Trends in the natural cosmetics markets: global, USA and Asia

In recent years, natural cosmetics have been successful on the international stage like no other product range. Amarjit Sahota from Organic Monitor gave a presentation on global trends at BioFach Vivaness. Sheila Linderman from the USA looked at developments in North America, and Jonathan Horsley from I-Green spoke about the market situation and concepts in Asia. It became clear that the growth curve for natural cosmetics was flattening out worldwide, but development compared with the classic cosmetics market nevertheless remained dynamic.
(Picture: trying different products at Vivaness)
According to Amarjit Sahota’s (picture) estimates, the turnover of natural cosmetics rose by 16 % to 7.9 bn US dollars in 2009. The main markets for what is now a huge selection of natural face and body care products that do not contain paraffin, parabens or synthetic chemical ingredients now lie in the USA and Western Europe. Germany continues to be the biggest single market in Europe. Sahota estimates the total European market to be worth 1.5 bn euros, with an average annual per capita spend of 4.40 euros. In 2010, turnover in Europe will probably pass the 2 bn euro mark.

Sahota has calculated that the volume of the North American market is 5.2 bn dollars, with a per-capita spend of 15.70 dollars, which is well above the European average. However, the distinction between near-natural and certified products is even more hazy there than in Europe. Both in the States and in Europe the specialist retail trade is the main sales channel. Between 2005 and 2008 the turnover of natural cosmetics has more than doubled, and in pharmacies in particular it has risen by almost a factor of 7. Specialist shops have increased their average turnover from 75,000 to 121,000 US dollars a year. Supermarkets, starting from a low base, increased their turnover fivefold. (Chart available from Amarjit Sahota)

For Sahota the reasons for the continuing growth in turnover are consumers’ increasingly critical approach to risky ingredients, the overall rise in ethical consumption and the trend to more organic and natural products in the non-food sector. In the various sales channels, he has observed the increasing product reach and a greater interest on the part of retailers in the form of more shelf space for natural cosmetics. Demand is also growing through concept stores, perfumeries, spas and beauty salons.

Designer labels and the preference of stars for particular brands are continuing to raise people’s awareness and to stimulate demand. The product range is rapidly becoming more diverse and more specialised, and much more emphasis is being put on innovative ingredients, that are ideally sourced from organic agriculture and fairly traded. The trend to stronger competition and takeovers has not abated. Sahota gave the examples of the sales of Bare Escentuals by Shiseido, the takeover of Kibio by Clarins and of Burt’s Bees by Clorox.

Looking to the future, Sahota thinks in particular that the number of labels will continue to grow. In addition to the standards like BDIH, Natrue, Ecocert, etc., he foresees a range of other private labels for, for example, climate neutral, Fair Trade, social responsibility of companies or own trademarks. In his view, the non-specialised sales channels and concept stores will be where future growth can take place. He says the market will split into more segments, and new products will stimulate demand. Sustainability will remain a hot topic.

Sahota said the most important consumer trends were the growing rejection of chemical ingredients in cosmetics, the overall rising demand for non-food natural products as well as organic food, and the increasing sensitivity of consumers regarding ethically produced and fairly traded goods. More and more consumers now have the opportunity to buy natural cosmetics as they spread through the trade and as availability rises in consequence. New sales channels have discovered natural cosmetics, and a number of chains have brought out private label lines.

Sheila Linderman (picture) showed that, despite the growth curve being less steep in the North American market, growth was still being recorded. The main products in demand are basics like soap and body care (lotions and shampoos). According to the Organic Trade Association (OTA), around 2,600 certified organic cosmetics and body care products were on sale in 2008 and generated turnover of 250-500 million US dollars. OTA estimates that about three-quarters of natural personal care products are not certified organic.

Just as in Europe, there is no legal standard specifically for natural cosmetics in the USA but, if cosmetics are described as organic, the ingredients comply with the state USDA standard. Since 2007, two private standards for natural cosmetics have appeared. One is the NSF standard with which Natrue operates. Products complying with the NSF-305-standard contain a minimum of 70 % organic ingredients, and this standard is supported by big companies like Aveda, Oasis and Hain Celestial. The second standard is the NPA standard (Natural Products Association) that is supported by, for example, Burt’s Bees and has invested large sums of money in a campaign to familiarise the public with the logo.

In Linderman’s view, there is a trend towards natural rather than organic cosmetics. She says this is down to the inadequate supply of the right raw materials and the lack of uniform standards specifically for cosmetics. The other reason is the fact that the European standards BDIH, Ecocert and Natrue are gaining in importance in the American market.

Over recent years, the Asian markets have become increasingly interesting for the manufacturers of natural cosmetics. Jonathan Horsley from I-Green, for eight years a manufacturer and distributor from its base in Kuala Lumpur to Malaysia, Japan, Singapore, Hong Kong and South Korea, estimates the market to be worth 160 – 200 million US dollars (2008). As well as a range of body care products, I-Green markets the baby care brand Bud’s Baby. Horsley concentrates on selling via the internet and smaller specialist shops.

Asian consumers in general pay a great deal of attention to health – there is a tradition of healthy living, with exercise and yoga, and eating lots of fresh foods, in particular fish, fruit and vegetables. Horsley says that there is great potential for organics. Demand is also increasing for chemical-free cosmetics and body care products. There is, however, no corresponding infrastructure in the trade. Moreover, the location of many specialist shops is far from ideal, and there is little incentive for customers to cross the threshold. If they are located in shopping malls, there is at least a guaranteed high footfall.

There are also a number of up-and-coming sales channels, for example well presented specialist stores like Natures Gates (picture) and pharmacies like Akin, Renew and Sukin, that sell a much wider range of goods than the classic chemist shops you find in Germany. But smaller specialist stores like VC Botanicals want to score with a natural cosmetics range (picture: Bud’s in concept store in Singapore). Bodybar opened three shops in 2009 in Malaysia. The specialist store justlife (also in Malaysia) is one of Bud’s biggest customers. Mr Horsley pointed out that demand was increasing in the Philippines too because of the presence of many US Americans.

He sees future prospects in a positive light. He emphasises that the certification of products is important for success in Asian markets – people in Asia trust logos and trademarks. Mr Horsley adds, however, that logos are being forged. He says that brands will play an increasingly important role in the future, although distinguishing between organic cosmetics and near-natural cosmetics still left a great deal to be desired. There is a real battle going on to secure a place on the retailers’ shelves.