Cosmetic OEM/ODM Market – Insights
Cosmetic OEM/ODM manufacturers have extensive knowledge and expertise in the entire beauty and personal care products development and manufacturing process. Through OEM/ODM manufacturers, provides finished products to beauty and personal care brands.
Private label and independent brands are mainly dependent on outsourcing for manufacturing of its products. Increasing demand for private label and independent brands is driving more and more players to enter the full buy provider business model. According to Coherent Market Insights’ analysis, global private label sales of beauty and personal care products in 2016 was valued at US$ 12.6 billion, which increased to US$ 12.8 billion in 2017.
Key players operating in the cosmetic OEM/ODM market are offering innovative designing and packaging solutions to attract customers, thereby supporting growth of the cosmetic OEM/ODM market, globally. For instance, in 2018, Schwanhäußer Holding GmbH & Co. KG launched cosmetic pencil with a ceramic case. Furthermore, in the same year, it launched wooden cosmetic pencils.
Rising awareness regarding toxic effects of chemicals used in BPC products has led to a shift in consumer preference towards organic and natural ingredient-based products. Cosmetic OEM/ODM have witnessed growth opportunities in production of organic products or products formulated with extracts derived from natural products such as seeds, fruits, and flower extracts. For instance, according to data released by the Organic Trade Association in May 2017, in the U.S., the sales of non-food organic products reached US$ 3.9 billion in 2016, which was an increase of around 9% from 2015, of which organic personal care products held major market share.
Cosmetic manufacturing is regulated by government regulatory agencies. Furthermore, different raw materials used in cosmetics manufacturing are also regulated. This in turn is restraining growth of the cosmetic ODM/OEM market. For instance, EC Regulation 1223/2009 regulates cosmetic products that are available in the EU market to ensure safety of products and reporting of serious undesirable effects. It also regulates manufacturing and labelling of cosmetic products.
The global cosmetic OEM/ODM market was valued at US$ 50 billion in 2018 and is expected to exhibit a CAGR of 5.7% over the forecast period (2019 – 2027), to reach US$ 80.4 billion by 2027.
Figure 1. Global Cosmetic OEM/ODM Market Share (%), By Region, 2018
Source: Coherent Market Insights, 2018-19
Among regions, Asia Pacific accounted for the largest market share of 34.2% in 2018. This is attributed to growing beauty and personal care industry in the region. For instance, according to the Personal Care & Cosmetics Products Country Guide: Australia, published by the U.S. Department of Commerce in 2016, Australia’s total personal care and cosmetics market was valued at around US$ 3.4 billion in 2015. Moreover, the report also states that average annual spending on cosmetics in Australia is US$ 146 and US$ 223 in Japan, as compared to US$ 139 in the U.S.
Among product type, skin care segment held significant market share in 2018 in the global cosmetic OEM/ODM market. This is attributed to increasing demand for lotions, moisturizers, and body wash among others. According to The Cosmetic Toiletry & Perfumery Association 2017 report, the cosmetics industry was valued over US$ 12.30 billion in 2017 in the U.K, of which 23.6% was accounted by the skin care industry. The report also stated that the skin care industry in the U.K witnessed a growth of 1.5% in 2017 and reached US$ 2.90 billion in December 2017, from US$ 2.86 billion in December 2016.
Figure 2. Global Cosmetic OEM/ODM Market Share (%) Analysis, By Product Type, 2018
Source: Coherent Market Insights, 2018-19
Players operating in the global cosmetic OEM/ODM market are adopting various growth strategies to expand their customer base. For instance, in March 2019, KBL Cosmetics launched a new innovation design product i.e. Foldable Triangle Eyeshadow. In 2017, Cosmax acquired full stake in the U.S. cosmetics developer and manufacturer, Nuworld, for US$ 50 million. Cosmax plans to enhance its local manufacturing facility as well as research and marketing to gain a competitive edge in the U.S. cosmetics manufacturing market. In 2017, Cosmecca Korea announced to set up its third factory in Pinghu, Zhejiang Province, China. This new site will increase Cosmecca’s production in China to 240 million units.
Major players operating in the global cosmetic OEM/ODM market include Intercos S.p.A., Kolmar Korea Co. Ltd., Scalpi Cosmética sa, Cosmecca Korea Co., Cosmax Inc., Mana Products Inc., KBL cosmetics Ltd., Urist Cosmetics Incorporated, Fareva Holding SA, Milliona Cosmetics Co., Ltd., Skinlys, Maesa SAS, Schwanhäußer Holding GmbH & Co. KG, Tricorbraun Inc., Herrco Cosmetics Limited, Architectural Beauty, Allure Labs Inc., Case Mason Filling, Inc., Pardaco Trading Pte Ltd, and KDC/ONE among others.
Cosmetic OEM and ODM offers cosmetic manufacturing services to different cosmetic brands such as independent, legacy, and private label. It offers advantages such as reduced product launch times and inventory management. Smaller cosmetic brands prefer cosmetic OEM/ODM, as they do not have required resources. Large brands prefer cosmetic OEM/ODM, as they have experience and resources.
The demand for innovative beauty and personal care products is increasing significantly. Several new innovative beauty and personal care products are being launched in the market. For instance, in August 2019, Tom Ford Research introduced a new luxury skin care line with ingredients such as caffeine, cacao, and gyokuro. Many cosmetic private labels and independent brands do not have expertise and resources to develop new products. Cosmetic OEM/ODM offers innovative solutions to such brands. This, in turn, is driving growth of the cosmetic OEM/ODM market.
Lucrative growth of the cosmetics and personal care industry is also contributing to growth of the OEM/ODM market. For instance, according to the report for the Beauty and Wellness sector published by Wesgro Cape Town and Western Cape Research in 2016, South Africa’s beauty and wellness sector was valued at US$ 490 Mn in 2013, which increased to US$ 570 Mn in 2015.
Key features of the study:
“*” marked represents similar segmentation in other categories in the respective section.