Innovation is key to 2013 survival for ingredient suppliers despite recession

In part one of this trend outlook, John Madden concedes that innovation is an increasingly difficult aspiration due to the recession, regulatory obstacles, and attention towards certain ingredients used in cosmetics; but tips natural ingredients to continue to grow in 2013, driven by consumer demand.

“Beauty and personal care is a very dynamic industry for ingredient suppliers with lots of exciting challenges,”​ he says. “However, like many industries, it is under a cloud due to the economic woes we face and the ingredient category is not expected to show any growth over the next five years.”​

“It is for this very reason that ingredient suppliers must have the courage and energy to innovate if they are to survive.”​

Natural opportunity​

It is in natural ingredients that Madden states is a big opportunity, as consumers drive the global demand; making it a very important category.

“For example, the global growth of plant extracts in hair care is expected to about 2 per cent average growth from 2011-2016,”​ the analyst explains.

Commitment to innovation​

One of the biggest challenges faced by suppliers of value-added ingredients is to be able to differentiate themselves from low cost suppliers, such as those increasingly found in Asia-Pacific, as companies cannot just compete on a cost per kilo basis; which Madden says is where a commitment to innovation is key.

“We all know there has been a slowdown in ingredient innovation due to the recession and the consequent focus on cost-cutting, as well as regulatory obstacles,”​ he adds.

“It is for these reasons that partnerships between suppliers and brand manufacturers are so important, and today this partnership approach has developed into open innovation; and this is now an integral part of the industry.”​

Examples​

A few examples of recent innovations in ingredients are new UV absorbers, particularly as there is now a greater understanding of the effect of ultraviolet radiation on skin ageing.

There are also a number of peptides and skin benefit agents being introduced, and anti-ageing products are now increasingly using peptides as well as UV protection.

Stay tuned for the second part of the trend outlook, as Madden discusses the effect of consumer perception on the ingredients industry.