While the COVID-19 pandemic significantly impacted overall demand for personal care ingredients, some segments fared better than others. With our finger on the pulse of the personal care ingredients market, here’s our take on where the opportunities lie.
“Personal care ingredients will play a vital role in the economic recovery of countries post COVID-19,” says Kunal Mahajan, Project Manager in our Chemicals & Energy practice. “As such, companies that manufacture these ingredients are well-positioned to experience opportunities in the short term. Evonik, BASF, Ashland, and Symrise are among those we’re keeping our eye on.”
Down, Up, Bumpy
Demand for color cosmetics, hair styling, and sun care products declined significantly during the pandemic. Given the lockdowns and restrictions instituted by governments worldwide, people were forced to shift to working from home and avoiding recreational activities, leading to a decline in demand for these products. In turn, demand for cosmetics ingredients, hair fixative polymers, and UV-protection ingredients took a sharp hit in 2020. While 2021 witnessed a bounce-back in demand for these ingredients, 2019 levels have not yet been regained.
In contrast, not only did the ingredients used in products like soaps, shampoos, and hand sanitizers experience a surge in demand in 2020, but this upward trajectory continued in 2021. Demand for preservatives, surfactants, emollients, and conditioning polymers reaped the rewards. Consumers also placed greater emphasis on hair and skin care during the pandemic, much to the benefit of these ingredients.
Supply chains were affected by the pandemic as well. While the sourcing of raw materials is no longer as gridlocked as it was, it remains bumpy, with the lack of availability of containers continuing to lead to delivery times doubling, which has led to the shortage of ingredients, which has led to significant price increases for some ingredients — a domino effect that has lingered, albeit to a lesser degree.
That’s not to say there haven’t been beneficiaries of the supply-chain disruptions — local suppliers have reaped the rewards of the slowdown in imports of ingredients
The Good News
The rebound of the color cosmetics, hair styling, and sun care segments positively influenced the market in 2021. The recovery of the most impacted segments of the market is also expected to drive market growth. Companies are resuming their operations and adapting to the “new normal” while recovering from the impact of COVID-19. At the same time, some governments have announced an end to pandemic restrictions, which will also help fuel demand for these ingredients.
“A rise in the market for beauty products post-pandemic has resulted in an increase in the demand for personal care ingredients,” says Mahajan. “Within the color cosmetics segment, we look for a wave of consumers using more sophisticated and dramatic makeup, particularly related to eyes and lips.” This trend stems from the long period of social isolation during the pandemic and consumers now wanting to emerge from their cocoons in a very dramatic way. In addition, the return to offices is expected to boost the demand for hair styling products. The sun care segment will recover as social and travel limitations are alleviated and consumers resume their pre-pandemic level of activities.
The strong trend toward natural ingredients and “clean beauty” is further driving the market. As consumers look for healthier lifestyles, fanned by the increased focus on self-care during the pandemic, the personal care industry will continue to develop products with a higher degree of naturalness. However, the clean beauty concept goes further. Not only are consumers looking for ingredients that are plant-based, organic, and naturally occurring, in addition to compounds that are natural-identical ingredients, but they are also focused on ingredients that are produced in a sustainable manner and that are locally and ethically sourced. For example, proteins are benefiting from this trend, with manufacturers of personal care ingredients experiencing increased demand for plant-derived proteins compared to animal-derived proteins. However, natural ingredients are expensive, which could impact their growth.
Surfactants have also been affected by this shift toward more natural ingredients, with demand for sulfate-free ingredients increasing. While this trend was originally witnessed in only a few niche applications, it has gained momentum in all market segments. At the same time, due to supply-chain disruptions and feedstock shortages caused by the rebound in the global economy, formulators have prioritized obtaining the necessary raw materials rather than focusing on sourcing sulfate-free ingredients. The result has been a reduced focus on sulfate-free ingredients. Nevertheless, interest still exists, with alkyl polyglucosides (APGs) being the preferred alternatives. Some amino acid-based surfactants, like glutamates and sarcosinates, are also experiencing increased demand, though to a lesser degree.
This trend was initially seen in developed market such as the United States and Europe. However, it has now penetrated developing markets such as India. Among young Indian consumers, demand is growing for personal care products that are environmentally friendly, sulfate- and cruelty-free, and more natural. This will drive demand for these products — and their ingredients — in this region, further adding to the opportunities to be had.
A similar trend toward milder ingredients is also being seen in antimicrobials. Increasing regulations, limitations in use, and public scrutiny regarding some of the most traditional preservatives, such as formaldehyde donors, parabens, isothiazolinones, and halogen organic compounds, are leading to their substitution. This will drive the growth of benzyl alcohol and organic acids such as benzoic acid/benzoates and sorbic acid/sorbates, which are expected to grow faster than other preservatives. Ingredients such as these are considered to be milder, safer, and nature-identical preservatives. Further, growing pressure from regulatory bodies and consumers about many of the preservatives is driving demand for preservative boosters, which offer multifunctional properties and increase the preservation effect in a formulation, reducing the concentration level of preservatives in finished-product formulations.
Our Personal Care Ingredients: Global Market Analysis study – the 11th edition of our flagship program – is scheduled to be published shortly. It will cover the consumption, supply, and pricing of ingredients used in personal care formulations; in addition, the study will evaluate drivers and restraints affecting the market and build a five-year forecast model, giving a clear view of market opportunities in the post-COVID world.
About this blog:
Personal Care Ingredients: Where the Opportunities Lie Post COVID-19 contains insights from Kunal Mahajan, Project Manager of Kline’s Chemicals & Energy practice. Mahajan, who has more than 15 years of experience in market research, has extensively covered the ingredients market for home and personal care, in addition to other related markets such as specialty actives. At Kline, he has been responsible for numerous syndicated market research reports and consultation projects across the Chemicals & Materials industry. Prior to joining Kline, Mahajan managed research projects for leading oil and gas, and chemical clients around the world. He holds a degree in chemical engineering from the Indian Institute of Technology, Delhi, and an MBA from the Indian Institute of Management, Indore.
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