The adverse impact of the COVID-19 pandemic was witnessed across all industries of the economy, as well as on people’s lives globally. Among the many affected industries was personal care, further leading to a negative impact on personal care ingredients demand. To thoroughly understand COVID-19 impact on the personal care ingredients industry and the evolution of the market in a post-COVID-19 scenario, it is important to present an overview of this industry.
The personal care ingredients market can be divided into two types: mature and growth markets. Mature markets include Europe, the United States, and Japan, among others. Growth markets can be further subdivided into two categories.
- China is a growth market wherein consumers are shifting toward mid- to high-end personal care products, thus adopting premium ingredients.
- India and Southeast Asia have relatively smaller shares in the personal care ingredients market currently but have huge growth potential.
Europe and the United States lead the personal care ingredients market, together accounting for more than 50% of the market. They are followed by China, India, Brazil, and Southeast Asia.
Japan holds a small share despite it having a large consumer market for the personal care industry. The relatively small share of Japan is due to the country being a large importer of finished and semi-finished personal care products.
On the other hand, India holds a relatively higher share than markets such as Brazil due to the high demand for ingredients such as coconut oil and henna in India. However, in other ingredient categories, India holds a similar share to markets such as Brazil and Southeast Asia.
Personal Care Ingredients Market by Region, 2021
Total: USD 18.0-19.0 billion
Skin care and hair care are the leading ingredient-consuming applications, with skin care having a higher share than hair care in most regions, except Brazil. The share of skin care in the personal care ingredients grew through 2020 and 2021 due to the skyrocketing demand for hand sanitizers induced by the pandemic. As skin care and hair care are the largest applications, the ingredients groups within these applications are also leading the market. For instance, emollients, the key ingredient in skin care, is the second-largest ingredient group within the personal care ingredients market, after surfactants. The high demand for surfactants is accredited to these being the key ingredients for all applications. Conditioning polymers, which are mainly used in hair care applications, are the third-leading ingredient group in the market.
Synthetic ingredients currently dominate the personal care ingredient industry, but due to changing consumer preferences, the share of natural ingredients is increasing. However, natural ingredients are more prone to microbial attacks and face compatibility issues with other ingredients in various formulations, which could adversely affect their growth.
The personal care ingredients supplier landscape is relatively fragmented, with no supplier having more than a 10% share in the market. While BASF, Dow, Croda, and Evonik are the leading suppliers of ingredients by sales value, three different types of suppliers can be observed in this industry. The first type comprises multinational suppliers, such as BASF, Dow, and Croda, which are present in almost all the ingredient groups within a cosmetic formulation. The second type is suppliers that have a significant presence in a few ingredient groups like conditioning polymers, such as Momentive and Wacker, as well as specialist suppliers, such as Roquette, which have leading positions for heavily consumed ingredients such as sorbitol. The third category consists of regional suppliers, such as Guangzhou Tinci in China and Seiwa Kasie in Japan.
The impact of COVID-19 on personal care products and their ingredients varied from one ingredient group to another. Demand for products such as color cosmetics, sun protection products, and hair styling products was adversely impacted, in turn, leading to a sharp decline in the demand for UV absorbers or color cosmetics ingredients. These ingredient groups are yet to fully restore to the pre-COVID-19 levels. On the other hand, demand for personal care products such as soaps and shampoos was not affected due to COVID-19; therefore, the demand for ingredients that are used in these products, such as surfactants, was not influenced. Further, demand for products such as hand sanitizers skyrocketed, resulting in demand growth for antimicrobials, among other ingredients.
The COVID-19 impact also varied from one market to another. In 2020, demand for personal care ingredients declined in all the markets, with Europe and the United States facing more adverse declines compared to markets in Asia. This was because Europe and the United States were more affected by COVID-19 than ASEAN countries. Further, China recovered from COVID-19 by the end of the first quarter of 2020, after which the market also recovered. As a result, the personal care ingredient markets in Asia were less affected than the markets in Europe and the US.
Personal care formulators needed to maintain inventory for longer periods of time as supply chains were affected by COVID-19. As a result, personal care formulators increased their purchases from local ingredient suppliers.
As the COVID-19 pandemic subsides, economies around the world are gradually opening up. Office operations have restarted, and tourism has increased. This is expected to drive back demand for personal care products. Color cosmetics ingredients are expected to be the fastest-growing ingredient group in the personal care ingredients industry. Other ingredient groups such as hair fixative polymers and UV protection ingredients are also expected to grow faster than their usual growth rates.
Asia will remain the fastest-growing region due to higher growth in markets such as India and China. However, Europe and the U.S. markets are also expected to grow faster than their usual growth rates as economies recover.
Further, personal care ingredients demand will be impacted by the emergence of new product concepts or trends, as well as the permanence of habits such as frequent hand washing and mask wearing in the future. Demand for non-transferable makeup products is expected to grow faster in the post-COVID-19 market compared to the pre-COVID-19 market. This is because irrespective of mask mandates, a certain portion of the population is likely to continue wearing masks to prevent COVID-19. As a result, the demand for makeup products that do not transfer onto masks is expected to grow.
At the same time, consumers have become accustomed to natural look due to pandemic-induced lockdowns. Some consumers are likely to continue with the natural look, which is expected to impact the demand for personal care products and, thus, personal care ingredients.
Further, frequent hand washing is likely to continue, maintaining the growth in demand for products such as hand sanitizers. This is expected to contribute to the demand for solvents such as ethanol and isopropanol, as well as antimicrobials.
The pandemic also led to the rise of direct-to-consumer (D2C) companies. For example, India witnessed the growth of companies such as Nykaa, Forest Essentials, Purplle, Mama Earth, and MyGlamm. D2C companies use social media to easily reach consumers. Due to easy access to inexpensive internet, most consumers, especially the younger generation, stay active on social media. This is leading to the growth of private-label brands, as well as faster adoption or strengthening of trends such as natural, cruelty-free, paraben-free, and vegan personal care products in the market. This trend is also expected to provide an opportunity for ingredient companies to offer new ingredients as well as formulation services to D2C companies.
Lastly, the demand for natural ingredients is expected to grow faster than the demand for synthetic ingredients. Although it is not a new trend, it has witnessed acceleration due to COVID-19 as consumers believe natural ingredients to be safer than the demand for synthetic ingredients. Consumers are looking for natural ingredients in product categories such as hair styling products, for which not many natural ingredients are available in the market.
This article first appeared in HPC Today’s November issue: https://www.teknoscienze.com/hpc-today/