Global factsThe international market for natural and organic cosmetics has skyrocketed over the past few years and will further grow. Global sales in natural and organic cosmetics passed the €5bn mark in 2007. US sales were estimated around €3.5bn whereas European sales approximated €1.1bn in 2007. Within Europe, Germany is the leading market with total sales of around €650m in 2007, corresponding to around 6% of the total German cosmetics market sales of €1.4bn. A market share of 10% in Germany by 2010 is a realistic scenario and experts agree upon the strength of this global trend with current growth rates of around 20% per year. In comparison to this, growth rates in the conventional cosmetics market have remained largely stagnant in recent years. In Asia, especially in Japan, Korea, Malaysia, Hong Kong, Singapore and Taiwan the popularity of natural and organic cosmetics has significantly grown. In countries gaining economic weight such as India, sales volumes of cosmetics have undergone a general growth including natural and organic cosmetics. Amongst other reasons, this is due to rising income levels which allow the growing middle-class to afford more personal care products. At the same time high-income consumers have started to look for premium products. In Latin America, Brazil, a country where beauty and the use of cosmetics have traditionally played an important role in daily life, has become an interesting sales market. Brazil is renowned and important when it comes to sourcing ingredients for natural and organic cosmetics. In addition, Brazil is a significant cosmetics producer and increasingly serving the world market with finished products.
Legal issues and certification
The natural and organic body care market differs from that of organic food. For example the EU Organic Regulation (834/2007 of 28 June 2007 repealing 2092/91) does not currently include health and beauty products. Consequently, there are no legal requirements for the term ‘natural‘ and ‘organic‘ for these products. So far, in Europe there are five main standard (and logo) providers (AIAB/ICEA, COSMEBIO, BDIH, Soil Association, Ecogarantie) and various certification bodies that certify natural and organic cosmetics in line with the presently available ‘private standards'. A harmonisation initiative of these main standard providers aiming at one European standard, which was created at BioFach in 2002, has not yet come to fruition and it is still unclear whether these standards will ever be harmonized. NaTrue, only recently founded has been established to lobby for the interests of natural and organic cosmetic companies in Europe. The initiative based in Brussels to lobby the EU is focussed on the concerns of producers with regard to future legislation in the field of natural and organic cosmetics. So far, NaTrue only represents leading German natural and organic cosmetics companies. It has established a close cooperation, and is accepted by the ‘German Cosmetic, Toiletry, Perfumery and Detergent Association' (IKW) the conventional peak body of manufacturers and distributors of cosmetic, toiletry, perfumery, detergents and household cleaning products. In May this year NaTrue published its own standard, which claims to exceed all standards existing in Europe with regards to strictness and complete transparency. This standard defines requirements for three different quality categories: Natural cosmetics, natural cosmetics with an organic portion, and organic cosmetics. In the US, the leading Organic Trade Association (OTA) had a body care working group that could not reach consensus after years of discussion. In spring 2008 representatives from a number of leading cosmetics industry companies created the Organic and Sustainable Industry Standards (OASIS), a US industry body to certify natural and organic body care products. Its standard is still in draft and no products are labelled with its logo yet. In May, the US Natural Products Association also released a standard and provides certification for natural (but not for organic) cosmetics. Maybe the most promising approach was taken by the National Science Foundation (NSF). While the NSF organic standard is identical to the USDA's organic food standard, the 'made with' standard differs in a way that enables manufacturers moving in an organic direction to become certified. Earlier this year, Canada based ‘Certech Registration' came up with a new set of standards and now offers both a ‘natural' and an ‘organic' standard, in line with the distinction in the French association COSMEBIO. Today, with a court case over misleading the consumers filed in the US by Dr. Bronner's Magic Soap backed by Organic Consumer Association the clash between those labelling their products natural or with organic ingredients but not complying with NOP and those claiming that only products that follow NOP may be labelled as organic has gone out only being internal discussions over the right way to follow. Despite all these efforts it is still unclear, whether these new standards in North America will ever gain relevance in the market. Confronted with this situation several companies decided to follow standards offered by European organisations and to use their logos (which does not solve the underlying problems).
Too many logos?
Considering all these existing standards and certification schemes on the quality of natural and organic cosmetics, consumers remain confused, unable to figure out what the respective certification logos on products stand for and what they can actually rely on. To counter consumer confusion an internationally agreed logo may be the solution. Such an agreed logo should in fact be realistic as the manufacturing of cosmetics is actually more independent from geographical and cultural differences such as preparation methods which complicate mutual consent within the organic food industry. Here, IFOAM may play a role in harmonising by developing an internationally agreed standard based on its democratic system of standard setting. The organic food industry can however serve as an example as e.g. German consumers know the German organic seal - applicable on products which comply with the EU Organic Regulation - by almost 100% as recent studies show. This label serves them as a straightforward orientation.
LOHAS
Optimised communication strategies are especially noteworthy for those companies which commit themselves to doing business in a verified responsible manner, e.g. by long-term and fair ingredient supplier-manufacturer partnerships. Such add-on values to the actual products have become an increasingly important purchasing criterion for more and more consumers. This is especially true for a growing group of consumers, who take sustainability and fashion aspects more than ever into consideration, and are therefore said to live the so-called Lifestyle Of Health and Sustainability (LOHAS). The US market for sustainable products and services has already reached the range of $200bn and natural and organic cosmetics are a strong part of this market. Celebrities like Julia Roberts, Brad Pitt, Kate Blanchett or Jennifer Aniston are role models who follow the LOHAS and are priceless sales promoters for brands such as Dr. Hauschka cosmetics and others.
Sales channels
A closer look at the sales channels for natural and organic personal care products indicates they are between the poles of high growth and stagnation. Organic food shops have traditionally had personal care products in their range and still, a considerable amount of all natural and organic cosmetic products is marketed via organic food shops. However, the number of consumers who buy their personal care products in organic food shops has recently been stagnant. On the other hand, sales have increased in specialised natural and organic body care shops. This type of retail is considered to gain further importance; however specialised shops need a clear profile to communicate with their previously defined consumers groups unmistakably. Modern type drugstores like dm in Germany, also retailing organic food, successfully sell natural and organic body care products apart from their conventional assortments. In Germany they already had the biggest market share in 2007 with around 30%. Within this type of sales channel the above mentioned retail brand products stand out. In addition, these drugstores experience a general popularity. Customers of all ages appreciate the distinct shopping atmosphere in these stores which they associate with relaxation and privacy. Other sales channels, for example pharmacies, perfumeries or spas, are expected to grow, too.
Conventional cosmetics industry
Manufacturers of conventional cosmetics certainly do not ‘sleep' and are aware of the above mentioned developments. A couple of months ago, Clorox, a US company of various food and chemical products - famous for its bleach - paid $935m in cash for privately held Burt's Bees. Burt's Bees manufactures natural and organic cosmetics like lip balm and body lotion. Another example is the acquisition of French Laboratoire Sanoflore, a manufacturer of certified organic cosmetic products, by the world's leading cosmetic player L'Oréal in 2006. This acquisition followed the company's purchase of the Body Shop, a famous player in the naturals market, earlier in 2006. At international trade fairs where the international supply industry for cosmetics meets, and where natural and organic cosmetics were not an issue in the beginning years, the subject becomes more and more important every year. The exhibitors fundamentally agree on natural and organic cosmetics being more than just a momentarily trend which is further evidence for its omnipresence on an international scale. Summary The global market for natural and organic cosmetics has never been more promising than today. Major international companies become more and more interested realising the market potential they want to benefit from. The prospects for involved companies look bright; however, it is not enough for them to rest on their laurels. On the contrary, marketing and PR have to be brought to perfection and relevant target groups have to be focussed on. Shortages of materials have to be avoided and stable relationships with farmers and other ingredient suppliers are a must for a successful future in this promising global market, which can also be highlighted in marketing.
