During the economic downturn price was the key motivation behind purchasing decisions, creating a challenging situation for personal care ingredients suppliers.
While, price sensitivity is still an issue, it is lessening depending on the channel the customer is active in, Kline analyst Anna Ibbotson told CosmeticsDesign-Europe.com.
“After a difficult period when price was the key purchasing criteria, the return of innovation as a key buying factor for formulators will create an opportunity for suppliers to develop more added values and take values and take market shares from established products,” she said.
According to the recent report, the European personal care ingredients market is valued at $1.74bn (€1.35bn) with annual volume growth expected to stand at 2.6 per cent until 2014.
Outperformed other end markets for speciality chemicals
Due to the relative resilience of the personal care and cosmetics sector, the market has outperformed most other end-use industries in which the speciality chemicals industry is active, Kline said, and is expected to recover quickly.
Leading ingredients categories within the market are currently speciality surfactants, conditioning polymers and emollients, but UV absorbers and ‘green’ ingredients are expected to grow rapidly in the future.
Ibbotson explained that a number of factors were taken into account when defining ‘green’, including naturally derived, biodegradable, exclusion of petrochemical ingredients and environmental safety. According to the analyst, both large and small companies stand to take advantage of the boost in this class of ingredients.
“A combination of companies offer greener ingredients from Cognis and Croda to smaller players which are more focused on a natural ingredient portfolio,” she said.
UV absorbers are expected to benefit from consumer demand for UV protective qualities in many skin care products outside of the more traditional sun care ranges.
Convergence of the market
Kline’s report also noted the increasing convergence of the personal care ingredients industry, with mergers and acquisitions decreasing the number of players active in the market.
A notable acquisition in the sector that confirms this trend was the recent purchase of Cognis by BASF in June of this year.
According to Kline, this convergence is an attempt from suppliers to become a one stop shop for ingredients and to be present in most market segments.
However, the effect this will have on the health of the personal care ingredients industry is not clear. “It is too early to say what the impact will be on the market,” Ibbotson said.