A surge in cosmetic orders leaves containers in short supply... ODMs also running at full capacity

[Financial News] A K-beauty boom has brought a flood of cosmetic orders, leading to an ongoing shortage of cosmetic containers. Cosmetic contract development and manufacturing (ODM) companies are responding by running their facilities at full capacity to meet demand, but container makers have been unable to keep pace with the increased production.  
According to industry sources on the 20th, Kolmar Korea’s production capacity rose 41%, from 633 million units last year to 890 million this year. Its utilization rate also increased, reaching 81% at the end of the first half of this year, up 5 percentage points from 76% last year. The rate rose even as the company expanded capacity, as cosmetic brands continued to place orders. Although holidays and other factors will reduce the number of working days in the third and fourth quarters this year, utilization is expected to rise further as orders continue to grow.
However, major cosmetic ODM companies, including Kolmar Korea and Cosmecca Korea, experienced disruptions to some production due to container shortages. The situation has gradually improved recently.
ODM companies are changing their production lines to increase utilization by postponing production of products whose container deliveries have been delayed and prioritizing other products for which containers are available. Major ODM companies, including Kolmar Korea and Cosmax, have production schedules planned through the end of the year amid surging demand, allowing them to shift production to alternative products.
An ODM company official said, "Orders keep coming in from small cosmetic brands to brands that have recently grown rapidly," adding, "We’re running our production lines to make other cosmetics instead of products whose containers are in short supply."
Container makers are facing a similar situation. Pum-Tech Korea, the country’s largest cosmetic container maker, has completed construction of its fifth and sixth plants this year to meet rising demand. It has also secured a site for its seventh plant, with completion targeted for early 2028. Production capacity is set to rise from 652 million units in 2024 to 828 million this year. As the company expands its production capacity, its utilization rate has increased from 81.6% last year to 83.5% in the first half of this year.
The container shortage is expected to further concentrate demand among major companies, including Pum-Tech Korea, as only a limited number of suppliers can respond quickly to large orders. Another challenge is that developing molds and completing other steps after a contract is signed takes time, making it difficult to switch suppliers. A beauty industry official said, "Larger brands have the resources to secure sufficient inventory, but smaller brands may have difficulty sourcing supplies," adding, "If supply chain problems across the industry persist, they will hamper the spread of K-beauty." 
ODM companies continue to expand production capacity to meet rising demand. Kolmar Korea plans to complete construction of a raw materials facility by the first half of next year and install a new production line in its existing raw materials facility. Cosmax plans to increase the share of basic skincare products in its domestic business to 70% this year. Pyeongtaek Plant 2, which is due for completion at the end of this year, will also focus on producing basic skincare products.

[email protected] Kang Myeong-yeon Reporter