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Beauty Tech Giving Beauty Industry a Facelift

In recent years, artificial intelligence and virtual reality have been adding an additional dimension to the beauty industry, quite literally. With consumers increasingly embracing and demanding personalized offerings and precise results, leading brands, such as L’Oréal and Shiseido are investing heavily in the space. Just as in many other industries, AI is revolutionizing beauty products and how they are conceptualized, created, and sold. However, it is a long road from being perceived as gimmicky promotions to improving customer engagement to becoming commercial go-to solutions.

Artificial intelligence (AI) has been greatly integrated in our lives through different sectors and now the beauty industry is no exception. The use of AI, augmented reality (AR), virtual reality (VR) as well as complex beauty devices has revolutionized the way consumers perceive, apply, and select beauty products. Moreover, in the age of online retail, it enables companies to maintain a similar personalized level of service that would otherwise require a physical interaction with a beauty consultant. Technology is creating new experiences for the consumer, both in terms of beauty products’ features as well as purchasing process.

Beauty industry is also one of the most competitive sectors, with consumers always being on the lookout for new products and having low brand loyalty. Beauty tech seems to address this issue as well, as it elevates consumer engagement through enhanced personalized offerings, which in turn is a trend that has been driving the beauty industry for several years now.

The three main aspects of beauty tech encompass personalization through AI, virtual makeup using AR and VR, and smart skincare tools/beauty gadgets.

Personalization through AI

Across the retail sector, the key to consumer’s heart and pockets for a long time has been personalization of products and sales experience. Beauty industry is no exception. Consumers have been looking for the perfect skincare product that work best for them or the lipstick shade that goes perfectly with their skin tone. Moreover, consumers want this all from the comfort of their home. This is where AI comes in.

Through retail kiosks and mobile apps, AI enables companies to offer personalized shade offerings that are especially curated for the individual user. A number of companies is investing and capitalizing on this technology to differentiate themselves in the eyes of the consumer. One of the leading market players in the beauty industry, L’Oréal, has been one of the first companies to invest in AI- and VR-based beauty tech and acquired Toronto-based, ModiFace, in 2018. There are several different ways companies, such as L’Oréal, have incorporated AI into their product offerings.

Beauty Tech Giving Beauty Industry a Facelift by EOS Intelligence

Beauty Tech Giving Beauty Industry a Facelift by EOS Intelligence

Lancôme (a subsidiary of L’Oréal) has placed an AI-powered machine, called Le Teint Particulier, at Harrods and Selfridges in the UK, which creates custom-made foundation for the customer. The machine first identifies ones facial color using a handheld scanner, post which it uses a proprietary algorithm to select a foundation shade from 20,000 combinations. Following this, the machine creates the personalized shade for the user, which can then be bottled and purchased.

In addition to physical store solutions, AI-powered apps and websites also offer consumers personalized recommendations. In 2019, L’Oréal applied ModiFace’s AI technology to introduce a new digital skin diagnostic tool, called SkinConsult, for its brand, Vichy. The AI-powered tool uses more than 6,000 clinical images in order to deliver accurate skin assessment for all skin types. It analyzes selfies uploaded by users to identify fine lines, dark spots, wrinkles, and other issues, and then provides tailored product and routine recommendations to the user to address the skin concerns.

My Beauty Matches, a UK-based company, offers AI-based personalized and impartial beauty product recommendations and price comparisons. The website asks consumers diagnostic-style questions about their skin and hair type, concerns, and preferences, and uses AI to analyze the data and recommend products from 400,000 products (from about 3,500 brands) listed on its website. Alongside, the company runs Beauty Matches Engine (BME), which is a solution for beauty retailers using consumer data and AI algorithms to identify consumer purchasing and browsing patterns as well as their preferred products by age and skin or hair concerns. This helps retailers predict and stock, which product the consumer is likely to purchase, improving sales, increasing upsells, and providing a personalized solution to customers.

On similar lines, another app, Reflexion, uses AI to measure the shininess of skin through pictures and offers personalized product recommendations. The app claims to provide much deeper analysis than regular image analysis apps and provides additional features such as testing if products such as foundation are evenly applied. The app works by measuring a face surface’s Bidirectional Scatter Distribution Function (BSDF), which is a measure of light reflected on the user’s face.

Nudemeter is another such product, which uses AI to personalize makeup choices and foundation shades for a full spectrum of skin tones, including darker skins. The app uses color analysis and digital image processing along with its AI algorithms that ensure accurate color measurement irrespective of background lighting, pixels, etc. The app is currently being used by Spktrm Beauty, a US-based niche beauty company targeting shoppers with dark skin.

Virtual makeup through AR and VR

In today’s world where consumers prefer to shop from the comfort of their homes, AR and VR are enabling beauty companies to provide experience similar to that of physical retail to their consumers. AR and VR technologies-based apps let users experiment virtually with a range of cosmetics by allowing them to try several different shades, all within minutes and through their smartphone. This elevates the users shopping experience and improves sales conversion.

Sephora’s Virtual Makeup Artist enables customers to try on thousands of shades of lipsticks and eyeshadows through their smartphones or at kiosks at Sephora stores. While many such apps and filters have been in use for some time now, they are increasingly becoming more sophisticated, providing accurate color match to the skin and ensuring the virtual makeup does not move when the user shakes their face, changes to a side angle, etc. In addition, such apps also provide digital makeup tutorials to engage customers.

On similar lines, L’Oréal uses ModiFace’s AR and AI technology to provide virtual makeup try-on on Amazon and Facebook. The technology enables customers using these two platforms to try on different shades of lipsticks and other make-up products through a live video or a selfie from an array of L’Oréal brands such as Maybelline, L’Oréal Paris, NYX Professional Makeup, Lancôme, Giorgio Armani, Yves Saint Laurent, Urban Decay, and Shu Uemura.

Moreover, AR-based try-on apps helped brands connect with their customers during the previous year when most customers were stuck home and could not physically try on make-up. LVMH-owned Benefit Cosmetics has been investing in AR tech, and launched Benefit’s Brow Try-On Experience program (along with Taiwanese beauty-tech company, Perfect Corporation), which helps online shoppers identify the right eyebrow shape and style for them and then choose products accordingly. The company uses facial point detector technology for the program. The app witnessed a 43% surge in its daily users during April and May of 2020 (as compared with January and March 2020), when people were confined to their homes owing to the COVID outbreak. This helped connect with consumers in a fresh manner and increased brand loyalty. Moreover, Benefit claims that brows products have been their strongest category post-COVID outbreak.

One of China’s leading e-commerce players, Alibaba, also partnered with Perfect Corporation to integrate the latter’s ‘YouCam Makeup’ (an AR-based virtual makeup try-on technology) into Alibaba’s Taobao and Tmall online shopping experience.

Smart devices

In addition to AI and AR based apps and solutions, smart devices is another category in the beauty tech space that is gaining momentum. A certain section of premium consumers are increasingly open to invest heavily into smart beauty gadgets that not only improve skin and hair quality but also help them quantitatively measure the results from using a certain product. While these products are currently expensive and for a niche audience, they have been gaining popularity, especially across the USA and China.

One such smart skincare device is L’Oréal’s Perso, which is based on ModiFace’s AI-powered skin diagnostics and analysis technology. Perso uses AI, location data, and consumer preferences to formulate personalized moisturizer for the consumer. The product is further expected to extend into foundations and lip shades. Perso is expected to be launched in 2021.

On similar lines, in July 2019, Japan-based Shiseido, launched its smart skincare device called Optune, which measures a user’s location-based weather and air pollution data, sleep data, stress levels, and menstrual cycles to create a custom moisturizer. Optune is available on a subscription basis and costs about US$92 per month.

In 2020, P&G also launched a premium skincare system, called Opte Precision. The skincare device uses blue LED light to scan one’s skin and applies a patented precision algorithm to detect problem areas and analyze complexion. Post this, the device releases an optimizing serum that is applied to spots to instantly cover age spots, pigmentation, etc., and to fade their appearance over time. The device has 120 nozzles and works on a technology similar to that of a thermal inkjet printer. The device targets a premium niche audience and costs US$599 with refill cartridge costing US$100.

In 2018, Johnson & Johnson’s drugstore skincare brand, Neutrogena, also launched a smart skincare device – a skin scanner, called Skin360 and SkinScanner, which uses technology from FitSkin (a US-based technology company). The scanner comes in the form of a magnifying camera that gets attached to a smartphone. The camera, which has a 30-time magnifying power helps scan the size and appearance of one’s pores, size and depth of fine lines and wrinkles, the skin’s moisture level, and also provides a score to the skin’s hydration level. The data is processed in a mobile app, which in turn provides a complete skin analysis and offers expert advice and product recommendations. While most smart skin devices are relatively expensive, this one retails at around US$50.

EOS Perspective

While AI and AR have been embraced by a lot of industries in the past, beauty tech is still in its infancy. That being said, there is a lot of potential in the space, especially with the consumer becoming increasingly comfortable with technology. While till recently, most technology-based products in the beauty sector were gimmicky and more for fun and consumer engagement, brands have started taking this space seriously, and started launching products that offer real sales growth opportunity.

Moreover, while AI and AR-based technologies have been accepted fairly easily by the consumers and industry players alike, smart devices is still a very niche category, with most products focused on a niche affluent clientele, who are willing to spend more than US$100 on products that may help improve their skin. There is a lot of potential for this segment to innovate, collaborate, and launch products at a more affordable price point in order to reach the masses.

Over the next couple of years, we can expect new niche players, exploring the benefits of beauty tech to enter the market in addition to greater number of partnerships between traditional beauty giants and technology companies. As personalization continues to be the mantra for consumers, beauty companies cannot look to ignore the space in the coming future.

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Influencer Marketing Redefining the Fashion and Beauty Industry

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Social media users are increasingly reliant on and influenced by what they see online, particularly, when it comes to marketing done by fashion and beauty brands. Social media provides immense marketing opportunities to the fashion and beauty industry by allowing them to closely interact with customers and influence their buying decisions like never before. To tap such opportunities, about 78% of global fashion brands incorporated social influencers in their marketing strategy in 2017, according to a survey conducted by Launchmetrics. Influencers are slowly becoming an integral part of marketing campaigns for fashion and beauty brands – for high-end brands such as Becca Cosmetics and Yves Saint Laurent, as well as affordable brands such as Maybelline, for whom influencers have been pivotal in driving sales.

Why beauty and fashion brands are adopting influencer marketing?

In the past, to launch new collections or promote products, fashion/beauty brands invested heavily in celebrities and television models gracing magazine covers, billboard and television advertisements, among others. These efforts were effective but as technology progresses, fresh marketing tactics are born. While most of the traditional forms of advertising are still being used, brands have started to realize how laborious it is to employ traditional methods in promoting products, hence, majority of brands are going digital and starting to work with influencers.

How influential is influencer marketing?

Undoubtedly, influencer marketing is one of the fastest growing digital marketing tools, providing unparalleled access to real-time word-of-mouth targeting. For marketers, today’s social media influencers are yesterday’s celebrities and socialites, only with a more persuasive voice and greater power to reach audiences.

Beauty and fashion industry has understood the power of influencer marketing quite well. Cosmetics brands such as Smashbox have completely abandoned the use of traditional print media for advertising while luxury cosmetics companies such as Estee Lauder have significantly reduced spending on traditional media to focus on digital.

Fashion and cosmetics brands are using various types of influencer campaigns to promote products, foster brand awareness, and boost sales. For example, Maybelline (an American cosmetics company) in China used the influence of beauty bloggers and 50 celebrity influencers to do a 20-minute livestream video for a newly launched lipstick in 2016, which led to sales of 10,000 lipsticks in two hours.

On the other hand, Olay (an American skincare company) introduced a skincare campaign, Olay 28-day Challenge, which urged influencers to document their four-week experience of using company’s products while updating their followers simultaneously across various social media platforms. Influencers also gave away free samples and offered discounts to followers to encourage them to buy the products to join the skincare challenge. In 2018, the campaign was able to increase engagement rate by 20% and there was a significant increase in Google searches for the brand name.

There is no end to innovative social media campaigns that brands are launching. For example, in 2018, H&M (A Swedish clothing retail company) engaged in conversation with consumers on Instagram to come up with new designs for its brand Nyden, which is targeted at millennials. H&M worked with nine influencers, who used Instagram stories’ polling feature to understand followers’ preferences for certain designs, such as using zippers versus buttons, among others. Over a period of two weeks, the polls attracted more than 425,000 viewers and generated 35,000 votes.

For brands such as Fashion Nova (an American fast fashion retail company), with 14 million Instagram followers and ranked as the most Googled fashion brand of 2018, marketing through Instagram has been pivotal in its rapid ascent in the fashion industry. Fashion Nova is known for betting big on Instagram and use of celebrity influencers – as of December 2018, the company had worked with 3,000 influencers on Instagram. Using celebrity influencers, it claims to have generated sales up to US$ 50,000 per post and selling out a whole collection of clothing line within 82 minutes. With about 20 to 30 posts per day on Instagram, Fashion Nova knows how to keep its audience engaged and generate brand awareness.

What challenges are obstructing growth?

Influencer fatigue

Influencer marketing is not as impeccable as it sounds to be. With more and more businesses adopting influencer marketing, threat of influencer fatigue increases, which could result in disengaged audiences and reduced impact. According to a study conducted by Bazaarvoice in 2018, about 47% respondents claimed to be fatigued with repetitive influencer posts on Instagram.

Promotional content is already beginning to clutter consumer’s news feeds. With beauty and fashion influencers recommending every other product that enters the market, audiences will eventually lose trust in them, feel disengaged and overwhelmed. Consumers, after some time, are bound to get tired of having their buying behavior manipulated. Just like people started using ad-blockers when websites became loaded with advertisements, there’s a probability that they may also turn away from beauty/fashion influencers.

Absence of standard metrics/parameters to determine success of campaigns

There is uncertainty regarding what constitutes a successful influencer marketing campaign and how to calculate ROI on marketing spend. Beauty and fashion companies are unable to accurately calculate profitability of influencer campaigns. According to a study published by Celebrity Intelligence in 2018, 46% of respondents (from the beauty industry) faced challenge in evaluating ROI of an influencer collaboration.

Driving purchases is not always the key objective of influencer marketing, rather it focuses on softer goals like growing brand awareness or boosting engagement, which makes ROI far more complex to determine.

Influencer marketing does not guarantee results in terms of sales, brand reach, or number of clicks. No standard metrics have been set for the industry to measure success, instead brands end up speculating whether the campaign was successful or not. Some beauty and fashion companies monitor the comments or number of likes on the posts, while others determine views on videos or track campaign hashtags, all of which are not very effective methodologies.

Fraudulent practices

Much like other industries, beauty and fashion market has also fallen prey to influencer frauds. According a report published Points North Group in 2018, cosmetics/skincare companies suffered losses due to fraudulent engagement – 46% of Raw Sugar Living’s influencer marketing budget was squandered on fake followers, Clarins lost 45% of its budget on influencer frauds, while L’occitane blew 24% of its budget, among various others. Such deceitful practices have taken a toll on marketers, who invest in influencers to drive brand awareness and sales, but their campaigns fail to reach the actual target audience.

Another inauthentic social media activity plaguing the beauty and fashion industry is staging fake promotional posts by aspiring influencers. Companies want to see promotional abilities and references of past campaigns of influencers before hiring them to do paid sponsored posts. Hence, aspiring influencers, particularly from the beauty and fashion industry, have started to publish posts with brand hashtags and captioning it in a manner such that it seems to be a promotional or sponsored content. While this leads to free publicity for brands but most of them complain that this also results in inferior quality sponsored content posted without approval, which could harm brand’s reputation.

Influencer Marketing Redefining the Fashion and Beauty Industry by EOS Intelligence

EOS Perspective

If there is any market that qualifies to be an early adopter of influencer marketing, it is the beauty and fashion industry. It is an extremely dynamic industry and to stand out from competitors, brands need to constantly evolve, be creative, and promote products extensively – all of which is easily achieved through influencer marketing.

Equipped with social media savviness, influencers have the power to eloquently persuade consumers to make purchases. There is no limit to the creativity that they bring to the table – fashion/beauty influencers design compelling marketing campaigns for the brands by reviewing products, conducting polls and contests, offering huge giveaways, sharing their experiences of using products through videos or photographs, attending events organized by brands and promoting such events, among various other tactics.

Is influencer marketing here to stay?

There is no doubt that influencer marketing is becoming the mainstay of beauty and fashion industry, far from a passing fad. The personal nature of influencer campaigns is one of the reasons why it is proving to be effective for the beauty and fashion industry. According to a survey conducted by Celebrity Intelligence in 2018, 98% of beauty companies believed that influencer marketing is effective for the industry while 68% thought beauty segment has a natural affinity with influencers. Even though difficult to calculate, surveys have determined that influencer campaigns could also provide high ROIs – for every US$1 spent on influencer marketing, brands received average ROI of US$10.7 in 2017. Fashion and beauty brands have gauged the power of social media and know that with the right influencer endorsing to the right community/audience, it can translate into clicks, conversions, and actual sales.


Find out more about drivers and challenges in influencer marketing adoption here


For fashion and beauty brands, influencer marketing has become a multi-million-dollar investment, with considerable portions of their budgets dedicated to influencers. For example, Estee Lauder (a US-based cosmetics company), in 2019, revealed that 75% of its marketing budget will be spent on digital marketing, particularly on influencers, while Shiseido (Japanese multinational personal care company) increased its influencer marketing budget by 50% in 2019. On the other hand, in February 2019, Benefit Cosmetics (a US-based cosmetics company) formed an in-house dedicated influencer agency in the UK to streamline influencer marketing operations and manage influencer relationships. In the future, it plans to expand the in-house influencer agency to other locations as well.

Undoubtedly, influencer marketing has dramatically changed the fashion and beauty industry, by allowing real people to narrate a brand story, demonstrate product, and provide honest and credible product reviews. In order to make it a sustainable marketing strategy, measures are being taken to overcome some of the existing challenges. In pursuit to engage with authentic influencers, beauty brands are adopting more sophisticated, data-led approach to selection process. According to Celebrity Intelligence survey, in 2018, about 67% of beauty brands identified social media analytics (including audience insights and engagement metrics) useful to choose authentic and suitable content creators.

Another ongoing challenge is to accurately determine success of campaigns, which some companies (including lifestyle and cosmetics brands such as Daniel Wellington, L’Oréal, and Olay) are tackling by providing influencers with a unique URL or a discount code, which followers can use and brands can easily track conversions. If the campaign does not entail discounts, various metrics can be used to evaluate ROI such as traffic driven, social reach, social media impressions, engagement rate, cost per impression, and cost per engagement, among others.

Nonetheless, opportunities that influencer marketing provides for the beauty and fashion industry outweigh all downsides. While brands have achieved success with sponsored posts and brand hashtags on social media, there is still a lot more for them to explore and innovate through influencer marketing.

by EOS Intelligence EOS Intelligence No Comments

Infographic: Tailored Cosmetics – Customization Is a New Trend

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In the last five years, the beauty and cosmetics industry has witnessed a considerable demand for bespoke or tailored beauty products, which offer an alternative to “one-size-fits-all” cosmetics. The bespoke cosmetics companies allow customizing ingredients, colors, and fragrances, among others, to provide products tailored to an individual’s skincare routine or requirements. With consumers being increasingly selective, more engaged, and aware about ingredient and formula benefits, the appetite for customization to meet their distinct needs has grown.

Presently, the market for tailored beauty products is relatively small, dominated by small-sized players and start-ups, with a few established beauty brands such as Estée Lauder, Shiseido, Lancôme, among others, operating in the market. As demand grows, several other players are expected to venture into the market.

Despite challenges such as limited accessibility and high product prices, bespoke cosmetics market has tremendous growth potential and is certainly more than just a fad. The concept of customization catering to every individual’s requirements is increasingly luring more customers and could take bespoke cosmetics from being a novelty to mainstream sooner than later.

tailored cosmetics


Headquarter locations of tailored cosmetics manufacturers (refer to the infographic)

  • Function of Beauty and Kiehl’s – New York, USA
  • Ittsē and eSalon – California, USA
  • Cover Girl – Maryland, USA
  • Skin Inc. – Singapore
  • GeneU – London, UK
  • Ioma and Lancôme – Paris, France
by EOS Intelligence EOS Intelligence No Comments

Brazil’s Personal Care and Cosmetics Market: Transitioning from Physical to Digital?

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Brazil’s personal care and cosmetics market is skyrocketing with growing sales driven by a fashion-conscious and beauty-obsessed population. Brazil, the cosmetics industry veteran, is the third largest consumer of beauty products worldwide and relies heavily on traditional channels for distribution. Online retailing has made inroads into the personal care market in Brazil and is on a slow but steady growth trajectory with immense potential in the future.

Brazilian consumers have long exhibited strong interest in personal care and beauty products, mostly purchased through traditional distribution channels. Over the past couple of years, these consumers have gradually also begun shopping for beauty products online, however, they are still skeptical about payment security as well as delayed delivery and quality of products.

Brazil’s Personal Care and Cosmetics Market-1

 

 

Despite the obstacles, some online retailers — such as Natura, Men’s Market, and BelezaNaWeb — have stepped up to overcome hurdles and develop robust strategies to initiate online purchase of personal care products. After realizing potential of online retailing in the personal care and cosmetics segment, investors have started pouring in money in e-commerce websites to reap benefits.

Brazil’s Personal Care and Cosmetics Market-2

 

Personal care segment can benefit from numerous growth opportunities in the e-commerce market with consumers’ rising inclination towards special offers attracting them to shop online, beauty product segment’s growing share in the emerging online shopping market, m-commerce boosting online sales, etc. E-retailers should exploit these opportunities to penetrate the market and improve sales.

Brazil’s Personal Care and Cosmetics Market-3

 

Brazil’s Personal Care and Cosmetics Market-4

EOS Perspective

While the e-commerce industry faces various obstacles, a robust online strategy along with a balanced eco-system — comprising fraud protection arrangement, better payment mechanism, developed infrastructure, as well as clear understanding of consumer behavior — is likely to improve e-commerce adoption and increase sales.

The market is slowly overcoming some of the hurdles — to combat logistics issue, government has started investing in air and shipping ports to facilitate parcel deliveries through these modes. This is likely to improve shipment timelines and consumers, as desired, can avail quick delivery of personal care products. Further, online retailers have started assessing consumer behavior and responded by improving shopping experience by re-designing websites, launching m-commerce applications for convenient mobile browsing, and implementing loyalty programs. The Brazilian government is working towards implementing stringent regulations to protect consumers against online frauds and formulating robust e-commerce policies.

Paving way into the Brazilian e-commerce market to sell personal care products has been challenging, however, with improvement initiatives slowly gaining momentum, the market is on an upswing to witness a stellar growth.

by EOS Intelligence EOS Intelligence No Comments

How To Confuse The Consumer – Organic Cosmetics or ‘Organic’ Cosmetics?

Despite the ongoing crisis, there is a continuous interest in green, environmental, and health-centered benefits across consumer products, including personal care. While organic personal care and beauty products markets have been growing in several geographies, they are still a fraction of the overall cosmetics industry. Industry experts expect organic personal care and beauty products to continue on its growth trajectory; it might, however, be hampered by consumer’s increased scrutiny and lack of trust in the authenticity of organic claims.

Cash-stripped consumers do shop less and trade downwards in some of their purchasing choices, however, still remain under the universal pressure to stay young and to fit in the general convention of beauty, allowing the cosmetics and personal care markets to do pretty well. The ever existing need to beautify oneself, satisfy vanity, or to heal personal insecurities, had led to a healthy growth of beauty and personal care industry worldwide during the pre-crisis years. Despite the current slowdown, Euromonitor estimates the beauty and personal care market to grow 5% annually to reach US$562.9 billion by 2017, with the US sales alone accounting for US$81.7 billion.

The industry has not remained untouched by the widespread trend of going green, and natural and organic cosmetics segments have seen some good growth rates even amid crisis. Transparency Market Research estimates that the global demand for organic personal care products was about US$7.6 billion in 2012, with anticipated CAGR of 9.6% by 2018, when it is expected to reach US$13.2 billion. While this might be still a fraction of the overall beauty and personal care industry, the growth is promising, especially that more and more consumers express strong interest in organic cosmetics in hopes of their more beneficial or at least less harmful effect. The interest in organic cosmetics is particularly strong in a few developed countries, led by the USA, Japan, and Germany; however, other developed and developing markets are also exhibiting the trend. It is believed that, over long term, there are even greater opportunities in markets across Eastern Europe, China, Brazil, Mexico, or India, where health awareness is increasing, purchasing power is growing, and ‘going green’ trend is catching up. As a result of these opportunities, makers of organic and natural personal care products proliferate, led by names such as The Body Shop, Burt’s Bee, Dr. Hauschka, Weleda, Bare Escentuals, Herbal Essences, or Aveeno.

However, organic beauty and personal care products industry has its own dark face, and while the growth is promising, there are a few issues challenging the overall market growth.

If it quacks like a duck, is it… ‘organic’?

In several markets (probably most of them), many organic products are not organic at all. While certain level of organic regulation and certification has been achieved in the food industry, personal care industry lags far behind. Therefore, large part of cosmetics, despite having some natural or plant-derived ingredients, is made with synthetic and petrochemical compounds. Further, several of those naturally grown, supposedly organic ingredients, in reality are grown on soil that was treated with fertilizers and pesticides, thus has barely anything to do with organic – pesticides’ harmful effects can be transferred to end products, and further to consumer’s skin. The reason for such dishonesty is not hard to guess: truly organic products are far more expensive at each stage, from product development, to raw material sourcing, to production, as well as distribution, as their short shelf-life is a real challenge for both producers and retailers.

Producers benefit from lack of legislation, as they can put an ‘organic’ label on products with some (even marginal) natural content while using synthetic ingredients to achieve better product properties. However, such practice will harm the industry over long term, since it will destroy overall consumer trust and dilute the differentiation of genuine organic products. Legitimate organic cosmetics have to compete with conventional ones labeled as ‘natural’ or ‘organic’. It is fair to say that the ‘evil’ cosmetics producers just take advantage of the lack of law that would clearly regulate when a cosmetic product can and cannot be called ‘organic’. Organic personal care products are not government-regulated and no global or universal standard has been developed so far.

 

‘Organic’ Legislation Gap

The USA has not introduced any regulation that would control the use of ‘organic’ in labeling of personal care products. While USDA regulates organic agricultural products, which might also be used as ingredients in cosmetics (e.g. honey, cinnamon, avocado), it does not have authority over the production and labeling of cosmetics and personal care products as such. Therefore, if a cosmetic product’s ingredient is plant-derived but is not a food ingredient (e.g. plant-derived essential oils), it does not fall under jurisdiction of USDA, and producer’s claims go unregulated. At the same time, USDA issues certifications under the USDA National Organic Program, however it just allows cosmetics to be certified organic, it does not require it.

Similarly in Europe, there is no clear regulation on the types of claims. There are certain private organization certificates, such as Ecocert, which help guide consumers through the plethora of claims on labels. However, no legislation has made it mandatory for cosmetics producers to obtain such certification, therefore, ‘organic’ claims can still be made. The EU recently introduced new EU Cosmetics Regulation, which imposed uniform rules for all cosmetic products, including “Common Criteria” that identify principles for cosmetic product claims. However, organic cosmetics still lack regulatory definition, leaving an open gate for greenwashing.

Greenwashing in the spotlight

With increasing confusion about what really is and is not organic, several organizations and campaigns are pointing fingers at industry cheaters, calling for stricter regulation preventing false claims, and these organizations’ voices are increasingly audible. Drives such as The Campaign For Safe Cosmetics by a coalition of several organizations or Coming Clean Campaign by Organic Consumers Association, point out that governments do not regulate cosmetics industry for safety, long-term health impacts, or environmental damage they cause, and that producers label their health and beauty products falsely as ‘organic’. While these efforts have not led to fundamental changes in legislation, one goal has been achieved: consumers are increasingly aware that the word ‘organic’ on the label does not guarantee organic content. Moreover, consumers learn how to scrutinize the real-deal brands and differentiate them from the ones that just greenwash their products’ image. Just this year, some voices were raised indicating a slowdown in organic beauty products sales. It appears, that while market and consumer trends do remain favorable, the claims on organicity of such products do not convince consumers. Simply put, consumers no longer trust that ‘organic’ means really organic, and that such products can meet their expectations, especially given their higher price.

‘Organic’ or ‘with natural ingredients’?

The inclination to natural content in consumer personal care products is nothing new. However, with the overall confusion of what can and cannot be rightfully called organic from regulatory point of view, there is another issue – lack of clarity on the consumer side. Organic products are not always differentiated in consumer minds, and they are thrown in the same bag with all ‘free from parabens’ or ‘with natural ingredients’ products. This is not the same as a truly 100% organic product, made with organically grown, pure ingredients, with traceable and certifiable organicity of all raw materials used. Still, organic cosmetics marketers have not been able to define clear positioning for their products yet, and they seem to have settled for the word ‘organic’ do the job for them. Yet for many consumers, ‘organic’ and ‘with natural ingredients’ seem almost the same, and they perceive such products as alternative, artisanal, rather than luxury or aspirational, resulting in their lower commitment to purchasing choices remaining only within the ‘organic’ category.

The overall natural cosmetics market, with its organic segment, is growing, and several market leaders have managed to establish a reasonably strong position (while some brands, such as Herbal Essences or Aveena, still being a target of awareness and integrity campaigns). At the same time, there have been several failed attempts to bite a share in the organic sales cake – including Clarins shutting down its Kibio brand or L’Oréal’s Sanoflore brand’s unsatisfactory performance, with some less significant brands exiting the market within a couple of years of launching. The market is quite competitive and not easy to get to, and will be subject to increasingly tightening regulation, though it remains unknown when a truly, organic-oriented regulation will be introduced. Till then, it is up to individual consumers’ to understand the ingredients and research into particular producer’s practices to understand whether they really buy what they think they buy.

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