On the 17th of last month, a customer is shopping at a cosmetics store in a department store in Seoul. Photo by Yonhap News
[Asia Economy Reporter Moon Hyewon] The prices of daily necessities such as cosmetics and soap are under upward pressure due to Russia's invasion of Ukraine and Indonesia's suspension of palm oil exports. This is because the prices of raw materials such as palm oil and grains, which are the main ingredients, are soaring.
According to Amorepacific's quarterly report on the 17th, the purchase price of glycerin, a raw material used in the cosmetics business in the first quarter of this year, was 1,524 KRW per kg, an increase of 31.4% from 1,159 KRW last year.
Cosmax also disclosed in its quarterly report that the price of glycerin rose 12.2% from 1,720 KRW last year to 1,930 KRW.
LG Household & Health Care stated that the purchase price of palm stearin oil increased by 20.1% from $1,291 last year to $1,551 per ton, and the price of palm kernel oil rose 18.2% to $2,394 per ton.
Aekyung Industrial's purchase price of crude palm oil rose 17.7% from $1,372 at the end of last year to $1,615 per ton, and the purchase price of corn increased 18.5% to $672 per bushel.
Palm oil, a vegetable oil produced by processing the pulp of oil palm fruit, is a raw material used extensively not only in processed foods such as ramen and snacks but also in cosmetics. Glycerin, fatty acids such as lauric acid, and MCT oil, which are mainly used in cosmetics like lipstick and lotion, are derived from palm oil. Fatty alcohols such as cetyl alcohol are also extracted from palm oil-derived fatty acids and used in cosmetics.
The cosmetics industry is closely monitoring raw material price trends. If price increases continue, profitability will be adversely affected, and companies will inevitably face the burden of raising prices.
LG Household & Health Care reported that while sales of daily necessities increased by 6.1% in the first quarter due to strong performance of premium daily beauty brands such as Elastine and Physiogel, operating profit decreased by 16.6% due to cost burdens from rising raw material prices.
In the case of Amorepacific, due to the burden of rising raw material prices, it already raised prices by an average of about 10% last month for 83 items across 9 brands including Hera and Sulwhasoo.
An industry official said, “Although we stockpile palm oil raw materials that can be used for a certain period, if the rise in raw material prices continues and cost burdens increase, a decline in profitability is inevitable, and we cannot help but feel the pressure to adjust prices.”
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