1.1 Definition and scope of the study

The organic cosmetics market represents a sub segment of the larger market for cosmetics. A cosmetic includes any substance used to clean, moisture or alter a person’s skin, hair, nails or teeth.

Cosmetics can be distinguished in two categories:

Beauty products: e.g. make-up, perfume, skin cream
Care products: e.g. shampoo, soap, deodorant

Organic personal care and cosmetic products do not contain chemicals such as parabens, phthalates, aluminum salts and petrochemicals, which are potentially harmful to an individual’s health. There is a legal treatment or distinction between the terms ‘organic’, ‘natural’ or ‘bio’ in the United States, as we will discuss further on. Nevertheless, for a cosmetic to be considered organic, it has to contain at least 95% of the ingredients certified as organic. Public opinion tends to identify them as those products containing ingredients derived from nature and not processed.

The global cosmetics market was worth over €213 billion in 2020 which, however, represented an 8% decrease in value with respect to 2019 mainly due to the effect of the COVID-19 pandemic.

The US market for cosmetics has grown substantially during recent years, with both production and exports experiencing a percentage increase in the last decade. The revenues of the broader cosmetic and beauty industry in the USA reached a value of USD 49.2 billions in 2020.

More specifically, the organic sector is blossoming, with increasing awareness regarding harmful effects of chemical products on the human body. This expansion comes both from demand, with consumers leaning towards natural and biological, and through suppliers, with companies offering each time more possibility of natural products, expanding from alimentation to personal care. Overall, the size of the organic products market in the US reached 40.6 billion in 2020.

1.2 The Global Outlook

The cosmetics market as a whole

The global cosmetics market can be defined a supply-led market mainly driven by innovation and in which new ideas are rewarded by customers.

The global cosmetics market was worth over €*** billion in **** as presented in the L'Oréal annual report. As it is visible from ...

1.3 The US Market

From a value of USD **.* billions in ****, the revenues of the cosmetic and beauty industry in the USA reached a value of USD **.* billions in **** peaking in **** (***). The market thus grew at a CAGR of *.**% in the past ten years.

Revenues of the cosmetic and beauty industry US, ****-**** in billion ...

1.4 International Trade

UN Comtrade provides data on production outcomes. For the category “cosmetics, beauty, make up, skin care preparation, manicure or pedicure preparation ****” in **** exports in the United States amounted to approximately USD *.* billions while imports totaled USD *.* billions.

Imports, Exports and Coverage Rate for cosmetic and toilet preparations US, ****-****, in billion ...

1.5 COVID-19 Impact

The measures of social distancing and lockdowns imposed in the US and in other countries have severely impacted the cosmetics market. Besides the shock in supply, the virus has also possibly impacted demand. This is because shopping for cosmetics may not be considered first priority in the middle of a pandemic. ...

2.1 Demand Drivers

The American woman spends on average US$ *** thousand on makeup during her lifetime [***]. Moreover, in ****, **% of women in the US claimed to purchase makeup products once every month, and **% more than once every month. Although it is a consolidated market, it is not immune to transformations, such as the growing demand ...

2.2 Product Demand by Category

Biological or organic products are more expensive than traditional products, since they are associated with a perception of higher quality, given the higher cost of natural ingredients which changes year-on-year, the uncontrollable environmental factors, and the manufacturing process that is more labor-intensive if compared to its generic counterparts.

Given the pre ...

2.3 Geographic Distribution of Demand

To better understand the geographic distribution of demand for organic cosmetics products, in the absence of exhaustive statistics on the precise market, it is still useful to look at the expenditures of US citizens of different regions on personal care products and services. Doing so, we will be able to assess ...

2.4 Demand Gap

Although most women seem to be satisfied by the selection of natural beauty products available at the retailers shelves or in their online sites, it seems like the supply has not yet met the demand when it comes to variety and selection range.

In fact, in ****, **% of American women claimed to ...

2.5 A greater Overlap between the Beauty and the Wellness Industry is demanded

According to the already mentioned survey conducted by the Global Web Index, a relevant trend in demand for organic cosmetics products can be found in an increasing desire of consumers for a greater overlap between the beauty and the wellness industry.

The respondents to the survey, namely, beauty buyers in the ...

3.1 Organization and dynamics of the market

The global biological sector has been developing at a fast pace. In fact, in ****, the world had *.* million organic producers, a growth of *,***% since **** [***].

The Organic Trade Association represents more than *,*** organic business in ** States. Although the country is the biggest market of organic consumption, it isn’t even in the ...

3.2 Transformation of the distribution channels

Considering the whole distribution of cosmetics in the US, we can highlight that store-based retailing (***), while only *% are beauty speciality stores. Normal retailers, which include supermarkets and mass merchandisers, hold, together, ** % of the market. Finally, e-commerce hold ** % of the market as distribution channels, highlighting the importance of the online channels for ...

3.3 E commerce: a double digit yearly growth

The online retail segment has shown an outstanding performance globally within the personal and beauty care market. Indeed, although ecommerce penetration has only increased slightly in recent years, the beauty and personal care online share is predicted to surge to **% in the United States by **** [***].

Purchasing habits are drastically adapting to ...

3.4 Competitive Environment and Main Players

As mentioned before, the cosmetics market in general is indeed highly competitive, and this can be seen when analyzing the revenues of the ** leading cosmetics brands worldwide, none of which makes up more than **% of the global market for cosmetics which in **** was equal to USD***.* billion.

Sales of the main ...

3.5 Mergers and Acquisitions

Between **** and **** L'Oréal acquired * pure players of the natural cosmetics market thus making a clear move towards making its offer portfolio more and more organic [***].

On * August **** L'Oréal announced the signing of an agreement to acquire the German company Logocos Naturkosmetik AG, a pioneer in natural cosmetics with brands ...

4.1 Ingredients

According to COSMOS - the international non-profit bio standards organization - organic cosmetics contain five categories of ingredients:

Water Mineral ingredients Agro-ingredients physically transformed Agro-ingredients chemically transformed Other ingredients

Agro-ingredient: “any substance of plant, animal or microbial origin derived from agriculture, aquaculture or harvesting”. [***]

Every category of ingredient has to respect ...

4.2 Pricing Composition

Organic cosmetics are known to be considered a premium product with respect to regular cosmetics, and this is certainly true in terms of their prices. However, the latter can be justified by looking at the costs which must be incurred in when producing these products [***]:

Shelf Life: Organic products generally have ...

4.3 Supply Trends

Anti-aging

There is an increasing demand for multi-functional cosmetic products such as anti-wrinkle creams. Mature women represent the greatest portion of this trend, as they are waiting for the encounter between technological advances and natural remedies to give its favorable outcomes. [***]

Mono portions

A unique packaging that enables the product to ...

5.1 Ongoing regulation

There is big confusion over the definition and identification of “organic” or “biological” cosmetics.

Natural cosmetics: contain natural derived extracts and/or natural derived ingredients (***) Organic/Biological cosmetics: contain raw natural ingredients (***) derived from organic farming : they must therefore have a valid certificate attesting their organic nature.

At a global level ...

5.1 American Regulation

In the US, cosmetics are regulated by the Food and Drug Administration (***). Nevertheless, neither of those acts give a definition for the term “organic”.

Moreover, the Agricultural Marketing Service of the U.S. Department of Agriculture (***), which sets the definition for the term organic and provides the certification for agricultural ingredients ...