As the K-beauty boom has increased workloads for cosmetics ODM (original design manufacturer) firms, orders that had been concentrated with top players such as COSMAX and Kolmar Korea are dispersing to lower-ranked companies, making the "trickle-down effect" more pronounced. COSMECCA KOREA Co., the No. 3 ODM by sales, and C&C International, No. 4, posted negative growth early this year, but they have entered a full-fledged improvement trend on the back of a sharp rise in recent orders.
According to the cosmetics industry on the 10th, COSMECCA KOREA Co. posted third-quarter sales of 182.4 billion won and operating profit of 27.2 billion won. Compared with a year earlier, sales rose 44% and operating profit rose 78.8%. Both sales and operating profit hit record quarterly highs.
Earlier, COSMECCA KOREA Co. recorded negative growth in the first quarter of this year, with sales and operating profit down 5.75% and 10.49%, respectively, from a year earlier. Orders from key clients were concentrated in the first half of last year and slowed in the second half.
This year, rising domestic and overseas orders put both sales and profitability on a growth track starting in the second quarter. COSMECCA KOREA Co. counts the brands "Anua" and "Medicube," as well as Beauty of Joseon, among its key clients.
COSMECCA KOREA Co.'s Korea unit recorded a 55.6% year-over-year increase in sales in basic skincare in the third quarter. Sales in color cosmetics and sun care also rose 28.3% and 99%, respectively. U.S. unit Englewood Lab also logged sales of 61.8 billion won, up 50.3% from a year earlier.
Park Jong-hyun, an analyst at DAOL Investment & Securities, said, "COSMECCA KOREA Co. is seeing increasing orders from domestic indie brands that are showing steep growth, especially in North America, and is recording sales growth on par with those brands' expansion."
C&C International, Korea's No. 4 ODM, is also signaling a full-fledged rebound in results. According to financial data firm FnGuide, C&C International is estimated to post third-quarter sales of 76.9 billion won and operating profit of 9.7 billion won. That would be increases of 3.8% in sales and 36.1% in operating profit from a year earlier.
Earlier, C&C International recorded negative growth in the first half, with sales of 139.9 billion won and operating profit of 14.2 billion won, down 8.3% and 34.6%, respectively, from a year earlier. The decline was due to reduced orders for products from major domestic clients last year.
This year, C&C International is rebuilding its workload, centered on color-focused indie brands in North America. The share of overseas orders, which stayed at 30%–40% last year, has recently risen to more than half. Lee Ga-young, an analyst at Samsung Securities, said, "In color, domestic indie brands have yet to see major success in exports to the West," adding, "C&C International's competitiveness is standing out as it supplies color products directly to Western brands."
These smaller ODM firms are also moving to expand capacity (CAPA) to match growing orders. COSMECCA KOREA Co. began operating its new Cheongju plant in May, adding annual CAPA of 66 million units. Of the 15 production lines, four are dedicated to hydrogel masks to proactively meet demand for mask packs that are popular overseas.
C&C International is building a combined color and skincare production facility in Cheongju, aiming for completion in 2027. The new Cheongju plant site measures 19,361 pyeong, more than six times the combined sites of the existing Hwaseong and Yongin plants in Korea. The company expects that when the new plant is completed in March 2027, total annual CAPA will expand by 1 billion units from the current level to 1.45 billion units.
Park Jong-dae, an analyst at Meritz Securities, said, "As existing indie brands grow rapidly, there are more cases of spreading product orders across several firms while they renew flagship items and launch new products. New beauty brands also turn to smaller ODMs to save on costs," adding, "Amid this trend, smaller ODM companies are quickly increasing orders by competing on speed and price."