Specialty ingredients have the largest potential for growth within the personal care ingredients industry, according to the latest research by Kline & Company, with botanicals and biotechnology actives leading the market in terms of value share.
“Each of those categories claims roughly a quarter of the market, with botanicals benefitting from a large availability of sources and a continued shift toward natural ingredients,” says Nikola Matic, Vice President of Kline’s Chemicals sector. Europe and the United States are the two largest markets for specialty actives, followed by Japan and China.
When looking at the market for functional or “chassis” ingredients in value, , emollients, surfactants, and conditioning polymers are the leading ingredient groups. Meanwhile, solvents top overall consumption in terms of volume; this is mainly due to the immense demand for solvents such as ethanol, which is used to produce hand sanitizers and was essential because of the COVID-19 pandemic.
“Because of their low price, solvents have a relatively low share in value,” Matic reports. “It’s emollients and surfactants that lead market consumption by value, with the former being used in large quantities in skin care and hair care applications, two leading personal care applications. The high demand for surfactants, meanwhile, is owed to their use across applications in rinse-off formulations.”
ALL THE REASONS CONSUMERS WANT SPECIALTY ACTIVES
In general, as detailed in Kline’s new Specialty Actives in Personal Care: Global Market Analysis and Opportunities report, specialties are advancing because consumers are searching for the Fountain of Youth: Antiaging benefits top their wish list, with consumers desiring DNA protection, along with energizing, anti-stress, anti-wrinkle, antioxidant, moisturizing, and skin-firming/lifting advantages.
“The higher consumption of specialty actives in anti-aging products is being led by an aging population, coupled with increased consumer awareness,” Matic explains.
But there’s also an interesting trend emerging. “We’ve seen a shift in the market that shows some people want to simply age gracefully,” Matic says. “This trend, called ‘well-aging,’ does not follow the concept of ‘no wrinkles’; instead, it sees consumers wanting to delay visible signs of aging by keeping their skin fresh, hydrated, healthy, and even in complexion. Well-aging is now being incorporated into the industry, with an increasing awareness of how and when to use various skin care products.”
Beyond their quest to age better, consumers are seeking anti-acne and anti-inflammatory benefits, skin whitening/lightening, slimming benefits, sun protection, and hair care. The latter includes a new trend called the “skinification” of hair.
“It is now understood that a healthy scalp leads to healthy hair, so scalp health has come into focus for active ingredient suppliers and personal care formulators,” Matic says. “This trend is expected to benefit ingredient categories such as biotechnology and peptides.”
Several brands have already jumped on the hair skinification bandwagon, with Augustinus Bader’s The Scalp Treatment, the INKEY List’s Glycolic Acid Exfoliating Scalp Scrub, and the Alterna’s Renewing Scalp Care Scrub-to-Foam all promising to improve scalp health.
HOW IMPORTANT IS ‘NATURAL’?
Another factor affecting the market: an increase in the adoption of ISO 16128, a standard pioneered in Europe to provide guidelines on definitions for natural and organic cosmetic ingredients.
“For part of the market, the ISO standard is taking the place of certification bodies,” says Matic. “It’s more important for the industry’s chassis than for actives – concentration is key in the calculation of the natural index. And we’ve found that ingredients that are being labeled ‘derived-natural’ [those that have more than 50% natural origin content, by molecular weight or by renewable carbon content, obtained through defined chemical and/or biological processes] are being seen as ‘almost as good’ as those labeled as ‘natural’.”
In fact, derived-natural ingredients currently hold the largest share of personal care ingredients demand, followed by natural and non-natural. And while the value share of active ingredients in Europe skews toward “natural,” the difference between that and synthetic ingredients has been stable over time.
“Looking at three categories of active ingredients in Europe — botanicals, biotech, and synthetic peptides — we saw that the market doubled in the 2007-2022 time period,” notes Matic. “While botanicals exploded in the 1990s and first half of the 2000s, their share has slightly decreased since. Instead, biotech products have grown in the last 15 years, notably due to sustainability reasons but also a combination of natural sourcing and high-tech positioning. The share of synthetic peptides has been rather constant through the years.”
THE MARKET’S BIGGEST TREND: SUSTAINABILITY
A spate of new trends is helping to shape the market for personal care ingredients. Among the most impactful: sustainability and the quest for a circular economy.
“Awareness about sustainability is increasing among consumers and, in turn, they want products made with sustainable ingredients,” Matic says.
This is leading to the trend of “upcycling”, which entails taking waste products from other industries and using them in personal care products. One example of an upcycled ingredient is TEGO Natural Citrus by Evonik, which is derived from a food-industry byproduct and used for its antioxidative and anti-inflammatory effects on the skin.
In addition, as consumers want to know whether the ingredients used in their products were produced sustainably and ethically, transparency is becoming important. And more than ever, consumers don’t want ingredients that they deem harmful in their products, a desire that’s forcing formulators to change their formulations.
“Increasing regulations, limitations in use, advertising campaigns, and bad press about some traditional preservatives such as parabens and isothiazolinones are triggering their substitution with ingredients that are considered milder, safer, and natural,” Matic says. “For conditioning polymers, the industry continues to move toward natural or natural-derived ingredients, which will favor the use of ingredients such as guar, cassia gum, and proteins. Polyquaterniums are also under scrutiny, as they all are synthetic. A similar trend is being seen for emollients, surfactants, emulsifiers, and rheology control agents — one that’s also leading to a move away from animal-derived ingredients such as animal proteins.”
OTHER TRENDS TO WATCH
Kline’s radar is also picking up a shift toward minimalism, aka “skinimalism,” which finds consumers seeking simpler product formulations and beauty routines. Its result: an increase in the use of multifunctional ingredients.
“This is expected to drive demand for emollients that can also offer antioxidant and hydrating properties, such as squalane or hyaluronic acid – especially in aging societies such as Japan and Europe,” says Matic.
Another reason for the trend: the world’s post-pandemic “new normal.”
“Consumers developed a new relationship with makeup products during the pandemic,” Matic notes. “Many people stopped the routine of doing their makeup on a daily basis and never went back to it. It’s for that reason that we believe the new generation of product launches within the color cosmetic area will be hybrids of skin care products and makeup products, providing both skincare benefits and certain makeup effects in only one step. That’s good news for formulators: Multifunctional ingredients usually make formulation easier, and that’s another reason there’s more demand for such ingredients.”
In addition, this trend will affect the hair care segment — consumers are also leaning toward a more-natural look for their hairstyles, which will, in turn, reduce demand for hair fixative polymers.
Customization/personalization is also becoming popular in the industry as increasing competition is leading formulators to offer products that directly address consumer needs and desires. This is especially true for India and Brazil, which have a large population of young consumers; as a result, companies such as SkinKraft and Meu Q are developing customized products.
Additionally, “inclusive beauty” — developing products suitable for people of various ethnicities, and thus, creating the right ingredients – is on the rise, especially in Europe.
One last trend to watch: a consumer preference toward locally manufactured ingredients.
“This is especially prevalent in China, and it’s caused local production to increase,” says Matic. “Multinational formulators are setting up manufacturing in China, and this will benefit actives demand in the country. That said, it will be a negative factor for demand in South Korea and Japan.”
Aside from consumer preference, demand for locally produced ingredients is increasing because of shipping costs.
“The shipping industry was severely impacted by COVID-19, with imports of ingredients becoming difficult,” says Matic. “This provided an opportunity for local suppliers in countries such as India to offer ingredients to formulators. And now, shipping is being further affected by high costs, as crude oil prices have risen.”
All this, Matic says, means that the shift toward local suppliers in various markets is expected to continue. What else is on the horizon for personal care ingredients?
THE FUTURE OF THE INDUSTRY
As expected, relaxed COVID restrictions will lead to strong growth in color cosmetics and sun care products. And with frequent handwashing and sanitization becoming more important, antibacterial soaps and wipes and hand sanitizers will continue to increase; as such, so will the growth of antimicrobial products.
Kline’s forecast to 2026 shows that all functional ingredient groups are expected to grow at a rate between 2% and 4% while active ingredients are consistently growing at least 50% faster, China and India are expected to be the fastest-growing market for the specialty actives industry by a large margin, followed by Brazil and Europe.
As far as for active ingredients, peptides and biotechnology are expected to grow faster than the average market, with botanicals, marine ingredients, synthetic actives, proteins, and enzymes and coenzymes following.
Kline’s Specialty Actives in Personal Care: Global Market Analysis and Opportunities series features seven separate reports – covering Europe, the United States, Brazil, China, India, South Korea, and Japan – that assess the current and forecast demand by major ingredients, functionalities, prices, distribution channels, supplier sales, and technical and market trends. In addition, subscribers receive access to an interactive database that shows market size by ingredient, region, supplier, and functionality; it also offers historic data and forecasts to 2027. For more information on the series, contact Matic at Nikola.Matic@KlineGroup.com.
This article first appeared in Chemical Weekly
