Cosmetics Exports to Russia Jump 9-fold in 5 Years
Korean cosmetics are gaining popularity in Russia amid the spread of Korean pop culture in the country.
According to a report issued by the Institute for International Trade, which is affiliated with the Korea International Trade Association, Russia was the world’s 11th largest market and 5th largest in Europe for beauty products in 2018, with its size estimated at around US$10.3 billion.
Russian women are very interested in makeup and skin care, and they have high purchasing power with the labor force participation rate of 69 percent. In recent years, the dramatic rise in the number of beauty stores and drug stores, such as L'etoile and Magnit, in Russia and the development of the e-commerce market are driving the growth of the beauty market.
Under the circumstances, K-beauty is becoming popular with the spread of the K-Wave. South Korea's exports of beauty products to Russia jumped nearly ninefold in 2019 from five years earlier. Russia has become the second largest importer of Korean cosmetics in the world following France. In particular, small and medium-sized brands that use cheaper and unique natural ingredients are more popular than brands of large companies.
According to the report, the local trends in Russia are characterized by preference for natural cosmetics and natural makeup, practical consumption due to the economic downturn, and smart consumption based on online information.
The report stressed that Korean companies need to target the basic cosmetics items that are the most popular in the Russian beauty market, which has high preference for Korean products.
Since Russian women are highly interested in skin health, they will be bullish for Korean businesses with advanced technology in the field of functional devices, including facial masks and anti-aging products, and beauty devices such as light-emitting diode (LED) masks and massagers, the report said.
The report also stated, “After the economic recession caused by the Western sanctions and a steep decline in oil prices in 2014, consumers are showing practical consumption patterns as they prefer discount products, low-priced brands, and multi-functional products. Therefore, the cost-effectiveness strategy is more effective than the premium strategy.” The report advised Korean companies to expand their businesses into health and beauty (H & B) stores, which account for 42.5 percent of the distribution of beauty products in Russia as well as into the online market which has emerged as a major retailer with a dramatic annual growth rate of 20.9 percent for five years since 2014.
The report said that in order to attract picky Russian consumers, it was important to focus on content production rather than advertisement. It recommended Korean cosmetics entrepreneurs to utilize social media and beauty opinion leaders. In addition, the report advised that since real reviews were crucial factors in purchasing decisions, product development efforts reflecting those reviews were necessary while monitoring the reviews.
Kim Hyun-soo, a senior researcher at the institute, said, “Russia was Korea's largest export destination for cosmetics in Europe and the 6th largest in the world last year, and it will be a market that serves as a bridge between the countries in Central Asia and Eastern Europe in the future.” He added, “Thanks to the popularity of K-Beauty, there will be great opportunities for Korean small and medium-sized businesses with technology and functionality to actively expand into Russia.”