The Market for Natural Cosmeceuticals

Darrin C. Duber-Smith, MS, MBA

By Darrin C. Duber-Smith, MS, MBA
[email protected]

The natural personal care market continues to grow at double-digit rates, as organizations introduce new product lines into a variety of channels, existing companies offer line extensions, and larger players continue to enter the arena. Where do “cosmeceuticals” fit into the picture? The nature of this important category is often vastly misunderstood among consumers and members of the personal care supply chain alike, and one must fully understand the market before a strategy to exploit market opportunity can be enacted and desired results achieved.

A cosmeceutical is essentially a “gray area” between the “cosmetics” category, a non-therapeutic group of products defined by U.S. regulatory agencies, and the “OTC/drug” category, products that are by definition therapeutic. The elusive cosmeceutical, allegedly first identified by Albert Kligman at a Society of Cosmetic Chemists meeting over 25 years ago, is a product that does have a therapeutic effect on the body, but marketers must be careful when making product claims, which must not be therapeutic in nature if they are to remain within the less-regulated cosmetics area. The cosmeceutical category is not yet defined by U.S. regulatory agencies, and the products enjoy both aesthetic and functional benefits without crossing over into becoming OTC/drugs. We are reminded that nutritional supplements held a similar dubious distinction prior to the enactment of the Dietary Supplement Health and Education Act of 1994 (DSHEA), which finally gave supplements an identity, a defined place between a food and a drug.

These products represent a significant part of the skin care market and will continue to play a larger role in the growth of the overall natural personal care market, a thriving industry driven by general consumers who desire efficacy, but in the form of healthier alternatives to traditional products, as well as aging baby boomers who both suffer from and wish to prevent a variety of skin-related conditions. The Natural Marketing Institute, Harleysville, PA, asserts that even among the under 35 crowd, skin care usage has increased significantly. According to Global Cosmetic Industry Magazine, the overall category (including both natural and synthetically derived ingredients and products) is expected to grow at between eight and nine percent annually, and anti aging products, in particular, rose 13% in 2003.

Wrinkle reduction, skin lightening/darkening, collagen enhancement, cellulite reduction, skin irritation alleviation, anti-oxidant protection/treatment, and many other target areas are all addressed by an increasing array of cosmeceutical products. One could even classify moisturizers, toners, and natural ingredients that protect from the sun, but do not make sunscreen claims, as part of this category. Botanicals that have not been over- processed as well as naturally derived organic minerals, numbering several hundred at present, are most often the active ingredients in cosmeceutical products, and an increasing number of such ingredients are tested and marketed every day.

All of these products tend to be relatively “high-end,” housed in small containers that command high price points and desirable profit levels. Consumers can find products of this nature across a wide variety of channels, including spas; natural foods stores; prestige and other specialty outlets; the mass market; and the higher profit direct channels such as the Internet, television commercials and infomercials, direct mail, print advertising, and multi-level. This bodes well for strategic marketers, as they are able to reach more and more customers with essentially the same message using many different mediums across a variety of channels. In addition, these products “officially” fall under the less-regulated, non-therapeutic “cosmetic” category, and are therefore less expensive to research and develop than those in the OTC/drug category. The main point of differentiation herein is the nature of claims that are made.

Cosmeceuticals represent a sea of endless opportunities available to savvy organizations that possess a detailed understanding of the nature of their target market demographics as well as that market’s corresponding needs, attitudes, and behaviors toward preventing or treating a variety of skin-related conditions. Channels are wide open, and organizations can leverage a multitude of marketing mediums, crafting a truly integrated marketing plan to reach their sales and profit objectives.

Darrin C. Duber-Smith, MS, MBA, is president of Green Marketing, a Colorado-based strategic planning firm offering marketing planning, marketing plan implementation, and other consulting services to natural products companies in all stages of growth. He has 15 years of specialized expertise in the natural products industry and is also Visiting Assistant Professor of Marketing at the Metropolitan State College School of Business in Denver, CO, as well as executive director of the International Association of Natural Product Producers. He can be reached at [email protected].

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