Organic Monitor assessed over 50 cosmetic brands and ranked them according to their level of ‘naturalness’. The research was led by a chartered chemist who analyzed the formulations of natural and organic cosmetics and compared them to their marketing claims.

Brands were categorized by their rankings as follows: Certified organic cosmetics received the highest rating (9-10), pure natural cosmetics were rated 5-7, naturally inspired cosmetics 2 and conventional cosmetics 1.

The study found that the majority of brand’s formulations do not accurately reflect their marketing claims. Products that claim to be 100% natural were discovered to include synthetic preservatives, emollients and surfactants. Some brands with ‘natural’ claims were conventionally formulated, and several organic cosmetics did not even meet natural standards.

However, the study did show that products certified by a recognized agency received the highest ranking. Although, some products contain certified organic ingredients, the formulations still have synthetic ingredients not common to natural and organic products.

Organic Monitor emphasizes the importance of natural or organic certification as it adds continuity to the industry with strict standards and guidelines on allowed natural formulation processes and ingredients. Moreover, Organic Monitor encourages companies to become certified and establish trust with consumers by helping them distinguish a truly natural product from a falsely labeled one.

Natural Cosmetic Brands Assessed

Brands that received high naturalness scores include: Intelligent Nutrients (9), Green People (8) and Living Nature (7). Intelligent Nutrients products received high naturalness ratings, as they contain high levels of organic (food) ingredients, with almost all products certified organic.

New brands launched by large multinationals also scored high in terms of their natural and organic formulations: Garnier Bio Active (L’Oreal), Diadermine Bio Expertise (Henkel) and Johnson’s Natural (Johnson & Johnson). The high naturalness ratings of these brands epitomize how the natural and organic arena has evolved from just having small niche brands.

Natural & Organic Certification

Not all certifications are created equally. While natural and organic certification agencies like ECOCERT, Soil Association, BDIH, NPA and NaTrue standardize what constitutes a natural product, the report criticized Fair Trade organizations which allow cosmetics to be certified Fair Trade if they contain a minimum level of Fair Trade ingredients. Some consumers perceive these products as natural since they are certified and often marketed on their Fair Trade (natural) ingredients.

The study went on to show that many certified Fair Trade cosmetics received low naturalness ratings because of high levels of synthetic ingredients. Organic Monitor calls for Fair Trade certification standards to be tighten so they do not add to consumer confusion of what constitutes natural and organic cosmetics.

According to the study’s findings, the level of naturalness of brands varies considerably between geographic regions. European brands, partly because of the high adoption rates of natural and organic standards, score highest. North American brands are the second most natural, and whilst brands in other regions generally receive lower ratings. Although a growing number of Asian and Latin American brands are emphasizing their natural – and in many cases, indigenous – ingredients, the formulations are usually high in synthetic preservatives, emulsifiers and other ingredients.

The recently launched ecommerce site labels themselves as New York City’s go-to retailer for the natural beauty conscious and sells selected brands offering natural cosmetics, skincare, bath and body, and fragrance products.

Last week, the company announced that all suppliers who cannot prove that their products are free from carcinogenic, toxic or synthetic ingredients which have been proven to be harmful to human health will be removed immediately from the store. Furthermore, products tested on animals are also banned from the store.

Speaking about the initiative, Founder and CEO of Gotham Beauty, Richard Annington said: “Our business is founded on the principle of providing an edited collection of truly healthy, harm-free brands.”

One of the ingredients that were deemed harmful by Gotham Beauty was Parabens due to its connection to cancer. As a result any product formulated with Parabens is not allowed to be sold in their online store.

Gotham Beauty initiated a review of its products after discovering one of its suppliers was required to re-label products to be sold in the European Union.  Unlike the FDA who relies mainly on cosmetic manufacturers to evaluate the safety of their products, the EU has one of the strictest regulatory environments relating to the safety of cosmetic and personal care products.

According to Annington, more than 500 cosmetic products sold in the US contain ingredients which are banned in Japan, Canada and the European Union.

As part of the product review process, Gotham Beauty will be discontinuing Lollia and Tokyo Milk immediately. Customers who have purchased these products are invited to contact us for a full refund.

The market for natural and organic personal care products is widening. Companies are entering into retail channels that were once assumed ‘out-of-bounds’ for higher priced natural products. Natural brands are now finding success in supermarkets, drugstores, mass merchandisers and club stores. Additionally, private labels are also contributing to the growth as they allow retailers to offer natural products at affordable prices. With a much broader consumer base, market growth is driven by the full retail spectrum, not just specific channels.

However, there is a growing divide within the industry. Over 600 brands are present in the North American market, but the market share majority is controlled by few. A two-tier market has developed, according to Organic Monitor, whereby large brands are occupying the first tier and small to medium size companies are operating in the second tier. And the gap is growing. Large natural personal care product companies, like Burt’s Bees, Bare Escentuals, and Tom’s of Maine, have all recently been either bought by or received huge capital inflows from much larger dominate manufacturers, which has allowed them to even further expand.

Organic Monitor predicts that in coming years natural and organic products will account for 10% of personal care product sales. The natural and organic market, once only a small market segment, now is poised for considerable and continual growth. Mergers, acquisitions and investments will likely play a significant role in market developments over the next few years as the high growth potential is attracting more investors.  But, as the market becomes increasingly crowded there will be even more fragmentation between the successful brands and the aspiring brands. Those who can build strong distribution and differentiate themselves are expected to excel.

Organic Monitor recently published a report which analyzes the US and Canadian markets for natural and organic personal care products, which they segment by the following product categories:

• Natural & organic skin care products
• Natural & organic hair care products
• Natural & organic oral care products
• Natural & organic cosmetics
• Natural & organic deodorants
• Other natural & organic personal care products

The 2^nd edition report provides market information for each product category including: market size, revenue forecasts, pricing analysis, competitive landscape, sales channel breakdown and consumer trends. Recommendations are given to existing participants and new entrants looking at growth opportunities in this emerging market. Market shares and profiles are given of the leading brands, manufacturers, importers and retailers in US and Canada.

Find more information on the report here.

The new potential law is causing a high level of confusion amongst the French cosmetic industry, generating disbelief from the opposition and satisfaction from some consumer advocacy groups, and natural and organic cosmetic makers.

The French Chemical Industry Reacts

The Union of Chemical Industries (UIC), a French association representing the French chemical industry, feels the law is a “disproportionate reaction… and excessive degree of precaution, completely disregarding the proper scientific processes and the careful logic applied by the European regulations.”

Opponents to the bill said that toxicity studies of endocrine disruptors “still rely on the definition of daily intake, while potential cocktail effects or the effect of small doses have been hardly or not studied.”

To further strengthen the opposition’s scientific and technical case, they endorsed evidence from INSERM and the ANSES of which neither have made their final risk assessment.  Moreover, REACH, the European Community Regulation on chemicals and their safe use, does not ban all use of endocrine disruptors.

In addition, the UIC is concerned about the ramifications of the law whereby they feel many of the applications which use phthalates, Parabens and derivatives of alkylphenols are not technically substitutable.

Support from NGOs and Organic Companies

The position of consumer advocacy groups, NGOs, and organic and natural cosmetic companies is obviously very different, especially regarding possible substitutes. They welcome the strong stance the French deputies have taken and would very much like to see the bill pass through the senate and become a law.

The vote and potential new law strengthens the manufacturing and branding strategies of organic and natural cosmetic manufacturers. The majority of the natural and organic cosmetic industry has already stopped using or has always refused to use Parabens and other endocrine disruptors in their products.

Yet research gaps do exist, and further studies are required for both sides to be fully supported by scientific evidence. For example, Parabens have been thoroughly tested for acute toxicity, and for this reason the proponents feel it has remained an acceptable preservative. However, very few studies show the consequences of the accumulation of small daily doses absorbed through the skin.

To Be Determined

Nothing is final and the bill faces many potential outcomes. If senators approve the bill as it is written it would become a law applicable upon publication in the Official Journal. However, it could also be rejected, or a vote could be enacted to amend the bill’s text.

Regardless of the outcome, it is a courageous step for French Deputies and hopefully it will reverberate to other countries and governing bodies. After all, it seems the French government is putting the consumers’ best interests first by eliminating ingredients with potential harmful effects. If the bill becomes a law, gone will be the day when big companies dictate regulation and safety standards despite of deep vested interests.

One would think replacing harsh chemicals with safe and naturally derived ingredients would be a good thing, right? Well, not so fast. Organic Monitor believes that this development could open up a Pandora’s Box in the beauty industry. Diverting agricultural land from the production of food crops to plant derived cosmetic ingredients could result in a global food shortage.

On a small scale replacing food crops with cosmetic ingredients may not seem like a threat to world food supply, but if the natural and organic product market continues to grow as it has been for the past 5 years then companies need to take preventative action. At the very least cosmetic companies need to begin putting measures in place that ensure their ingredients are derived from sustainable sources. The repercussions could be huge if natural cosmetic companies begin receiving some blame for a global food shortage.

Global food shortage, really? Well, it is surely possible. At the current rate of world population growth, coupled by increasing food prices and a decreasing amount of available agricultural land, the threat is very real and could easily creep its way into the natural cosmetics market.

If the threat manifests companies need to be prepared for a new debate about ‘food vs. beauty crops,’ says Organic Monitor.  Companies that already sustainably source their natural ingredients will be one step ahead and avoid the backfire.

Lead by Example

Large consumer product companies who source natural ingredients realize the risk and have already started taking proactive measures. L’Oreal, Unilever and Proctor & Gamble have made commitments to sustainable sourcing, while Wal-Mart has been putting pressure on its suppliers to adopt sustainability practices for a few years now.

Natural and Organic certifications and Fair Trade standards are gaining popularity around the world. Up next could be sustainable ingredient certified.

Palm Oil is a good example of how companies or associations can come together and set standards to sourcing natural ingredients. It is possible that in the near future more companies will follow suit as they have with palm oil by pledging to only source from Roundtable on Sustainable Palm Oil (RSPO)-approved companies. Organic Monitor has already noticed that similar roundtables exist for soya and cocoa, and more are under development.

In summary, the cosmetic and personal care industry have been moving in the right direction by wanting to make safer products by using natural ingredients, but it is evident that it now needs to be taken one step further. No longer is the time when having natural ingredients is enough. Companies now need to be able to squash the debate before it occurs and avoid a potentially harsh backfire by beginning to sustainably source natural ingredients.

The agreement has already taken effect whereby a combination of Unigen natural ingredients is being used in Clinque’s Even Better Clinical Dark Spot Corrector and Derma White Clinical Brightening Essence. Both skin care products are part of the “Nu Natural” trend where companies are blending natural ingredients and effective green chemistry.  No natural certifications have been announced.  In the future Clinque is expected to add further natural ingredients to their product line, as well as the addition of Unigen ingredients to other Estée Lauder brands.

The agreement now provides Estée Lauder with an important and commercially successful partnership with a global leader in the discovery and development of proprietary natural ingredients for the cosmetics and personal care industries.

With a variety of scientifically substantiated natural ingredients already distributed worldwide, Unigen develops botanical and marine-derived natural ingredients of which the safety and efficacy are established through testing at the genetic, cellular, and human clinical levels.

“Green chemistry, also known as sustainable chemistry, is the design of chemical products and processes that reduce or eliminate the use or generation of hazardous substances. Green chemistry applies across the life cycle of a chemical product, including its design, manufacture, and use.”

-          U.S. Environmental Protection Agency (EPA)

As the natural personal care product market grows, companies are looking for innovative ways to utilize natural ingredients while still creating an effective product. In doing so, green chemistry is advancing, and companies are mixing naturally sourced ingredients with safer, effective synthetic ingredients.  We realize that not every product on the market can or will use only natural ingredients, but at least some companies who do use synthetics in their formulations are consciously making an effort vis-à-vis green chemistry to provide a product that is both safer for personal use and the environment.

While green chemistry does not ensure the absolute safety of the products we use, it is a definitive step in the right direction.  The backbone of green chemistry still consists of chemicals and chemical processes, but it is designed to reduce or eliminate negative environmental impacts.

Green chemistry continues to evolve. Companies are updating and innovating manufacturing processes and a number of benefits are following, including reducing waste, pollution, energy and resources, using non-toxic components, and creating safer products.  The EPA has created Twelve Principles of Green Chemistry to serve as a guide for green chemists who want to reduce their environmental impact

Twelve Principles of Green Chemistry

1. Prevention
   It is better to prevent waste than to treat or clean up waste after it has been created.
2. Atom Economy
   Synthetic methods should be designed to maximize the incorporation of all materials used in the process into the final product.
3. Less Hazardous Chemical Syntheses
   Wherever practicable, synthetic methods should be designed to use and generate substances that possess little or no toxicity to human health and the environment.
4. Designing Safer Chemicals
   Chemical products should be designed to effect their desired function while minimizing their toxicity.
5. Safer Solvents and Auxiliaries
   The use of auxiliary substances (e.g., solvents, separation agents, etc.) should be made unnecessary wherever possible and innocuous when used.
6. Design for Energy Efficiency
   Energy requirements of chemical processes should be recognized for their environmental and economic impacts and should be minimized. If possible, synthetic methods should be conducted at ambient temperature and pressure.
7. Use of Renewable Feedstocks
   A raw material or feedstock should be renewable rather than depleting whenever technically and economically practicable.
8. Reduce Derivatives
   Unnecessary derivatization (use of blocking groups, protection/ deprotection, temporary modification of physical/chemical processes) should be minimized or avoided if possible, because such steps require additional reagents and can generate waste.
9. Catalysis
   Catalytic reagents (as selective as possible) are superior to stoichiometric reagents.
10. Design for Degradation
    Chemical products should be designed so that at the end of their function they break down into innocuous degradation products and do not persist in the environment.
11. Real-time analysis for Pollution Prevention
    Analytical methodologies need to be further developed to allow for real-time, in-process monitoring and control prior to the formation of hazardous substances.
12. Inherently Safer Chemistry for Accident Prevention
    Substances and the form of a substance used in a chemical process should be chosen to minimize the potential for chemical accidents, including releases, explosions, and fires.

The 12 Principles of Green Chemistry, originally published by Paul Anastas and John Warner in Green Chemistry: Theory and Practice (Oxford University Press: New York, 1998).

Burgeoning in Brazil

Source: Nancy Mills at Kline
Despite its ranking behind Asia and Europe as the third largest market for natural personal care products, the Brazilian market for naturals has ballooned at a 20% compound average growth rate (CAGR) since 2005. Despite an economic crisis that saw the nation’s GDP slide backwards by 0.2%, growth in naturals continued at a double-digit pace, making it one of the fastest growing markets in the world. Part of this growth can be attributed to the heavy influence of local giants Natura and O Boticário, which together command an overwhelming majority of the market share.

However, as the industry moves toward more natural formulations, there remains room for other players, especially those who can offer consumers a wider selection of truly natural products. The richness of Brazil’s biodiversity, particularly the flora of the Amazon region, is one of the key drivers in the growth of this segment, with many well-known ingredients already being explored for their cosmetic properties. The increasing supply of locally sourced raw materials also makes natural products more affordable and accessible for consumers.

Belief in natural remedies is already a well-ingrained aspect of Brazilian culture, where herbs and plants have long been widely used for medicinal and therapeutic purposes. This cultural acceptance makes it easier for manufacturers to make the natural “pitch” to consumers, who largely already appreciate the benefits. Meanwhile, the rising middle class has boosted overall cosmetics and toiletries growth, priming the market for naturals to blossom.

With large competitors like Unilever, Procter & Gamble, Avon, and L’Oréal already entering this segment on a global basis to diversify their existing product lines and meet the new demands of consumers, no doubt the local and regional players will see increasing competition in the coming years.

Natural Personal Care Products Sales in Brazil, (BRL)

Asia Continues Climbing

Buoyed by a longstanding traditional of herbal remedies, Asia remains the largest market for natural personal care in the world, but now ranks second to Brazil in its pace, posting double-digit growth in 2010. Here, truly natural formulations hold a larger share at nearly one-fourth of the market, but growth in natural-inspired products is gaining strength as consumers demand mass products at lower prices.

Interestingly, the market for naturals in Indonesia is well-established, dominated by multinationals like Unilever, which has been on the ground here for more than two decades. Here, consumers seem to follow Western trends, despite the largely rural population, with the foreign origin of a brand commanding priority as a status symbol over its natural positioning. In contrast, truly natural products account for about one-third of the total market in India, which ranks second in the region behind China in terms of overall naturals growth. The competitive pricing of domestic brands and a strong belief among consumers in the medicinal properties of ayurvedic formulations are driving growth in the segment.

Also poised for double-digit growth, the market for naturals in Asia is expected to surge by a nearly 14% CAGR through 2015, buoyed by rapidly increasing urban population and greater awareness of natural products, especially in China, India, and Indonesia. Renewed interest for natural products—and a change in the perception of naturals from that of cheap alternatives to mass brands—is creating healthy competition and encouraging domestic brands to invest in research and development to improve product quality. The dominance and wide acceptance of herbal natural products in China and India will ensure ongoing demand in the natural segment.

U.S. Upswing

In the supercharged natural personal care industry, the U.S. market has shown the most significant impact of the prolonged economic recession. However, the real story here seems to be the surge in truly natural products, which shot up more than 20% over the past year, while natural-inspired products inched up just over 4%. One of the leading factors behind the growth of truly natural products is product reformulations. Marketers are reformulating their natural-inspired products to fit more within the truly natural segment. Furthermore, some of the leading marketers of truly natural personal care products, including Burt’s Bees (Clorox) and Tom’s of Maine (Colgate-Palmolive), have succeeded in expanding their product lines in mass market retail outlets like Wal-Mart, Target, and drug stores around the country, which has played an important role in the growth of the truly natural segment.

Around the globe, consumers have displayed ever-increasing interest in natural products, which will continue to push worldwide growth into double-digit territory—a welcome respite for diversified multinational manufacturers reeling from lackluster performance in the overall cosmetics and toiletries market. The key to leveraging this growth in specific regions is to remain mindful of the nuances and unique characteristics in each market. While stellar growth may be the universal condition, specific consumer demands and other drivers in each region will dictate the best course of action to capitalize on pockets of opportunity.

Natural and organic cosmetics and personal care products are now mainstream, and companies presenting their products to the mass market, specifically through a large retail presence in supermarkets and chain stores are doing exceptionally well.  In comparison, some premium natural & organic brands are losing market share because of sluggish demand from organic food shops and beauty retailers.

Already established European natural cosmetic companies are bridging boarders and developing a pan-European presence. Korres Natural Products and Melvita are leading the way with the opening of new concept stores across Europe.  An increasing number of brands are following this trend, including Weleda, Dr. Hauschka, Madara Cosmetics and Couleur Caramel, all which have opened concept stores in recent years.  In addition to concept stores, brands are also manoeuvring to better position themselves in the high demand, high growth online retail market.

Brands that are well-known in some European markets and less recognized in others are now making inroads throughout the entire continent, such as Burt’s Bees and H&M.  Burt’s Bees is well received in the US and UK, but relatively unknown in other parts of Europe.  A new distribution agreement with Sephora retailers in France should help change this and expand their market share in new European markets.

H&M is a new entrant to the natural cosmetic industry.  Characteristically a fashion and apparel retailer, H&M is launching a new line of certified organic skin care products to be sold in stores across Europe.

As new entrants continue to increase and the market becomes even more competitive, Organic Monitor predicts the market winners to be “those companies who can adopt strategies based on product differentiation,” such as products certified natural or organic, as well as products that are competitively priced, offering consumers with a better value without sacrificing product effectiveness.

New entrants and established brands are expanding across Europe to meet growing consumer demand for natural & organic products. A recent study by Organic Monitor finds European natural cosmetic sales will approach EUR 2 billion this year.