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MS Natural Ingredients for Cosmetics CBI MARKET SURVEY: THE MARKET FOR NATURAL INGREDIENTS FOR COSMETICS IN THE EU CBI MARKET SURVEY THE MARKET FOR NATURAL INGREDIENTS FOR COSMETICS IN THE EU Publication date: September 2006 CONTENTS CONTENTS .................................................................................................................. 1 REPORT SUMMARY ..................................................................................................... 2 1 INTRODUCTION TO CBI’S MARKET INFORMATION ............................................... 5 2 INTRODUCTION TO THE EU MARKET .................................................................... 7 3 PRODUCT CHARACTERISTICS ............................................................................... 8 4 INDUSTRIAL DEMAND .......................................................................................... 9 5 PRODUCTION ..................................................................................................... 22 6 IMPORTS ............................................................................................................ 28 7 EXPORTS ............................................................................................................ 41 8 TRADE STRUCTURE............................................................................................. 43 9 PRICES ............................................................................................................... 47 10 MARKET ACCESS REQUIREMENTS ................................................................... 50 11 EXTERNAL ANALYSIS: MARKET AUDIT............................................................ 53 12 INTERNAL ANALYSIS: COMPANY AUDIT ......................................................... 64 13 DECISION MAKING......................................................................................... 68 14 EXPORT MARKETING ...................................................................................... 73 APPENDIX A DETAILED HS CODES ......................................................................... 83 APPENDIX B LISTS OF DEVELOPING COUNTRIES .................................................. 84 This survey was compiled for CBI by ProFound – Advisers in Development in collaboration with Andrew Jones and Klaus Dürbeck Disclaimer CBI market information tools: http://www.cbi.nl/disclaimer Source: CBI Market Information Database • URL: www.cbi.nl • Contact: [email protected] • www.cbi.nl/disclaimer Page 1 of 88 CBI MARKET SURVEY: THE MARKET FOR NATURAL INGREDIENTS FOR COSMETICS IN THE EU REPORT SUMMARY This market survey provides exporters of natural ingredients for cosmetics with a wide range of facts, figures and information pertinent to the European Union (EU) market. The market in individual EU countries is discussed further in separate market surveys. These market surveys can be downloaded through http://www.cbi.nl/marketinfo. It also includes a large number of references for additional research, primarily using the Internet. The cosmetic ingredients discussed in this survey fall in the following groups: • Vegetable oils, fats and waxes; • Essential oils and oleoresins; • Vegetable saps and extracts; • Raw plant material; • Natural colours. Consumption and trends Little information is available concerning industrial demand for natural cosmetic ingredients in the European Union. Ingredients are also traded for other end-users (e.g. the food and pharmaceutical industries), and there does not exist a harmonised definition. Therefore, production and market figures for cosmetic end-products can be used to give an indication. Different markets of importance, described throughout this survey, are the overall cosmetics market, the natural cosmetics market and the cosmeceuticals market. Cosmetics market The EU is the world’s largest producer of cosmetic products. The main EU producers are multinational companies like Unilever (The Netherlands/UK), L’Oreal (France), Wella (Germany), Sanofi (France), and Beiersdorf (Germany). Many of them also produce pharmaceuticals, chemicals and food. The West-European market represents a massive share of over 47% of the global cosmetics market of € 117 billion. However, major European markets such as Italy, Germany and France all show slight sales declines or stagnant markets, both in 2004 and 2005, reflecting slow economic growth and price pressure. Eastern Europe is one of the fastest growing markets. According to Colipa, the EU15 market amounts to € 57 billion, while the new EU member states have a combined market of € 4.2 billion. Natural cosmetics products Within the overall cosmetics sector, the natural cosmetics market is still relatively small, but it is growing faster than the overall market. The natural cosmeticsw market continued to benefit from growing global consumer concerns about health, a sense of well-being and looking good, thanks to burgeoning media focus on these issues. Euromonitor predicts the market will grow by an average of 9% a year between 2003 and 2008. According to Organic Monitor UK, the European natural personal care market in 2004 was valued between € 700 and 1,300 million, which equates to 1-2% of the EU personal care market, or € 2.60 per person. The number of companies entering the market of natural products is on the rise and, during the last few years, there has been a massive entry into this arena by the large mainstream manufacturers. With regards to "natural" or "organic" cosmetics, Germany is certainly the most advanced of the European markets. According to the BDiH, € 500 million was spent on natural cosmetics in 2004, which represent a (niche) market share of 4.5% of the total cosmetic market. Cosmeceuticals The market for cosmeceuticals – defined as products that contain one or more bioactive ingredient – has been growing strongly. However, future value growth is expected to decline Source: CBI Market Information Database • URL: www.cbi.nl • Contact: [email protected] • www.cbi.nl/disclaimer Page 2 of 88 CBI MARKET SURVEY: THE MARKET FOR NATURAL INGREDIENTS FOR COSMETICS IN THE EU significantly. In Europe it is expected to be worth around € 3.6 billion by 2009, 5.5% more than the € 3.4 billion in 2005. Germany is by far the largest cosmeceutical market in the EU. Natural ingredients There is a growing use of new, active natural ingredients with a functional benefit, such as in cosmeceuticals. Another important trend for the natural ingredient market for cosmetics companies is the increasing requirements in the field of transparency from raw material source to finished product. Phytofarm has estimated the world market for active ingredients used in personal care products at € 450 million in 2003, and estimates an increase of 40.5% to almost € 650 million in 2009. The most important markets for natural cosmetic ingredients are France, the United Kingdom, Italy and Spain. At the level of product groups, however, some specialisation can be distinguished. Spain, for example, is an important market for raw plant material and natural colours, and France for essential oils. No data is available for the use of natural ingredients for cosmetics, due to the use of these products in other industrial sectors. Trade structure Two major trade channels exist for natural ingredients, one for “ready-to-use” or finished materials and one for crude raw materials. The products offered by producers of natural ingredients have a different starting position in the trade structure. Raw plant materials are largely unprocessed, whereas the other four products are already processed. Although producers of essential oils, natural colorants and vegetable saps and extracts from developing countries supply products that are already processed, in many cases 2nd step processing will take place in the European Union. As to raw plant material, limited processing also often takes place in the country of origin. The most important trade channels for most developing country producers will be agents, importers, wholesalers and brokers, either with or without processing facilities. Chapter 8 also mentions the trade channels especially relevant for producers of new ingredients. Different types of traders can be distinguished. Enterprises based in the producing countries are mainly involved in the sale and export of large quantities of local products. Enterprises based in consuming countries are concerned with imports and supply of the domestic market. Wholesalers/distributors may also process raw plant material or conduct 2nd step processing of essential oils, natural colorants, vegetable saps and extracts and vegetable oils and fats, or other processing industry may perform that function. Although some industrial users have their own purchasing department, traders and brokers still fulfil important functions, since they are well informed about the EU market. The most important trend in the trade structure is the increased focus on traceability, as a consequence of GMP requirements. Production Many of the natural ingredients used in the cosmetic industry come from developing countries, then are further processed and re-exported to buyers in Europe. • EU production plays a limited role in essential oils and natural colorants. • The EU position in plant extracts, in which it is a leading producer, and in raw plant material, with several EU countries among the top producers, is much more prominent. Wild collection is still the main source of medicinal and aromatic plants in the EU. • EU production of vegetable oils and fats accounts for 9% of global
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