My daughter has the same problem. It's just chapped skin. The problem is, is that the cold air on the wet skin makes it worse. You can use chap lipstick. Stay away from anything that has alcohol (any word ending in -ol, except tocophenol, it's vitamin e) in it. The alcohol works against you making the skin more dry, hence you use more of the product (most chap sticks have alcohol in them). I use bag balm, it's like vaseline, but it was originally made for cows. Also, don't allow her to take the binky outside the house. And dry his skin before you leave the house.