Cosmetics & Personal Care market review

Published: August 29, 2017

Rashmi Chakote, Associate Manager at MarketsandMarkets Research, reviews the key factors driving and challenging the Cosmetics & Personal Care market, which is projected to exceed $17.3 billion by 2022.

The market for personal care ingredients comprises chemicals used in skin care, hair care, oral care, make-up products, perfumes and toiletries, among others. They include emollients, surfactants, emulsifiers, thickeners, antioxidants and active ingredients, which provide physical or functional properties to the final products. For example, emollients, which prevent and treat dry skin, protect sensitive skin, and improve skin tone and texture, are used in soaps, moisturizing creams, ointments, lotions and shower products. Surfactants, which create foam and lather, and help remove excess oils from the skin, are used in soaps, shampoos and shower gels.

Emollients and surfactants are the most common ingredients in hair, skin, and oral products and toiletries. . Skin care products also contain active ingredients such as whitening agents, anti-ageing agents, and UV absorbers catering to specific skin needs. Personal care products also use ingredients such as conditioning polymers, hair fixatives, antimicrobials, and fragrances. Hair care products mostly contain hair conditioning and hair fixative agents.

The market size of personal care ingredients is projected to exceed $17.3 billion by 2022, at a CAGR of 4.33% between 2017 and 2022. The growth of this market is primarily backed by the growing population in emerging economies such as China, India, Indonesia, Malaysia, Brazil, and South Africa. The demand for personal care ingredients is increasing because of the growing awareness among consumers about health concerns and hygiene. The market is also gaining importance owing to the increasing demand for products such as anti-aging agents, exfoliators, ultraviolet (UV) agents, moisturizers, antioxidants, and antimicrobials.

However, stringent governmental regulations on the use of synthetic personal care ingredients in Japan, China, the US and Europe are restricting growth of the market. Increasing consumer awareness of natural products in Western regions is also having an impact.

Key factors driving and challenging the personal care and cosmetics market are described below.

Increasing demand for multifunctional ingredients 

The growing demand for improved functionality and multiple benefits from a single product is a major factor driving the demand for multifunctional ingredients in personal care products. These multifunctional products contain both active as well as speciality chemicals (Table 1). The active multifunctional ingredients can provide more than one function in a particular product. For instance, blemish balm (BB) cream that is promoted as a multifunctional product is said to treat various skin problems such as aging, dullness, and tanning because of overexposure to the sun.

Many speciality non-active chemicals that have the ability to provide more than one function are gaining popularity as multifunctional ingredients. These chemicals may reduce overall product costs of raw materials and production, as smaller overall quantities of ingredients may be required.

Table 1 – Examples of personal care speciality ingredients with multifunctional properties

 Growing importance of protective products

Global warming and increases in temperature adversely affect the epidermal layer of the skin. The harmful radiations and sunlight can cause water loss and dryness, which in turn may lead to pigmentation, skin cancer, wrinkles, blemishes and sun burns. To protect the skin from such affects, consumers increasingly prefer using products that treat and protect their skin from environmental effects. There is a surge in use of sun protection products, with a variety of options to suit every skin type. These products are available with different sun protection factor (SPF) and pigmentation control.

According to Population Reference Bureau (PRB) statistics of mid-2016, on an average, 65% of the population fall under the age group of 16-64 years worldwide. There is a growing trend of using anti-ageing and anti-wrinkle products due to increasing awareness and to look young.

The desire for even-toned and light-coloured skin is a major factor driving the demand for skin whitening/lightening products. Skin whitening products are gaining importance in Asia-Pacific with India, China, and Japan leading the market in this region. This is because, in these regions particularly, fair skin is associated with beauty, youth and prosperity. The growing standard of living of the middle-class population, strong economic growth, and increased per capita spending on beauty products are the key parameters that have fuelled the global demand for these products.

Increasing demand for natural ingredients

Natural ingredients are obtained from plant and animal sources. With growing perceptions of risk of toxic and other harmful chemicals used in skin care and hair care products, consumers have started preferring bio-based products, especially in Europe and North America. In addition, the environmental impact of synthetic chemicals has increased the preference of natural ingredients.

These factors have encouraged consumers to pay more for ‘natural’ and ‘environment-friendly’ products. Biopolymers and biosurfactants are just two examples of bio-based products that have already started trending and are expected to create huge growth opportunities in the future (Table 2).

According to the US Department of Agriculture, bio-based products are slowly replacing petroleum-derived products and constituted 10.0% of the overall personal care ingredients market by 2015. Thus, rising demand for natural ingredients is expected to deter the growth of the synthetic personal care ingredients market in the near future.

Table 2 – Biopolymers and biosurfactants are just two examples of bio-based products used in the cosmetics and personal care sector

High growth potential from emerging economies 

As of 2015, there are six developing countries in the top 20 economies by GDP (nominal), which include China, India, Brazil, Mexico, Indonesia, and Saudi Arabia. With most of the developed countries reaching maturity, these economies are evolving as lucrative markets for all businesses. In 2015, the total population of BRICS countries was more than 3.8 times than that of the Group Seven (G7) countries.

The increase in purchasing power of middle-class populations of emerging economies will create high growth potential for the consumer goods market globally, including personal care products such as skin care, hair care, oral care and others.

The demand for personal care products is driven by increasing outdoor activities, changing lifestyle and awareness of skin care products. With the rise in disposable income and awareness of hygiene and skin care, consumers in developing countries are spending more on premium personal care products. Although the demand for low- or medium-priced products is still high in these regions, rising purchasing power has provided opportunities for companies to market high-end products, as consumers are demanding better-quality and higher performance products.

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