New opportunities drive ingredients market

The market continues on a positive expansion track, demonstrating that unlike other markets, cosmetics and toiletries escaped any major hit from the recent economic recession. While some regional markets experienced a limited decline, emerging country markets continued to grow, spearheaded by Argentina and the BRIC countries of Brazil, Russia, India, and China, which boasted double-digit growth rates. Europe continues to capture the largest share of the global personal care market with over 35% of the business. However, with key European markets including France, Germany, and Italy showing low growth rates of less than 3% CAGR, other regions are cutting away at Europe’s position. The European and North American markets have lost 2% of global market share each between 2003 and 2008. Much of this share has been taken by Latin America, which has seen a 3% market gain over the same time period, propelled forward by the doubledigit market growth in Argentina and Brazil. Strong growth is occurring in the cosmetics and toiletries markets of China and India, which are benefiting from extremely strong growth drivers. Steadily increasing disposable income levels in these countries are changing the spending habits of the countries’ sizeable populations. Whereas price sensitivity contributed to slow industry growth in the past, thriving demand for products with better functional benefits is expected to bring about a significant change. Growing awareness for new formulations is also creating new opportunities for specialty personal care ingredients suppliers. With a volume growth rate for personal care ingredients expected to reach nearly 10% between 2010 and 2014, India and China have the potential to become major ingredient consumption markets. In the meantime, Europe remains the largest market for personal care ingredients post-recession, followed by the United States. The total volume of the personal care ingredients markets of Europe, the United States, Japan, China, and India was estimated at around 575,000 metric tonnes in 2009. Europe and the United States accounted for over 70% of this volume. Furthermore, China has gained significant momentum over the last five years and overtaken Japan in volume sales, positioning itself as number three in the global market, increasing its share from 9% in 2005 to 14% in 2009. Japan’s share has declined from 6% to 5% during the same time period. In real terms, however, Europe is keeping pace with China. Even with the lower growth rate over the next four years the volume demand for personal care ingredients consumed in Europe will remain similar to that in China.

Ingredients

Among personal care ingredients, specialty surfactants dominate consumption with 34% of market share (Kline defines specialties as those surfactants which achieve a price over e1.50 per kg on a 100% active basis and are used in smaller volumes.) Specialty surfactants are the leading product category consumed in Europe, Japan, China, and India, and rank second in consumption in the United States. Their applicability in a broad range of products accounts for their major volume shares. This is also true of conditioning polymers including polyquaterniums, silicones, and proteins, which account for 20% of consumption in the aforementioned regions. Emollients come in at third place with 18% of market share. This product mix is unlikely to change significantly over the next few years; however, boosted by increased consumer awareness of sun exposure side-effects, the use of UV absorbers has extended to an increasing number of skin care products, ranking them among the most rapidly growing markets. In India, many traditional commodity chemicals, including sodium lauryl sulfate and sodium lauryl ether sulfate, are used in formulations. There has been less demand for specialty chemicals and the majority of existing demand remains satisfied through imports. However, an increasing number of personal care products now incorporate specialty ingredients in their formulations. Among specialty ingredients, specialty surfactants are the leading product category, followed by conditioning polymers, accounting for a combined volume market share of over 40%. In the market for emollients, domestic players lead sales. This is in sharp contrast to the market in China, which is dominated by large multinationals including Cognis and Croda. India now has the potential to become one of the major consumption markets for personal care ingredients. The highest volume growth is expected for emollients, with a projected 11.3% increase by 2014. Emollients are also a key growth area in China.