Demand for ingredients for the personal care industry can be divided into three segments. First is the commodities segment, where ingredients are sold to specification. This segment has a significant market but grows slowly. The second segment is specialties, where ingredients are sold on performance. This segment is the largest in the industry and is expected to grow faster than the commodities segment. The third is the active ingredients or specialty actives segment, where suppliers are focusing on selling a concept i.e. a claim is made for a personal care product based on the active ingredient present in it . This segment involves a very high degree of research and development and is the fastest–growing segment in the industry.
Globally, the active ingredients market is more than USD 2 billion and the smallest segment in the industry. The segment is broadly divided into seven segments: botanical actives (botanicals), biotechnology actives, proteins, synthetic peptides, enzymes and coenzymes, marine ingredients, and synthetic actives (mainly including vitamins). Three segments—botanicals, biotechnology actives, and synthetic actives—account for more than three-fourths of the total active ingredients market.
Regional Variations
The United States and Europe, together accounting for close to 60% of the total market, are the leading regions for active ingredients. Asia accounts for around one-third of the active ingredients market. Within Asia, China is the leading market, with an approximate 60% share. It is followed by Japan and South Korea. Biotechnology actives is the largest product category in terms of sales for the Asian market and has a much higher share in Asia compared to the global market. This is mainly due to the easy availability of hyaluronic acid, especially in China, as the largest suppliers for hyaluronic acid are based in China. Botanicals is the leading segment in Japan and South Korea, and synthetic actives lead in Asia overall.
There are similarities and differences between the Asian, European, and U.S. markets for applications of active ingredients. Anti-aging is the largest application in all markets. Even the share of anti-aging in the total market is similar between the Asian, European, and U.S. markets. Japan and South Korea have a higher share of anti-aging than China, similar to Europe and the United States due to a higher share of older people in the population.
There are also differences between the three markets. Glowing or fair skin is considered important in Asia, leading to a higher share for skin whitening applications. Consequently, there is almost no market for tanning in Asia, while it has a significant market in Europe and the United States. These and other variations are important to understand as they decide the usage of active ingredients in a market.
Asia: The Cosmetics and Personal Care Trends Driver
Asia is a smaller market compared to the United States and Europe but the fastest growing, due to consumer rising incomes and purchasing power as well as a desire to buy more effective personal care products. Further, there is a trend reversal as new concepts, claims, ingredients, etc., for the personal care industry are emerging from the Asian markets rather than the European or U.S. markets. As a result, the Asian market has become important not only due to its growth outlook but also due to the emergence of new trends that could drive the industry in the future.
Among new trends that emerged in the Asian market are the increased usage of ingredients from local sources, more effective and customized products, and personal care products for microbiome balance or circadian rhythm. Other trends include sustainable ingredient sourcing, growth in products for anti-aging, skin whitening, and multi-functional products.
Impact of Emerging Trends on the Asian Actives Market
The demand for ingredients from local sources is growing in Asia. This is due to greater awareness, proven efficacy, opportunity to expand portfolios for local suppliers, and growing appeal to use local ingredients. For example, in South Korea, the demand for ingredients sourced from Jeju Island have grown in the past few years and are expected to grow in the next five to 10 years.
Consumers in Asia are also looking for more effective personal care products. This trend is both a driver, as well as an inhibitor, to the growth of active ingredients demand in Asia. For example, consumers in Japan and South Korea are known to follow multi-step beauty regimens. However, in the last few years, some consumers are realizing that the multi-step beauty regimen may not be suitable for them due to their skin type or condition, as well as due to a lack of time (in South Korea, consumers call this “Skip Care”). As a result, consumers are looking to use fewer but more effective personal care products. On the one hand, this is leading to the use of fewer personal care products and, thus, acts as an inhibitor to the growth of active ingredients demand. On the other hand, this is driving the demand for multifunctional personal care products, leading to increasing demand for botanicals. There are a large number of botanicals available that can provide different benefits and can be used in multifunctional personal care products. This trend is also leading to the growth of hybrid products. For example, a new product called “Cream Skin,” a hybrid of a toner and a moisturizer, has been developed.
This trend is also leading to customization or personalization of personal care products in Asia, as consumers look for personal care products that are more suitable for their skin. There is a growing number of personal care companies providing subscription–based skin care products. For example, in South Korea, formulators are offering customized anti-pollution products marketed as climate-proof skin care. These personal care products are developed as per the consumer’s age, gender, lifestyle, skin condition, and other factors. At the same time, formulators such as Laneige, Iope, and LG Household & Health Care are allowing consumers to develop their own personal care products such as lip masks. This trend is expected to drive the demand for botanicals and synthetic peptides. Synthetic peptides can be customized to provide specific benefits, while the availability of a large number of botanicals helps in choosing a particular ingredient for a specific benefit.
Sustainability is also becoming important in Asia as consumers look for products based on ingredients sourced sustainably; this is also leading to growth in the concept of clean beauty. Consumers in Asia are looking for products based on safe ingredients, leading some formulators, such as KLAIRS, to reformulate their personal care products and shift to vegan formulas.
Skin whitening is an important and growing application in Asia. Consumers look for products that can help them achieve glowing skin (known as “luminous” skin in China or “glass” skin in South Korea). In Japan, consumers look for “mochi” skin, which is also known as “rice-cake” skin (meaning flexible and smooth). Synthetic peptides are key ingredients for achieving glass skin, while vitamins such as niacinamide and vitamin C help achieve luminous skin. Hyaluronic acid, due to its hydrating benefits, is a key ingredient for achieving mochi skin. This trend is expected to drive the demand for synthetic peptides, synthetic actives, and biotechnology actives.
Microbiome balance and circadian rhythm are the new applications that are growing in Asia. Many formulators in Asia have introduced or are looking to introduce personal care products based on these concepts. This is expected to drive the demand for botanicals and biotechnology actives in Asia.
Conclusion
These factors are expected to drive demand for active ingredients in Asia by 4% from through to 2024. China is expected to be the fastest–growing market, followed by South Korea and Japan. China is expected to grow faster as economic growth leads to higher income, leading to a portion of consumers shifting to premium personal care products based on active ingredients. However, the growth rates are lower due to COVID-19 as consumers reduce their discretionary expenses.
Skin whitening and anti-pollution (anti-inflammatory and anti-acne) are expected to be the fastest-growing applications in Asia. Synthetic peptides and biotechnology actives are expected to be the fastest-growing product categories in the region.
To learn more about specialty actives market in Asia or other regions, gain access to our Specialty Actives in Personal Care: Global Market Analysis, which offers a detailed, independent appraisal of the key regional markets assesses current and forecast demand by major ingredients and functionality, product trends and prices, distribution channels, supplier sales, and technical and market trends.
