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Personal care market still offers opportunities for chemical suppliers

By Simon Pitman , 15-Jun-2009
Last updated on 15-Jun-2009 at 17:40 GMT

The fact that consumers still want effective, multi-functional personal care products means that there remains significant demand for innovative chemicals.

“The market is ripe for savvy suppliers who can find the right niche and the right buyers for their innovative products to capitalize on the demand for anti-aging, anti-wrinkle, and other products that offer pharmaceutical-quality results without the prescription or the high price,” said Anna Ibbotson, industry manager at market researcher, Kline Group.

Times have been tough for chemical players, illustrated by the fact that BASF, the world’s biggest chemical company, recently announced a 23 percent dip in sales revenues for the first quarter of this year and the axing of 2,000 jobs.

Chemical companies hard hit by slump

Like most big chemical companies, it has been particularly hard hit by a slump in sales in the automotive and construction sectors.

Although BASF’s sales to the personal care market have been weak, they were considerably better than other segments. Indeed a number of other international chemical suppliers have reported sales to personal care suppliers have been solid and in some cases they have even increased.

This reflects what has come to be commonly known as the ‘lipstick effect’, a phenomenon whereby, during tough economic times when spending power is limited, consumers will splurge on a personal care item such as make-up as a cheaper means of treating themselves.

Chemical suppliers turn to personal care

This trend has led many of the international chemical players to concentrate their efforts on the personal care segment, raising the competition in what is already a highly competitive market.

One development over the past few years has been what Ibbotson refers to as the commoditization of chemicals such as polymers, additives and engineered plastics – products that were once considered specialty products.

These specialty products are estimated by Kline to represent approximately 40 percent of the $10bn US personal care ingredients industry, a share that reflects the rise of increasingly sophisticated formulations, delivery systems, actives, film formers, sensorial agents and specialty surfactants.

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