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The Global Cosmeceuticals Market


by Carrie Lennard, beauty and personal care industry analyst, Euromonitor

It's clear that while spending has curbed since late 2008, there are certain areas of consumption that were not as negatively affected. There are also areas where consumers are willing to loosen the purse strings more where value is to be attained. Consumers, particularly female consumers, did not veer too far from their general tendency and desire to look good, resulting in growth of anti-agers, for example. In this same timeframe, consumers have also given significant attention to health foods and wellness options as the concepts of beauty and health become increasingly interlinked.

Skin care is by far the most important category in the global beauty and personal care industry, accounting for nearly a quarter of total sales in 2009. Anti-agers continue to be the star performer, showing consistently high increases in revenue over the last five years. Although growth slipped slightly to 7 percent in 2009—down from 9 percent in 2008—it still far outperformed the overall global skin care category (3 percent growth) as well as the global beauty and personal care industry as a whole (4 percent growth).

Despite some trading down during the recession, premium skin care is set to see the biggest increase in value size of any premium segment, with US$2.6 billion set to be added over 2009 to 2014, equating to 40 percent of absolute growth in the entire premium beauty industry. This performance will be driven by strong demand for premium anti-agers in Asia, especially China. Even in Western markets, like the United States, sales of high-end anti-agers have remained comparatively buoyant as consumers have evidently attached greater importance to fighting the aging process than other areas of beauty and personal care, and the perception of a link between price and efficacy remains strong for many consumers despite evidence to the contrary.

Cosmeceuticals benefit from an increasing aging population inclined toward scientifically proven technology that slows the aging process. In 2009, for example, new anti-aging products touting cosmeceutical ingredients, such as L’Oréal’s Lancôme Absolue Precious Cells and Genifique were well received. Both claim to restore the skin’s youthful appearance by working on a cellular level. The relaunch of Estée Lauder Advanced Night Repair made similar claims. Both companies managed to keep their premium skin care brands relevant in the minds of U.S. consumers by focusing on the latest scientifically proven technology.

In an attempt to stay ahead in industry, both ingredients and end-product manufacturers are focusing their efforts on innovation and new technology. For ingredient suppliers, active skin ingredients with proven efficacy are already among the stars of the market for personal care ingredients. Overall, volume sales of active skin ingredients posted a CAGR of 5 percent over 2004 to 2009 and are projected a 3-percent annual growth over 2009 to 2014, according to Euromonitor International. This is almost double the growth rate forecast for all personal care ingredients so it is no surprise to see ingredient suppliers dedicating hefty R&D budgets to exploring new active ingredients and their delivery.

Innovators have certainly not limited their horizons when it comes to researching technological advances in skin care, with some almost “space-age" concepts being investigated alongside more recognized technologies. An important theme in the coming years for manufacturers and ingredient innovators will be the convergence between science and nature. As the demand for naturals grows, the industry could see a boom in demand for very sophisticated formulations that are positioned on the boundaries of science and nature. The same consumers that steer toward natural products are also likely to opt for a cosmeceutical if they believe in the efficacy of the product over that of the natural-positioned cosmetic. Additionally, the increasing use of natural plant extracts as functional ingredients could well form the backbone of a growing merge between natural and cosmeceutical ingredients.

Future growth in the skin care category will continue to be driven by anti-agers. Ultimately, most consumers will sacrifice many other areas of spending before altering their attempts to hold on to a youthful appearance. As a result, the anti-agers category is set to gain more than US$5 billion over 2009 to 2014. The crucial reason behind this growth in performance is consumer perception with regard to the long-term effects of these products on skin. Anti-agers are seen by many as an investment in future skin health. Given that cosmeceutical players educate consumers as to how and why cosmeceutical products differ from conventional cosmetics, they are set to gain from the growing demand and importance of anti-agers. Skin care manufacturers would be well advised to focus their product development budgets on producing high-quality, scientifically proven anti-ageing ranges. Emerging markets also offer pockets of opportunity for growth. With rising disposable incomes, emerging markets are now witnessing premiumisation as consumers trade up from basic ranges to more sophisticated ones. Thus, anti-agers with more efficacious results are proving to be appealing to consumers in developing regions, particularly China and Brazil. At the same time, premium cosmetics are also growing at a healthy rate in emerging markets and new product offerings based on breakthrough technology have and may continue to be well received.

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