Plant 1. This facility produces basic and customized cosmetics under the brand '3WAAU' and aims to increase its production capacity. Currently, Cosmax's annual capacity is around 3.5 billion units, with plans to boost it to approximately 4 billion units by the end of the year through the operation of a new global factory.
Meanwhile, Korea Kolmar plans to invest 173.3 billion won by 2028 to establish a basic cosmetics production facility in the Sejong Jeonui Industrial Complex. This move comes after the company withdrew from its Beijing plant, reinforcing its domestic production base and earning certification as the first reshoring company this year.
Cosmecca Korea has also decided to invest an additional 136 billion won in production facilities to establish a next-generation production base in Ochang, Chungbuk. Following a 64 billion won land and building acquisition in June, the total investment is expected to reach 200 billion won, with construction starting this month and equipment expansion planned through 2030.
The rapid expansion of the domestic ODM 'Big Three' is driven by ongoing orders from both domestic and international clients. Cosmax and Korea Kolmar are currently operating their major domestic production lines at near maximum capacity. Typically, the fourth quarter is considered a slow season for the cosmetics ODM industry, but both companies have secured production volumes through the end of the year.
Notably, the increase in indie brands is significant. Among Cosmax's top 20 client brands, the proportion of indie brands rose from 40% in 2021 to 50% in 2023, and further to 65% last year. Korea Kolmar also reports that indie brands have accounted for an average of 53% of its client base over the past three years.
Thanks to the expansion of client orders, Cosmax's Korean subsidiary surpassed 500 billion won in sales for the first time in the second quarter, while its U.S. subsidiary saw a 79% year-on-year increase, achieving its first quarterly operating profit since its establishment. The company currently exports directly to over 40 countries and supplies products to more than 100 countries when including indirect exports through clients.
Korea Kolmar has also seen a rise in orders for skincare and sun care products, with global clients launching new products, leading to its operating profit exceeding 100 billion won for the first time in the second quarter.
Recently, ODM companies have expanded their roles by collaborating with brands from the initial planning stages, offering insights on market trends, product concepts, formulations, and promising products for the next season. The combination of quality and safety in development capabilities, along with rapid and diverse small-scale production systems, has created an environment that attracts both global and indie brands. Industry insiders note that as brands grow, many are shifting to ODM partners that possess production capacity and the ability to respond to global regulations.
One industry expert stated, "There are not many countries that can quickly switch production lines to manufacture a variety of products. The synergy between development speed and the capacity for diverse small-scale production is drawing global brands to domestic ODMs."
* This article has been translated by AI.
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