Courting a Double Standard: Organic Labeling for Personal Care

The words “organic” and “natural” strike a passionate chord for many individuals who rely on these labels to deliver products that are safer, healthier and do not include pesticides and synthetic ingredients. A marketplace that is comprised of both certified organic products and those mislabeled as “natural,” which contain chemicals and synthetic ingredients, can be misleading and confusing to a consumer. The personal care market has reached an interesting crossroad as consumers turn toward a healthier lifestyle, demanding products that are legitimately marked.

The potential for natural, organic and environmentally sound personal care (PC) products continues to rise sharply in 2008, as conventional stores such as Target, Wal-Mart and Walgreens add natural and organic beauty products to their health and beauty aisles. Consumer demand is fueling these additions; manufacturers are in a race to take advantage of this trend. According to Mintel, a global supplier of consumer, media and market research, natural/ organic personal care reached $6 billion in 2006—across all channels including natural and conventional supermarkets.

The segment is predicted to grow exponentially as a health conscious lifestyle becomes more mainstream. Already, many Americans have adopted an awareness of their health and the environment by seeking and purchasing natural and environmentally friendly alternatives. Julia McNamara, vice president, consumer markets consulting for Datamonitor, noted that the appeal toward organic and natural PC offerings arrives from consumer concerns over harmful chemical ingredients being placed on their skin. At SupplySide West, held in November 2007, McNamara referenced a Datamonitor survey that found consumers have certain perceptions of organic and natural PC products:

• 70 percent believe natural products will improve their health;
• 86 percent believe personal care products are safe;
• 74 percent believe natural products are safer for use in the long term;
• 76 percent believe natural products have fewer and less severe side effects;
• 38 percent feel natural personal care products are important in maintaining their health.

As companies respond to the rise in consumer awareness and demand for organic and natural products, knowledgeable consumers are demanding better labeling, especially in their personal care goods. This explosive growth has left many questions blowing in the wind.

NOT JUST A LABEL

Cosmetic and personal care companies have enjoyed the unmonitored use of the terms “organic” and “natural” in their labeling and marketing messages, without the scrutiny of governing rules and guidelines, but a recent backlash from mainstream media outlets and consumer groups has cast concern and a big question mark over what truly constitutes an organic PC product versus one that touts organic ingredients but contains petrochemicals, synthetic materials and toxic solvents. In describing the state of organics for PC, Johnan Ratliff, founder of Fraiche, said, “Organic has become a gimmick to attract customers, and many consumers consider organic and certified organic to be one in the same. Therefore, organic labeling must be held to a higher measure than nonorganic labeling to ensure the consumer receives the quality implied by the organic label.”

Currently, a set of guidelines outlining organic and natural PC labeling does not exist, but many companies and manufacturers have adopted USDA’s National Organic Program (NOP) certification process in an attempt to build consumer confidence. “Unless the product has the USDA organic seal, it’s nearly impossible for the consumer to know how much or how little organic content it may have,” said Craig Minowa, environmental scientist, Organic Consumers Association. “The only products in the U.S. that must adhere to government guidelines when it comes to organic ingredients are those that acquire USDA organic certification. The other products may use the word ‘organic’ loosely but may contain a slew of synthetic ingredients.”

Companies that have taken a proactive approach are following the NOP’s standard for organic food and agricultural products. Organic certification can also come from other domestic avenues—private certifiers such as QAI, OCIA, OGBA and IFOAM (International Federation of Organic Agricultural Movements). In addition, any product that bears the term organic on their PC product in California must follow the California Cosmetic Organic Labeling Law that requires 70 percent NOP organic.

The rigorous process for any organic certification and compliance involves regular inspections, not just of physical fields, facilities and plants, but also of documentation and procedures. “As an ingredient distributor, we have to show that our ingredients are certified according to NOP standards when they enter our facility, and that they aren’t being altered in any way,” said Kibby Mitra, CEO, Natural Sourcing. “We additionally have to maintain the paper trail to prove lot-specific organic status.”

For a smaller PC or cosmetics company, sourcing reliable and reputable organic ingredients can be just one part of the hurdle in formulating an organic product. “As a small business owner, you pay the higher prices and deal with the small internet store fronts to bring in the initial organic ingredients for testing, then you decide what you want, you search on the internet for larger suppliers and do your best to scrap up the month to meet the minimum order requirement to get in the door,” said Ratliff, who noted that larger certified organic raw ingredient suppliers don’t fuss with the minor orders of small businesses.

Ingredient suppliers of certified organic raw materials are also facing their own challenges, as demand for organic and natural PC products means increased demand for certified organic ingredients. “As an ingredient handler, supply is extremely unstable,” Mitra said. “You have to stay ahead of the game even more so with organic products than with non-organic. Large manufacturers are buying out smaller producers in order to secure their stock. As a result, stock levels have become skewed.” Unexpected crop failures and supply fluctuation can severely affect the organic market by creating limited supply and volatile prices, leaving ingredient suppliers to blending and standardizing ingredients to accommodate mass market need and demand. Ingredient suppliers are also faced with the challenges of sourcing ingredients that are necessary for PC formulations but are either scarce or not yet available in organic form or supply. “Preservatives, for instance, pose an extremely complicated problem for personal care products requiring extended shelf life,” Mitra said. “Basic ingredients such as alcohols, solvents, emulsifiers, glycerin, surfactants, etc. are not yet available in sufficient quantities for the global market. Raw materials are also not available in sufficient volume.”

AN UPHILL BATTLE

In 2005, USDA attempted to prevent certified organic nonfood products from entering the NOP program and bearing the organic seal. Companies and associations expressed opposition, claiming that a withdrawal of organic certification for PC and cosmetic products would deprive consumers of the ability to tell the difference between a legitimate organic product and one that is mislabeled or misbranded as organic. While it was a major victory, it did not resolve many of the challenges and questions that manufacturers had. “In the U.S., the nature of the industry poses many challenges that the NOP food standards were not designed to cover,” Mitra said. “In my opinion, applying a standard that was originally developed for food and agriculture doesn’t cover manufacturing of cosmetics and personal care products adequately enough. I believe a new standard should be tailored to address the industry-specific issues to benefit the consumer, as well as to assist the manufacturers.”

Curt Valva, general manager, Aubrey Organics, expressed a similar desire for an updated set of regulations, since not all PC and cosmetic manufacturers that wish to get their products certified organic can go through the NOP. “The problem is that cosmetics are not food products. They can be agricultural products and, in some cases, certified to the USDA food standard, but the selection of products able to be certified to this standard is very limited,” Valva said. “Since the ‘law of the land’ standard is not enforced, many companies are using their own definitions of organic on their claims, or using standards that are not ‘official’ standards in the U.S.”

So, who is monitoring the industry and taking note? “Since the FDA does not have pre-market approval of cosmetic product labeling,” said Ellen Delisle, technical sales manager of cosmetic sales, Bio-Botanica, “It is up to manufacturers and distributors to ensure products are labeled accordingly.”

John Ferguson, director of product design and applications, Botaneco, summed it up: It’s all up to the consumer. “Since companies cannot agree on a standard, it is left to consumer demand to influence organic or natural content,” he said.

The industry as a whole continues to be fragmented on this topic. Some have united and are working together, providing comments and suggestions for a new set of rules. Others are hesitant. But one thing is certain—as long as guidelines are not enforced, the use of organic and natural terms may continue to be a hot button, especially when it comes to how these terms are being used. “It will be interesting to see how the issue of manufacturers using these words in their name or product line name will unfold,” Mitra said. “If patent rights can protect a company from confusingly similar names on the market, then it would make sense that using these buzz words anywhere on the label would be equally confusing to the consumer, and yet this issue does not appear to be heavily discussed at the moment.”

Also, there are details that require additional education and clarification that are not being addressed. “The current standards don’t prevent products containing more than 5 percent water or products that are not 100 percent organic from being labeled as organic,” Mitra said. “The current consumer is not necessarily aware of the difference between 100 percent organic or made with organic ingredients. This is a growing cause of concern in the PC industry.”

STUMBLING BLOCKS

Personal care companies often mistakenly think that meeting organic requirements in Europe means that certification in the United States is transferable or easy. NOP-approved certifiers claim that the process for personal care can be more difficult, given the lack of specific standards. Additionally, the international comparison of organics varies greatly; regulations differ from region to region, country to country. “The biggest problem is that you don’t know which countries standards to follow or whose to adopt.” Ferguson said. “They are all following a different set of standards. Who is correct?”

Valva added that the current scene in Europe is no different than the United States, in the sense that there is no single organic certification. “Dueling standards exist there as well, but they are much more regional ... almost country to country,” he said. “There is a push to harmonize the standard in the EU, but that has hit many of the same stumbling blocks we have hit in the U.S. On the natural front, the BDIH standard (Germany) is the most widely recognized natural standard on the continent, and to be successful in the EU market (to date), a company needs to be certified to that natural standard.”

On the home front, domestic trade associations, companies, manufacturers and even consumers have banded together in an attempt to sort through the clutter and confusion, to create a set of rules that address the needs of the consumer, the ingredient supplier and the manufacturer. This is a potentially sensitive area for those who feel that these new rules will be weaker standards than the USDA standard. “Some PC companies want a new organic standard, because they feel you can’t make a good product with the USDA organic standards,” Minowa said. “They want to be able to use detergent and preservatives, which are frequently synthetic, and those synthetic forms are not allowed under the NOP.”

Valva noted that an attempt to create organic rules for the personal care industry has been happening since 2000— beginning with a private industry group, then the Organic Trade Association (OTA) and now NSF International, which recently opened its organic standards draft for public comment. “The NSF International proposal will complement the current standard since USDA has not yet come up with an organic personal care standard,” said Barbara Haumann, press secretary, OTA. “The NSF standard actually addresses personal care that doesn’t fit into the two categories for USDA organic certification, and it’s a step forward particularly since the USDA has said that it is not a priority to develop a personal care standard for the 70 percent or more category.”

The NSF organic standard is a voluntary certification very similar to USDA’s; however, it includes a “made with” standard that allows manufacturers to use certain synthetic preservatives and biodegradable surfactants. Petroleum-based ingredients or processes are still not allowed. Two other groups—the National Products Association and an industry group called OASIS (Organic and Sustainable Industry Standards for Health and Beauty)—are also spearheading standards for the United States. The aim is to address issues such as labeling, processes, ingredients, allowed preservatives, synthetic (if any) and organic percentage declaration on the front of the label. Whether the rules will be concrete in two years or 10, the ultimate outlook is positive. “Once clear rules and a clear map are in place, manufacturers will have a clear direction,” Valva said. “It took 20 years for the food standard to be written. It is a living document and will continue to change. Same holds true for PC. It will happen and will continue to change as well. I am fond of saying ‘don’t let perfect get in the way of very good.’ We will develop a very good standard very shortly.” 

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