In Daepung-ri, Daeso-myeon, Eumseong-gun, North Chungcheong Province, the Kolmar BNH factory stands amidst vast fields, producing the world's No. 1 multivitamin, 'Centrum'. In 2023, Haleon (formerly GSK Consumer Healthcare), a global healthcare company, entrusted Kolmar BNH with the production of Korean products previously manufactured in Taiwan. The contracted volume, which initially accounted for 10% of the total items (SKUs) in the first year, has now increased to over 60% last year. A Haleon representative stated, "We plan to further increase the contracted volume this year and eventually entrust them with export production in the mid to long term."
Korean health functional food contract manufacturing companies, which had been struggling after the COVID-19 boom, are now experiencing a revival. Production orders for health functional foods are surging across both original equipment manufacturing (OEM) and original design manufacturing (ODM). This surge is attributed to the growing global attention towards Korean health functional foods, fueled by the K-food craze, and the increasing recognition of Korea as Asia's production base by global healthcare companies.
○ Korea emerges as a production hub for health functional foods, following the lead of K-beauty
The leading players in health functional food ODM are the subsidiaries of Korea Kolmar and Cosmax, both renowned for their strength in cosmetics ODM. According to industry sources, Kolmar BNH, the No. 1 health functional food ODM company in Korea, is estimated to have generated sales of 628 billion won last year.
Kolmar BNH's sales reached a record high of 606.9 billion won in 2020 due to the COVID-19 special, but then declined for several years. It has now surpassed 600 billion won again in just four years. Despite the domestic health functional food market experiencing negative growth last year, the company's overall sales increased thanks to exports. 'Atomy HemoHIM', an ODM product developed by Kolmar BNH from raw materials, has gained popularity overseas, leading to a 36% increase in global sales last year.
Cosmax NBT and Novarex, the second and third largest health functional food ODM companies in Korea, have also seen significant sales growth as they have become global production bases for major companies. Cosmax NBT produces products for the Chinese health functional food brands 'By-Health' and 'Swisse' at its domestic and Australian subsidiaries. The proportion of exports in Cosmax NBT's total sales has increased from 65% in 2023 to 70% in the third quarter of last year. Novarex is also producing finished products for the Chinese and Asian markets of GNC, a US health functional food company.
○ "Korean products are preferred over Chinese products even in China"
The competitiveness of K-health functional food ODM companies lies in their formulations and raw materials, which are tailored to specific needs. In the recent health functional food market, ultra-small formulation technology, which maintains ingredient content while reducing size, is gaining traction. Cosmax NBT has quickly developed this technology and secured a multi-pack health functional food contract with a major global pharmaceutical company. The ability to independently develop raw materials that determine the efficacy of health functional foods is another strength of Korean companies.
Their manufacturing capabilities have also been recognized. Kolmar BNH has obtained Good Manufacturing Practice (GMP) certification from the Australian Therapeutic Goods Administration (TGA). Cosmax Bio, another health functional food ODM subsidiary of Cosmax, has received NSF certification, which is recognized in 90 countries worldwide.
The long-standing trust built as a global K-beauty ODM company is also considered a competitive advantage for these companies. Cosmax and Korea Kolmar are among the global 'top 3' beauty ODM companies, along with Italy's Intercos. They have secured global companies such as L'Oréal and Estée Lauder as clients.
Although By-Health, a Chinese company, has its own production facilities, it entrusts the production of premium product lines to Cosmax NBT. An official from a health functional food company said, "
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