The report by Frost & Sullivan, entitled the European Markets for Active Ingredients in Personal Care, explains that active ingredients comprise only 0.5 to 2 percent of cosmetic formulations, thus market volumes tend to be low. Large companies in the actives market therefore have identified specific lead products such as vitamins, panthenol, triclosan and aluminum chlorohydrates, which offer relatively high market volumes. According to the report, besides high volume products, companies seek innovative, high value offerings for an effective portfolio.
"The continued market success of ingredient suppliers is dependent, therefore, on their offering innovative products in tandem with the needs of these newly identified market segments -" such as antiaging, products for curly hair, conditioners for colored hair, ethnic skin and hair care - the report says.
"In selecting raw materials for the products, the prestige brands are less price conscious, have lower volume requirements and are constantly looking to introduce innovative products into the market," explained Frost & Sullivan research analyst Probal Ghosh.
"The combination of these factors makes it possible for small to medium sized companies do well in this market," he added. "It is difficult for large companies to cater to such low volume requirements for ingredients, since it does not prove to be profitable to them."Frost and Sullivan estimate that the global market for ingredients in personal care is projected to increase from $516 million in 2003 to $725 million in 2010. This estimate leaves the market for actives at between $36.25 million and $145 million by 2010.
While the markets for anti-ageing agents, moisturisers and skin lightening agents are poised for rapid expansion, prospects for other segments such as hair conditioning agents, anti-dandruff agents and antimicrobials are less promising.
Consumers are more educated about the functional benefits of cosmetic products and the development of innovative products claiming various benefits such as cell renewal, anti-wrinkling and skin firming fulfill consumer demands.
Thus, cosmetic companies are pushed to launch new products that stand out. Additionally, Gosh adds that "companies are now bound by legislation to provide basis for the claims made on cosmetic labels. As a result, cosmetics have a higher concentration of active ingredients now. This trend is likely to boost the consumption of active ingredients by the market and create a strong base for volume and revenue expansion."