The study claims that 80 companies in the UK industry are clearly selling at a loss in order to increase market share and 24 per cent are now in financial danger.
Research and Markets released the study, which analyzed the financial performance of 530 firms over the past 12 months.
In spite of the gloomy outlook the report stated that average sales growth was 1.7 per cent last year, suggesting that the UK personal care market is in fact relatively solid.
The report's controversial claims about the financial health of UK companies sit uneasily with the strength of the overall market.
CosmeticsDesign.com attempted to contact the authors of the report to establish the arguments behind the statistics but the company did not respond.
Commenting on the claims, Samantha Thorburn from the market research firm Euromonitor said that manufacturers are pressured into offering attractive deals to the UK's powerful supermarkets.
Thorburn said that tight margins are therefore quite common and that many companies would take part in price wars and sell certain products at a loss to gain market share.
However, the analyst cast doubt on claims that almost a third of UK companies are in financial danger, saying that the overall market is strong enough to ensure that tight margins do not lead firms into financial difficulty.
Indeed certain sectors of the UK market are performing particularly well. A recent report from the Soil Association said that the booming UK market for organic cosmetics fuelled the 22 per cent reported growth in sales of all organic products.
Convenient cosmetics are another product area identified in a recently published Euomonitor report as being a growth area in the UK.
The study said that UK customers are increasingly willing to pay high prices for cosmetics that are easy to apply, multi-functional and timesaving.
