Bought an Expensive Lipstick but It Turns Out to Be the Price of 'Igeot' [Heotdari Economy]

(29) Cosmetic Auxiliary Material Costs Twice That of Raw Materials

Editor's NoteMany people thought they were engaging in smart economic activities to get better value, but it often turned out to be a misstep. When consumers are deceived by corporate marketing or blinded by momentary gains and make wrong decisions, it is ultimately the consumers who suffer. We aim to examine economic activities where people have made mistakes by misjudging everyday objects and situations.

Have you really used up your lipstick completely? Lipstick is a representative cosmetic product that is often discarded before being fully used. This is because a significant amount of product remains hidden at the bottom inside the lipstick container, which is not visible from the outside.

Kim Eun-jae (35), who thought she had used up her lipstick, confirmed that product kept coming out when she continued to scoop it with a cotton swab. After searching on social media for "how to use lipstick to the very end" and separating the container, she found that the amount of product left ranged from about one-third of a lipstick to as much as the equivalent of a whole lipstick. She said, "The saying that collecting two used lipsticks yields the same amount as a new one is true," and added, "I realized that the lipsticks I thought were fully used and discarded actually had only been used about half of the indicated volume."

The reason cosmetic companies fill containers with product that cannot be fully used is because the cost burden of purchasing cosmetic raw materials is not significant. Most of the money consumers spend on buying lipstick goes toward the container (case) and marketing costs.

According to the Financial Supervisory Service's electronic disclosure system, Amorepacific spent 412.514 billion KRW on raw materials for its cosmetics division last year. Of this, only 103.775 billion KRW was spent on various cosmetic raw materials such as skin care and lotion ingredients, while the cost for auxiliary materials like containers, caps, and packaging was 233.074 billion KRW?more than twice the raw material cost. The same trend continued in the first quarter of this year (January to March). Of the 91.121 billion KRW spent on raw materials in the cosmetics division, 24.3 billion KRW was for the contents, while 47.3388 billion KRW was spent on containers and auxiliary materials. This means that twice as much is spent on containers and packaging as on cosmetic raw materials.

LG Household & Health Care also showed a similar pattern. Of the 633.3 billion KRW spent on cosmetic raw materials last year, 120.4 billion KRW (19%) was for cosmetic ingredients, while 278.1 billion KRW (43.9%) was spent on containers and caps. In the first quarter of this year, only 35.6 billion KRW (20.6%) out of 172.5 billion KRW spent on raw materials was for cosmetic ingredients.

The situation is the same for Able C&C, which operates the road shop brand Missha. Of the total raw material cost of 100.74779 billion KRW last year, 20.36624 billion KRW (20.2%) was for cosmetic ingredients, and 40.4678 billion KRW (40.7%) was spent on packaging such as containers. In the first quarter of this year, Able C&C spent 25.91624 billion KRW on the cosmetics division, with 5.1186 billion KRW for raw materials and twice that amount, 10.27411 billion KRW, on auxiliary materials.

Professor Lee Eun-hee of Inha University’s Department of Consumer Studies noted that since cosmetic companies are not making efforts to reduce the hidden product inside containers, consumers should focus on using up the contents completely for both economical consumption and environmental problem-solving. She said, "Because the economy is not doing well, consumers are more determined to use products frugally," adding, "The number of smart consumers is increasing accordingly."