- 1 Definition / Scope
- 2 Market Overview
- 3 Key Metrics
- 4 Market Risks
- 5 Top Market Opportunities
- 6 Market Drivers
- 7 Market Restraints
- 8 Industry Challenges
- 9 Technology Trends
- 10 Pricing Trends
- 11 Regulatory Trends
- 12 Other Key Market Trends
- 13 Market Size and Forecast
- 14 Market Outlook
- 15 Technology Roadmap
- 16 Distribution Chain Analysis
- 17 Competitive Landscape
- 18 Competitive Factors
- 19 Key Market Players
- 20 Strategic Conclusion
- 21 References
- 22 Further Reading
- 23 Appendix
Definition / Scope
- Cosmetics and Pharmaceuticals together make Cosmeceuticals. They contain active ingredients that are proven to be beneficial to mankind.
- Even though U.S Food and Drug Administration does not identify the word "cosmeceutical" but the field of cosmetic world links the word to cosmetic products that have drug-like or medicinal use.
- When a product with certain medicinal use is launched in the market FDA considers it to be a new drug and hence clinical trials are mandatory to evaluate its safety and effectiveness. If the claims made are proved to be true through clinical trials then FDA approves it as new drug, thus it can be said as pharmaceutical but not as a cosmeceutical.
- Therefore pharmaceutical drug can undergo vigorous testing which costs millions but cosmetics do not have to prove their claims but can cite "scientific studies" of their ingredients, which should be taken as caution before opting for a cosmetic product.
- Cosmeceuticals market has a diverse product portfolio which include depigmentation agents moisturizers, anti-oxidants and retinoids. They are applied topically.
- The global market of cosmeceuticals was valued at $ 460 billion and is forecasted to value at $ 675 billion by 2020.
- This accounts for growth to be at 6.4% during the period of 2014 to 2020.
- Among the cosmeceuticals, skin care products capture the lion’s market share.
- Further Oral cosmetics are found to have leaping growth in the forecasted time.
|Base Year||2017||Researched through internet|
Major market risk arises due to the huge number of cosmeceutical products that are available but without proper product information. It may not be supported by clinical studies or scientifically proven method. The major issue of safety arises where the majority of the products have been derived by plant sources.
Top Market Opportunities
- Recent opportunities in cosmeceutical development are those that provide protection of skin from radiation and also oxidant damage by nonirritating ingredients which improve skin appearance.
- Retinoid class of products which are applied topically have the efficiency to reverse cutaneous aging and this has been evident in number of clinical trials.
- The new class of retinoid products have numerous outstanding features which are evident in its functions where they regulate growth and differentiation and hinder tumor promotion and lower inflammation by improving functioning of immune system.
- Skin irritation is cause by retinoid products on few patients where better toleration can be provided by retinol available over the counter.
- After retinoids antioxidants are the largest cosmeceutical ingredients which are predicted to have a stable position in the future. They act by improving skin aging by preventing free radical species which damage genetic material or cellular proteins.
- Increased middle age group and baby boomer generation serves for the increased demand of cosmeceutical market.
- Market drivers for the cosmeceutical market in United States is the availability of E-commerce platform.
- In 2013, online shops generated about $17.3 billion indicating that sales of cosmetic products can on rise in the coming years.
- Another booster to the market growth is the perception of the buyers who incline to buy products as they perceive that it helps them to achieve economic and social goals.
- Increase in the stock market and employment rates has rocketed the spending capacity of Americans particularly people with higher income.
- In 2014, spending on personal care products and beauty has surged due to increasing capacity among the people with higher income.
- Increased spending on beauty products paved the way for the consumers to allocate money to beauty at the cost of products at retail sale.
- Food Drug Administration (FDA) does not mandate clinical trials for cosmetics hence safety and efficacy should be judged carefully by consumers and doctors before taking or prescribing the product.
- As the competition from mass market keeps growing it is affected by severe legislation on ingredients and claims together with mindset of the consumer of conscious spending.
- Many people in 2014 loved the bare faced look giving the call to "natural look". Actresses like Reese Witherspoon and Jennifer Aniston have appeared in their movies with little or nearly no makeup in 2014.
- With Social media as the platform “natural look” has become popular creating the climate for less use of facial cosmetics.
- Even the trend in the nail polish has shifted from outlandish to understated and classy.
- Bold nail art has created a surge for couple of years but later in 2014 New York Fashion week spring has showcased the runways with models displaying their bare polished nails.
- Competition within the cosmeceuticals and with other treatment methods as well poses a great challenge to overcome.
- Even though cosmeceutical products have significant use then other novel treatments but still dermatologist should be consulted before using a product.
- In the light of technology by the application of nanotechnology to cosmeceuticals more variant products are bought with enhanced features like quality, safety and efficacy.
- As nanoparticles are small in size they absorb into the skin fastly and produce better results.
- Among the various forms available by nanotechnology are nanocrystals, nanocapsules , solid lipid nanoparticles, nanopigments, liposome formulations, niosomes, nanoemulsions, carbon nanotubes, dendrimers and fullerenes.
Pricing of Cosmecetics in US when compared to other countries like Austrailia and London is low.Due to heavy shipping charges involved the same product is obtained at three different prices in these three different countries
For example Giorgio Acqua Di Gio Essenza men's cologne (75mL) was found to be at three different prices at these countries.
Australia: (myer.com.au) : $125
UK: £66 (boots.co.uk) : $110.82
US: $US65 (nordstrom.com): $68.53
- In case of cosmeceuticals only Federal Trade Commission (FTC) operates, but not Food Drug Administration (FDA), to scrutinise any advertised claims of pharmaceutical products or scientific validity.
- As only FTC is involved in monitoring the product claims therefore dermatologists should carefully check the products and examine their quality before prescribing to the patients.
- Many times consumers buy cosmeceuticals without the consent of dermatologist therefore advice of physician should be considered and if using without consent then scientific articles supporting their action should be studied before using them.
Other Key Market Trends
- Changes in disposable income – Due to rise in income trends relatively there is increase in consumers spending in beauty products as well.
- Product innovation – Due to new products like BB creams and other natural products being seated in the market creates a chance for the shift of buying of the consumers from regular cosmetics. Many gender based skin products like fairness cream and face wash for men have entered the market which drives men, equally to women, to be beauty conscious.
- Consumer behavior towards adverse effects causing products – Many skin based products promise a miraculous change in the tone and various aspects of the body but end up in adverse effects as well. This situation has changed the consumer perception towards mild and products with less side effects and even to “go natural” , which in turn has driven the organic or natural products.
- Rise in the use of organic products: Products for skin and hair come with associated side effects which is why there is increase in the use and demand of less harmful organic products. Globally the cosmeceutical market for organic products is expected to increase in the coming years.
- Online shopping: Due to the growth of E-commerce sites many consumers have shifted their buying from stores to online which is also boosted due to increase in spending .
Market Size and Forecast
- Revenue of Cosmetic industry in United States is valued at $56.63 billon.
- The industry gross product of cosmetic industry in United States is valued at $11.97 billion.
- The forecasted value of gross product of United States cosmetic industry is valued at S13.91 billion in 2016.
- Sales through E-commerce vehicles of pharmaceuticals and beauty aids were together valued at $14.54 billion in 2012 and $17.03 billion in 2013.
- Compound annual growth rate of online sales for health and beauty products is assumed to be 14.2 percent from 2012 to 2017.
- Cosmeceutical market is competitive in nature with big multinational firms dominating the market however the smaller brands in 2014 have gained momentum in capturing market share.
- Big multinational firms have captured lion’s market share due to their robust presence and capacity in research and development.
- Smaller brands have created a market for organic or natural products and premium niche products which has captured the eye Americans through being beautiful naturally.
- Globally the major market of cosmetic industry is taken by Asia-Pacific Countries by occupying 35% of the market in 2014.
- APAC grabs the market share as the consumers are more beauty conscious and this attracts many of cosmetic products providers.
- In the year 2013, 22.4% of global cosmetic market was occupied by North America and 12.7% was occupied by Latin America.
- Development in the field of cosmeceuticals is seen by application of nanotechnology.
- Among the nanotechnology patent holders cosmetic industry has the highest rank in United States.
- L'Oreal spends nearly US$ 600 million out of its US$ 17 billion revenues on research.
- Cosmetic sales in United States were given by product category in the 2013. Mascara accounted for sales of $103.9 million, Lipstick with $71.0 million, Nail polish with $67.7 million, Eyebrow & Eyeliner with $58.9 million.
- Remaining cosmetics accounted for $46.1 million, foundation liquid with $44.9 million, Face powder with $27.3 million, concealer with $ with27.8million, Eye shadow with $26.8 million and nail polish remover accounted for $19.2 million sales.
- The cosmeceutical product and chemical demand for different products of cosmeceuticals like injectables, lipcare, tooth whitening etc have shown a steady rise over the years from 2002 to 2017.
- The outlook for the US cosmetic market in the years to come has shown a positive note with increment in average disposable incomes and decline in unemployment rates.
- As the income increases buyers tend to buy more products which is in turn is driven by improvement in economy.
- Ageing population contributes in driving the market as they tend to contribute towards buying anti – aging products towards skin care and makeup of eyebrows.
- Due to availability of nanotechnology companies are launching more variety of product portfolios with various uses and thus this serves to impact the market in a positive way by increasing its growth.
- Due to rise in working women and busy schedules whereby women allocate less time to get ready.
- Taking the above factor into consideration there is increase in products with various benefits.
- Due to demand created in BB creams many brands have launched their versions of BB creams into market. Kao Brands are a perfect example which have launched Jergens BB body Perfecting Skin Cream which provides multiple benefits by hydrating , illuminating and giving firmness , evenness and correctness to the skin.
- L’Oreal Paris Visible Lift Blur Foundation also has various uses which offers anti-aging skin care with (sun protection factor) SPF 18 and also addresses the problem of wrinkles besides being a classical foundation.
Distribution Chain Analysis
- There are nearly 400 manufacturing units for cosmeceuticals to manufacture and supply the products.
- Among the leading suppliers of cosmeceuticals Croda International Plc, in United Kingdom and Allergan, in California, United States occupies the top place.
- Allergan by the sale of its flagship product, Botox Cosmetic, had earned sales of $3.1 billion.
- Competition in the world of cosmeceuticals is always on the rise.
- As the demand for other alternative treatment tend to increase it provides a stiff competition to cosmeceuticals.
- Laser treatment is among the other treatments that are on demand which offer quick outcomes than cosmeceutical goods but come with increased cost and risk.
- Even there is indirect competition but still direct competition exists among the cosmeceutical products.
- Due to market penetration by other labelled cosmeceutical brands and fast commoditization of novel products and their ingredients the competition within the industry is expected to rise.
- Competition tends to increase as the mass market chains and availability of other treatments increase.
- The number of manufacturing units and brands suggested by the doctors tend to penetrate the existing market making a stiff competition and also occupying a significant market share.
Key Market Players
- The major players in the cosmeceutical industry are Procter & Gamble, Johnson & Johnson, Avon & Allergan, Estee lauder and L'Oreal which together constitute one half of cosmeceutical market in United States.
- Procter and Gamble is the market leader in United States occupying lions part of market share.
- Major Doctor brands are Murad, Hylexin, Dr Brandt, N.V.Perricone, StriVectin, DDF, Erno Laszlo, Rodan + fields, MD Skincare and Peter Thomas Roth.
- Globally United States has the largest Cosmetic market.
- It is evaluated that the total revenue of the cosmetic market will exceed around $62 billion and 63,816 employees will be by 2016.
- The market leader of the United States cosmeceutical market is Procter and Gamble with net sales accounting for $29.4 billion in 2014 and $29.2 billion in 2012.
- Regulatory hurdle that cosmeceutical market faces is lacking of proper clinical methods in order to evaluate the safety and efficacy of the products.
- Consumers often buy products without taking the advice of the dermatologist and this should be avoided by the consumers.
- Brandt FS, Cazzaniga A, Hann M. Cosmeceuticals: Current Trends and Market Analysis. Semin Cutan Med Surg 30:141-143, 2011
- Statista. Statistics and facts on the Cosmetic Industry. http://www.statista.com/topics/1008/cosmetics-industry/ . Published September 17, 2014. Accessed January 18, 2016.
- Statista. Statistics and facts on Cosmetic Brands in the U.S. http://www.statista.com/topics/2106/us-cosmetic-brands/ . Published September 17, 2014. Accessed January 18, 2016.
- Statista.The Cosmetics Industry. http://www.statista.com/chart/2729/the-cosmetics-industry/. Published 2016. Accessed January 18, 2016.
- WebMD. What Are Cosmeceuticals. http://www.webmd.com/beauty/face/what-are-cosmeceuticals. Published October 4, 2012. Accessed January 18, 2016.
- Statista. Revenue of beauty shops (NAICS 812112) in the United States from 2008 to 2020 (in million U.S. dollars). http://www.statista.com/forecasts/409856/united-states-beauty-shops-revenue-forecast-naics-812112. Published 2016. Accessed January 18, 2016.
- Lohani A, Verma A,Joshi H et al.Nanotechnology-Based Cosmeceuticals.ISRN Dermatology, 2014
- Business wire. Research and Markets: Global Cosmetics Market 2015-2020: Market was $460 Billion in 2014 and is Estimated to Reach $675 Billion by 2020. http://www.businesswire.com/news/home/20150727005524/en/Research-Markets-Global-Cosmetics-Market-2015-2020-Market. Published July 27, 2015. Accessed March 2, 2016.
- Beauty and Personal Care in the US. Euromonitor International. http://www.euromonitor.com/beauty-and-personal-care-in-the-us/report. Published May 2015. Accessed March 2016.
For further reading on Market research including competitors and trends please refer to bucket listed below:
1) Introducing Marketing Research By Paul Baines and Bal Chansarkar; Wiley 2002
2) International Marketing Research By C.Samuel Craig; Susan P.Douglas; Wiley, 2005(3rd edition)
3) The Art & Science of Interpreting Market Research Evidence By D.V.L.Smith; J.H.Fletcher; Wiley , 2001
4) Inside Information: Making Sense of Marketing Data By D.V.L.Smith; J.H.Fletcher; Wiley, 2001.
5) Market Research matters: Tools and Techniques for Aligning Your Business By Robert Duboff;Jim Spaeth; John Wiley & Sons, 2000
FDA : Food Drug Administration FTC : Federal Trade Commission SPF : Sun Protection Factor , ,