There has been explosive growth in body consciousness over the last 15 years. Gym membership levels, personal grooming products and services and the dominance of diet debates all bear witness to people’s interest in their health and appearance. In response, some interesting link-ups are taking place as food and cosmetic companies try to reposition their products.
The Cosmetic Toiletry and Perfumery Association (CTPA) commissioned a survey last year from Demos to examine the link between self-esteem and people’s well being. It found that “self-esteem is more important than ever because we lead increasingly open-ended lives with fewer universal values, where people are responsible for creating their own individuality”
That trend is translating into rapid growth in the market for the products of the CTPA’s 100 members. Their industry is worth £6bn according to the latest figures with sectors like premium skincare growing at 31.6%.
In response, companies are broadening their range of vitamins, functional foods and nutritional cosmetics as well as surgery and other beauty enhancing treatment.
Cosmeceuticals is a broad term to describe products that are claimed to improve people’s appearance. The US Food and Drug Administration (FDA) does not recognise the term although it concedes that the cosmetic industry uses it “to refer to cosmetic products that have medicinal or drug-like benefits”. While drugs are subject to an FDA review and approval process, cosmetics are not. It warns: “If a product has drug properties, it must be approved as a drug.”
For this reason US companies are wary of the claims they make.In Britain the safety of cosmetic products is regulated by the Cosmetics Directive under the Cosmetic Products (Safety) Regulations, requiring any cosmetic product placed on the market to be safe under normal circumstances of use. To establish this, safety assessments have to be carried out on each cosmetic product by a qualified person.
According to Paul Crawford, head of regulatory services at the CTPA, the rules governing what can be claimed as a product’s benefits vary with the country.
Within the European Union, testimonials and other claims as to a product’s effect are all likely to be part of the judgement of whether it is a cosmetic or a medicine, which has led to several cases in the courts.
In Crawford’s view cosmeceuticals are products applied externally that have a temporary effect. He believes the cosmeceuticals debate is part of a wider marketing strategy. “It is trying to convey that the product has much more serious effects than cosmetics: that it is a much more advanced and powerful product with a scientific basis,” he says.
But the category has no legal status. At the end of the day the categories for legal classification are medicines, foods, cosmetics or food supplements. There is a move towards providing products to promote the idea of beauty from within but over here it would be called a food supplement.
Peter Wennstrom, president of Swedish brand management consultant HealthFocus Europe, sees cosmeceuticals as a buzz term for products whose popularity is being driven by their apparent scientific validation.
His company research found that looking good is one of eight top global trends. What’s more, he says “the connection between what you eat and how you look is extremely strong”
“People want to extend their mid years and they want functional, nutritional benefits. It is a thin line between functional food products, vitamins, dietary products and food combining.” Perhaps for this reason additional terms have been coined - nutraceuticals or functional foods.
According to the US analyst Datamonitor, the US neutraceutical market had an annual growth rate of 8.2% between 1998 and 2003, but that includes fast growing energy-boosting products, and supplements.
Datamonitor notes that growth in almost all health-related segments is expected to slow over the next five years with the exception of what it terms ‘functional beauty products’, which are expected to increase at an annual growth rate of 13.7% reaching nearly $1bn by 2008. In particular, US consumers want anti-ageing products with visible benefits, ie ranges of products you can ingest and apply externally that will have visible effects.
In response to these trends, food and cosmetic companies are forming joint ventures: General Mills with DuPont, Hain Celestial with Cargill, Procter and Gamble with Pharmavite, Nestlé with L’Oreal and Shiseido with Coca-Cola.
Nestlé has been linked to the cosmetic giant L’Oreal since 1981 with their joint venture Galderma, which makes dermatological products, and Inneov, the beauty pill. Nestlé denies persistent rumours it wants to take over L’Oreal, calling its investment merely a “strategic” one. But the justification is alluring: health and beauty products are much more lucrative than low margin foods. Food with cosmetic purposes offers the chance of product differentiation.
There is additional attraction in seeking partners in Asia as Coca-Cola has done. First the market for cosmetics/anti-ageing products/healthy eating is huge and underdeveloped. Secondly the regulatory regime is less rigid. And third it is much more in keeping with the traditions of the region to eat particular foods to produce particular effects.
In spring last year Coca-Cola announced a joint venture with Japanese cosmetics firm Shiseido to produce Aroma Works, a cosmetic and beverage brand based around a grapefruit aroma. The first products were Body Style Water, a drink, and Body Stylish Mist, a body lotion which were jointly marketed last year. Both contained grapefruit juice and caffeine. The idea came from Shiseido’s “aroma theory” - that the effect of fragrances from plants like grapefruit or peppers can increase the production of uncoupling proteins that burn body fat. Both are being sold in Japan. According to reports there are no plans to sell it elsewhere and at this stage the drink is not being marketed with specific health claims.
Shiseido is also collaborating with the National Centre for Genetic engineering and Biotechnology (Biotec) in Thailand to evaluate the potential of Thai herbs for use in cosmetics as well as the transfer of technology and sharing of methodologies.
A good example of the marketing potential in cosmeceuticals is the company Sircuit. It calls itself a brand new concept in skin care, blending the best of both science and beauty and invites customers to “experience the future of professional skin care with 100% fresh natural Chirally Correct ingredients ... we call it face food”.
In the US, cosmeceuticals are big business. A two-day conference in June in New York was well attended according its promoter The Strategic Research Institute. Its senior vice president Rupa Ranganathan believes the business case is about overcoming ageing. But it takes in pharmatechnology, biotechnology and nanotechnology along the way.
One of the big trends it is seeing is the use of single products for both consumption and application, such as Green Tea, the new wonder ingredient. One of the sessions on offer was how to support the claims people are making about their products and how to protect their patents.
Back in the UK, Leatherhead Food International has already run one conference in June on Functional Foods - How Big is the Opportunity? and plans another in November called ‘Rejuvenating Foods - holding the years back’.
The moral of this story is that cosmeceuticals is a product range in its infancy although there is enormous potential for those companies that can get to market early. The margins are much higher than those in food.
Suppliers will be able to tap into a powerful global trend towards looking good, feeling good and living longer. But first they will need to overcome legislative challenges, certainly in the west, although the east represents a huge potential market, particularly for those who have already established a recognisable global brand for their products. It’s another example of who dares, wins. FM