SCUP Report

Table of Contents

Abstract

The worldwide market for cosmetics in 2006 is estimated to have been more than $200 billion (retail level). The total world value (at the chemical manufacturer's level) of the 2006 market for the cosmetic chemicals described in this report is estimated at less than $10 billion. This estimate excludes natural soaps (salts of tallow and coconut fatty acids), fragrances, solvents, and most filler or bulking materials.

The following pie chart shows world sales of cosmetics at the retail level:

The average annual growth rates for consumption of cosmetic chemicals on a value basis for 2006–2011 are expected to be 1.9% in North America, 1.9% in Western Europe, 15% in China and only about 0.5% in Japan. These growth rates reflect the relative maturity of the markets in these areas. It is expected that the high-growth regions of China, Russia, Brazil and India will gain greatly in importance in the next five years. By 2011, China will be the largest market worldwide on a volume basis. By 2011, Japan will lose its position as third-largest on a value basis, as the value of the Chinese, Brazilian and Russian markets increases.

There are a very large number of suppliers of cosmetic chemicals worldwide, but about twenty major multinational companies control at least half of the business. In most segments, between two and four companies dominate the market in a given geographical region. The great majority of sales in North America and Western Europe are directly to the cosmetics industry, but agents and distributors, in addition to some small specialty formulators, still account for a significant share. In Japan, distributors and specialty formulators play a much larger role.

The growing need for higher-performance, higher-purity products, and data documenting their safety and efficacy has improved the competitive position of the large multinational companies. These companies have greater resources available for R&D, technical service, and expensive, time-consuming health and safety tests. They can also use these resources to supply the large multinational cosmetic companies on a worldwide basis, further increasing their position as the dominant suppliers to cosmetic companies.

Worldwide, several driving forces have emerged that have created key market needs. These include human health and environmental regulations or issues (e.g., regulations requiring lower volatile organic solvent levels); the preferences of a small but significant (and growing) segment of consumers for mild, natural, and non-animal-based products; and a growing desire by increasingly sophisticated consumers for ingredients with documented benefits. These issues have accounted for much of the recent new product development work and are likely to determine many of the future changes in the cosmetic chemical industry.