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Beauty Industry Going Green

Last September, Paris hosted the 10th Beyond Beauty show, the inevitable meeting point for the aficionados of the beauty industry. During the event, manufacturers, big and small, centered their discourse on one particular theme: sustainable development.

Today, with the growing awareness of the potential side effects of many artificial substances used in personal care items, such as parabens, petrochemicals and toxins,many consumers are turning toward a greener approach when it comes to beauty. They are looking for products that do not harm their skin, nor the environment or society; products that are all-natural or free from artificial additives.

Mergers and acquisitions in the last couple of years have demonstrated companies' increased interest in organic and natural-positioned products and brands, as indicated by Shiseido's acquisition of Bare Essentials, LVMH's takeover of Nude Skincare and Ole Henriksen, and the French organic brand Kibio’s acquisition by Clarins.Organics products are increasingly gaining momentum in the beauty and personal care market, infiltrating not only the premium but also the mass market, with mainstream players such as Yves Rocher developing their organic range. They have also benefited to the natural trend, pushing consumers to look for natural ingredients.

The difference between organic and natural can sometimes be blurred. Natural products are not necessarily organic but are composed of plant-based material lightly modified and produced with the maximum respect for the environment. Simple natural products tend to be less expensive than organic cosmetics; therefore, more attractive to consumers, who might have trouble to distinguish the difference between organic and natural. In a French hypermarket for example, an organic shower gel can cost twice the price per liter of a shower gel with a natural positioning. Limited supplies of organic ingredients due to low yields or bad harvests can drive the price of raw materials through the roof.

Natural is a convincing argument. For example, Caudalie SARL, famously known for merging naturalness and technology, has gained popularity in Western Europe and saw a twofold value sales increase from 2008 to 2011. Today, even the men's grooming market has embraced natural ingredients in their formulation, with brands such as BullDog (Little Wing Trading Co Ltd), which saw its sales doubled from 2009 to 2011 in the UK.

In order to satisfy consumers’ greener expectations, manufacturers do not hesitate to integrate a more environmental dimension into their strategy. For example, by creating sustainable partnerships with local producers or by growing their own ingredients, companies like Sanaflore (Group L’Oréal), Natura and Yves Rocher can guarantee to their consumers the origin and the quality of their raw materials.

More companies are adopting a greener approach not only through their sourcing practices but also through their packaging. Manufacturers are increasingly turning to green packaging including packaging made from recycled materials or lighter materials. For example, Bio Beauty by Nuxe uses recyclable packaging printed with vegetable inks. The new BB cream by Origins lays in a FSC (Forest Stewardship Council) approved case made from recycled cardboard produced using renewable energy. Thierry Mugler uses a refillable bottle and a carton made from recycled materials for its fragrance Womanity as it is better for the environment and creates more perceived value for the consumer.

The beauty and personal care market is becoming greener and more transparent. The demand for natural products, which respect the environment and biodiversity, is stronger today than in the past. In order to stay ahead of the game, manufacturers would be wise to emphasize their greener and more genuine approach to cosmetics. However, they need also to be aware of the danger of greenwashing, that is to say, claiming more sustainable or more natural than is really the case. This leads to lack of trust by consumers. We are living in a cultural era where digital communication is becoming increasingly important and where consumers are better informed. Indeed, if the notoriously known preservative parabens was put on the map it is because information can travel on the world wide web fast. Therefore, transparency and brand consistency are vital to gain consumers’ trust.

Finally, playing the organic or the natural card can be a bright strategy to enter new distribution channel. By expending their brand portfolio with organic or natural-positioned products, mainstream manufacturers could not only meet the demand of eco-conscious consumers but also expand their distribution by entering health and wellness stores, such as Whole Food Market or the newly opened French supermarket fully dedicated to health and wellness, Coeur de Nature (Auchan Group SA).