A global shift from synthetic to natural active ingredients in personal care products is driving significant investments in the market, according to research firm Frost & Sullivan. This trend is fueled by a growing consumer belief that natural ingredients are safer for human health and the environment.

Source: Frost & Sullivan. Generic personal care dispensers.

Currently, natural active ingredients represent 25% to 30% of the total market share. However, this is predicted to double by 2023, leading to increased innovation in addressing the challenges of incorporating these often delicate ingredients.

“This preference for natural ingredients is particularly noticeable among consumers in India and China, who are familiar with traditional Ayurvedic and Chinese medicine,” says Raghu Tantry, Principal Analyst of Visionary Science at Frost & Sullivan. “While companies like Natura Cosméticos and the L’Oréal Group, known for their natural product offerings, have experienced significant sales growth, it’s crucial for companies to remain cautious about product claims, as regulators are closely monitoring the industry.”

Frost & Sullivan’s Visionary Science team suggests that manufacturers can capitalize on the growing personal care market by diversifying their product lines and offering ingredients with multiple benefits. Due to the challenges of microbial contamination and ingredient incompatibility often associated with natural options, manufacturers are turning to technologies like encapsulation. Controlled release technologies are also gaining traction, as they can both enhance the efficacy of natural ingredients and increase profit margins by utilizing potent, specialized active ingredients instead of relying on more common, less expensive alternatives.

The application of active ingredients in personal care is evolving beyond traditional uses like moisturizers and sunscreens for body care. There is a growing demand for products offering anti-pollution and antioxidant properties, particularly in haircare. Furthermore, the diverse ethnicities found in different regions create new opportunities for both active ingredient and cosmetic manufacturers. For instance, there is a substantial market for halal beauty products in the Middle East and skin-whitening products in the Asia-Pacific region.

“While we are seeing an increase in regional players, many are focusing on price competition rather than innovation,” observes Tantry. “To thrive in this competitive landscape, active ingredient manufacturers need to prioritize research and development (R&D), build strong distribution channels, and collaborate closely with personal care product manufacturers to better understand upcoming product trends.”

Given the intense price pressures in the market, participants need to find a balance between cost-effectiveness, innovation, and diversification in their business strategies. Ultimately, success depends on their ability to support customers with reliable research, closely monitor consumer trends, and capitalize on the numerous opportunities within the global market.

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Global Personal Care Active Ingredients Market, Forecast to 2023 (K187-39) is part of Frost & Sullivan’s Future of Health, Beauty and Packaging Growth Partnership Subscription. The study covers ingredients for moisturizing, ultraviolet (UV) filters, anti-ageing, exfoliating, conditioning, antimicrobial, and others. Get complimentary access to more information on this analysis and to register for a Growth Strategy Dialogue, a free interactive briefing with Frost & Sullivan’s thought leaders.