From a market perspective, personal care products are important. The cosmetics industry is a dynamic and vibrant one that promotes and encourages scientific innovation that is both crucial to the success of its business model and overcoming regulatory challenges.
Such apparent territorial and global challenges have not, however, stemmed the tide of success for the cosmetics industry, which has, in recent times, demonstrated resilience to global economic downturn.
According to a 2015 report,1 the EU cosmetics market with a population of greater than 500 million consumers remains one of the largest and leading single markets worldwide (€69 billion) with the EU export market representing one third of the global market. Comparatively, the Asia Pacific population accounts for ca. 60% of the global population (ca. 4 billion people) with ca. 20 % of the global cosmetics sales; principally via the biggest market players being China (ca. €32 billion), Japan (ca. €18 billion), and South Korea (ca. €7 billion).
Outside of established regulatory frameworks and scientific compliances, the global cosmetic industry including the natural and organic cosmetics (NOCs) sector remains diverse; both in terms of consumer expectations and requirements. To this end, and focusing on the NOC sector, there has been in recent years an ever increasing interest from the cosmetic consumer in natural and/or organic beauty and personal care products.
The NOC sector is scientifically innovative and, as for all cosmetics, NOC finished products and ingredients must be safe, functional and effective. Yet, the NOC sector has its own additional regulatory challenges due to the absence of an official definition for either ‘natural’ or ‘organic’ in relation to cosmetic ingredients or their finished products. Consequently, as a global market, the adoption of, and emphasis upon, specific criteria requirements concerning a NOC finished products and its ingredients can vary both geographically and by consumer interest and/or focus e.g. sustainability and environmental conservation, product authenticity, product efficacy, ingredient avoidance, animal testing, packaging etc.
In the absence of a clear market definition, reports of the market size of the NOC sector can vary. The reason behind this is based upon whether, and to what extent, bio-inspired products are included or not, or whether the products have been certified or not. Consequently, while one global market value2 shows estimates of ca €7.5-9 billion this can increase to €30 billion for another.3 The global market share is estimated at between 1%-2.5%.
Estimates generally agree that the global market for natural and organic cosmetics is on the rise with a market growth of ca. 7-10%2,3 but with rising growth also comes increasing competition. NOCs have penetrated all major global markets with Europe, Asia, Brazil and the US, among the four largest territories. At present Asia and Europe lead the way with total sales in natural beauty care occupying over 50% of the global market share.
In recent years the initial growth in the EU NOC market has slowed in real terms, yet continued economic growth in the EU NOC sector remains strong and resilient; with a continued growth rate at 5%-7%2 compared with the total EU cosmetic industry growth rate for 2014 of 0.5%.1 Specifically, the EU market share of the NOC sector, at ca. 2.5%-4.0% and with total EU market value of ca. €3 billion, remains dominated by the principle EU Member States of Germany and France with 6%-8% of the market. According to Vivaness,4 Germany, the largest EU market, has reported total sales exceeding €1 billion, and market share is expected to achieve 10% in the coming years.
Within the Asia Pacific market there is the slow emergence of Asian NOC brands but the market remains fragmented. The Chinese market, the biggest regional NOC market, has been dominated by foreign brands; some of which are EU-based and carry the labels of private standard.
However, mandatory Chinese animal testing requirements for all imported cosmetics,5 and that alternatives to animal testing are not accepted for imported products on the Chinese market, has slowed the growth of the Chinese NOC market. In addition, certain European NOC private labels6 have imposed self-regulatory requirements in their criteria so that finished products may not be supplied to third countries outside the EU where animal testing is a requirement. All this in combination with the complex regulatory requirements, the fact that certified-organic and/or natural ingredients, such as extracts, are imported, and the limitation in the technicalities of product development to ensure the absence of synthetic ingredients (more indicative of nature-inspired products) have also contributed to this slowing of the Chinese NOC market growth. Indeed, it is the case that China’s loss, associated with its animal testing policy, has presented a verifiable gain for Asian Pacific markets including Thailand, Singapore and Hong Kong.
After China, Japan represents the second biggest market followed by South Korea and Taiwan. Within ASEAN Member States, with a total population exceeding 600 million, reports have recently highlighted that the organic market is expected to achieve almost 10% growth in the organic cosmetics market by 2020 with particular emphasis being placed upon Thailand.2 Indeed, of the ASEAN countries over 50% of the market for the NOC sector in 2014 was accounted for by two: Thailand and Indonesia.
As part of the global personal care industry, the NOC sector remains to-date without an official regulatory definition for ‘natural’ or ‘organic’ in relation to cosmetics ingredients or finished products. The terms ‘natural’ or ‘organic’ are often associated with food; particularly organic for which there exist both national and territorial legislation for certification in accordance with a defined system for organic production. For example, in the EU this is Regulation (EC) No. 834/2007.7
However, an agricultural regulation cannot be applied to ‘natural’ or ‘organic’ finished cosmetic products but such agricultural regulations can assist to provide a regulatory framework reference for specific criteria requirements used by private NOC standards to define compliant ingredients/raw materials. For instance, concerning natural origin, and so a baseline definition for the term ‘natural’, conformity in terms of prohibition of GM (genetically modification) is a requirement, as part of the certification procedure, for compliance to many of NOC private standards; particularly with a natural certification level. For compliant ‘natural’ and certified-organic ingredients, GM is prohibited under organic standards by default (e.g. Article 9 of Regulation (EC) No. 834/2007). Yet, not all ingredients are available as certified-organic and/or may be non-food/feed products. Therefore, depending on the NOC private standard, the standard owner may choose to include criteria requirements for compliant NOC ingredients that cite specific national or territorial legislation, and/or articles therein, to cover, for example, non-organic NOC ingredients that are also food or feed substances (e.g. Regulation (EC) No. 1829/2009 and Regulation (EC) 1830/2003).
Despite the absence of a ‘natural’ or ‘organic’ definition, all cosmetic products, including those formulated with natural ingredients, must be safe and be in a position to demonstrate that safety when questioned in order to be placed on the market; as is the case in the EU for example. Consequently, all cosmetics (natural/ organic or not) must meet the fundamental compliance requirements according to the corresponding national or territorial cosmetics legislation for each country in which the respective product will be marketed.
Within the EU territory there is a single piece of harmonised cosmetics legislation, Regulation (EC) No. 1223/2009,8 which came into force on 11 July 2013; replacing the former 7th Amendment to Directive 76/768/EC. The EU Cosmetics Regulation describes a single definition of a cosmetic product within the scope of the regulation, as described in Article 2(1)(A), with an additional manual of guidance on the scope of Article 2(1)(A) provided for borderline categories of product. The accompanying annexes of Regulation (EC) No. 1223/2009 also outline those ingredients which are prohibited (Annex II), restricted (Annex III), together with positive lists for permitted colorants (Annex IV), preservatives (Annex V) and UV filters (Annex VI).
For the Asian Pacific region, regulations governing cosmetics can vary by territory or nation. For example, from those countries who have transposed the ASEAN Cosmetics Directive9 (or ACD is modelled upon the 6th Amendment of EU Directive 76/768/EC) into their respective local regulations (such as Indonesia, Vietnam, the Philippines, Malaysia and Singapore), to the non-ACD countries with national regulations such as South Korea10 (with two categories: Cosmetics, Functional Cosmetics and Quasi Drugs), Japan11 (with two categories: Cosmetics and Quasi Drugs), Taiwan12 (with two categories: Cosmetics and Medicated Cosmetics), and China5 (with the categories: Special including domestic and imported products and Non-Special separated into domestic and important products). Hong Kong is, by comparison, unique and differentiates itself in that there is no regulation for cosmetics within this special administrative region but Hong Kong customs require that the one of the cosmetic regulations of, for example, the EU, US or China are met.
At EU level, both ‘natural’ and ‘organic’ are claims under Article 20 of Regulation (EC) No. 1223/2009. In July 2013, the EU Commission released legislative document, Regulation (EC) No. 655/2013,13 relating to Article 20 (2) of Regulation (EC) No. 1223/2009 as a general criteria for all cosmetic product claims; however, neither ‘natural’ nor ‘organic’ were referenced to provide an official regulatory definition. A report by the EU Commission regarding the conformity of finished cosmetic product claims, as regulated by the criteria within Regulation (EC) No. 655/2013, is to be submitted to the European Parliament and the Council by 11 July 2016.
The absence of an official regulatory definition, both before and after the EU Cosmetics Regulation coming into force, has meant that the market became segmented. As such it also became clearly apparent that there was a need for boundaries between semi-natural or nature/bio-inspired cosmetic products and authentic or truly natural cosmetic products. The bio-inspired category covers the large market share of products since such products do not have to meet the standard set certified-natural cosmetics. Consequently, there is more flexibility and such bio-inspired products can often only contain a minimal content of raw materials from plants or other herbal active ingredients. Bio-inspired cosmetic products can be referred to via the term ‘greenwashed’.
Natural cosmetics, on the other hand, are those which are not bio-inspired but can, themselves, be broadly divided into those that are or are not certified. The EU (principally Germany and France) and the US have the highest share of truly natural cosmetic brands, in part due to the certification, which within the EU NOC market accounts for 68%14 of products being certified. The certification category includes all brands and product lines that comply with the specific criteria requirements of a given standard, as set by private certification body, association or organisation, in order to carry the corresponding label.
Currently, with many label choices equally means growing challenges for consumers as part of their decision making: they need to decipher and decide what a particular label means, and what its benefits are over another. It has been estimated that there exist over 40 private standards worldwide,2 the majority (greater than 25)2 of whom operate within the EU, whose contents are generally freely available via open accessibility to the public.
In the face of ‘greenwashing’, the proliferation and flourishing of certifiable, voluntary private standards, particularly in the EU, such as Natrue,5 exist to promote a regulatory definition for natural and organic cosmetics (finished products and ingredients) for the benefit of consumers and protection of the sector. Some of these private standards can also be used internationally for free movement and certifiable definitions of ‘natural’ or ‘organic’ products in the global market. A number of well-established EU private standards for NOCs, such as Natrue, already provide the internationally applicable use of their label.
Certification can be carried out either by the private standard owner themselves or by an independent third party approved by the private standard owner. While certification to a private standard presents an additional cost to the manufacturer, and often requires the presentation of the seal or label on the product packaging, its added value should not be undersold.
Critically, certification provides finished product differentiation for the manufacturer, and the added value to indicate to the consumer the reassurance of authenticity to verifiable requirements including certification level (natural or organic), definitions of which ingredients, production methods and process can and cannot be permitted, or specific product category requirements, as set by a private standard. From the consumer perspective the certification approach can aid to build trust and benefit transparency; and labels can therefore play an important role in the legitimacy of a NOC product.
In Asia, unlike the EU, and particularly Germany and France, there is reduced consumer awareness of NOCs and limited distribution of products. Consequently, it is becoming more evident within the AsiaPacific region that in the absence of an official regulatory definition for NOCs, and so by analogy with the situation concerning greenwashing in the EU, recent focus has been played upon the important role of certification and its function to abate the high level of consumer confusion within the Asian markets about NOC ingredients and products. Evermore so Asian brands are choosing to opt for the adoption of EU private standards to the reduction of mislabelling, and so promoting legitimate marketing through advertising claims for brands producing NOCs. However, the adoption rates remain lower than those of the EU countries, for example.
Nevertheless, products in Asia can be subject to various national legislation that provide certain stipulations associated with the term ‘organic’. In South Korea,10 the KFDA (Korea Food and Drug Administration) provides guidelines for the labelling and advertising of organic cosmetic products, which reflects the claims on the percentage of organic ingredients in the total product. For example, aside from the minimum requirements for compliance within the standard, the KFDA guidelines include reference to specific claims such as “at least 10% of organic ingredients in the total product”, and for “Organic” to be used in the product name also requires that “at least 95% of organic ingredients in the product excluding water and salts”.
Whereas in China there exists another national-based system for organic products via the Certification and Management for Organic Products (CNCA) operates.15 Here organic ingredients must be certified, and claims on the product must reference total amount of organic ingredients ≥95% in order to be labelled as an organic product. This claim varies from when the total amount of organic ingredients is between 70%-95% where products can only be labelled as a product manufactured by organic ingredients, or if less than 70% then the organic ingredients only can be labelled in the ingredient list of the product.
From the various private standards, located principally in Europe, it can be identified for the certified NOC market that a natural cosmetics prohibits such ingredients and processes as synthetic fragrances; irradiation of natural raw materials; silicone or mineral oil derivatives; petroleum or synthetically derived products (with some specified derogation for certain standards); genetically modified ingredients (GMOs). For NOCs certified as ‘organic’ it is generally established from the various private standards in the EU that in order to be certified as an ‘organic cosmetic’ ≥95% of the ingredients must be from controlled organic farming and/or wild collection according to a specified individual or set of organic standards or regulation(s).
For the most well-established private standards those ingredients referred to as ‘natural’ are chemically unmodified originating from animal, vegetable or mineral sources and equally take into account biotechnological methods, such as fermentation; with varied caveats for GM processing tools (enzymes/ microorganisms). Given that it is not the case that every possible functional ingredient (eg. an emulsifier) for use in natural cosmetics cosmetics can be made purely so as to be effective from unmodified ingredients, private standards will provide a defined framework for how derived/chemically-modified natural ingredients are to be evaluated. As part of a key, and necessary, means to maintaining consumer transparency, many private standards provide positive inclusion lists for accepted INCIs (The International Nomenclature of Cosmetic Ingredients). It remains the case that natural cosmetics contain listed pigments, minerals or preservatives; where the individual definitions, classification titles and requirements of which fall under the criteria of the respective standard. As for derived chemically modified natural ingredients, many private standards often list the INCIs permitted by the respective private standard for consumer transparency on positive lists. Treatment of water remains an issue between private standards who choose to opt for its inclusion it in a calculation of natural content, or exclusion due to an artificial inflation of the natural content by allowing water to be taken into account. Finally, dependent upon the standard, there can be additional specified requirements for the formulation of the finished product: guaranteed differentiation for chemically unmodified or modified ingredients within specific product categories; maximum and minimum percentages for classified ingredients content by certification level; specified percentage requirements of the total ingredients that must be organic.
Private standards for NOC product certification can also provide additional benefits, reflecting consumer priorities and concerns, via self-regulation of the permitted requirements for label usage. As an example, Natrue, provide the consumer with extra assurance and protection against ‘greenwashing’ by guaranteeing that at least 75% of all the individual products in a delimited series (identified either by the brand or the sub-brand) must be compliant with the Natrue standard.6
Natrue also promotes its ethical considerations via an extended animal testing ban for finished cosmetic products certified to the Natrue Standard, as regulated by Regulation (EC) No 1223/2009, to third countries outside the EU – meaning that products carrying the Natrue seal may not be supplied to a market if animal testing is required.6
Concerning certain criteria requirements as part of formulation, in Asia the KFDA10 requires ingredient compliance with the Guidelines for Labelling and Advertising Organic Cosmetic Products, including reference to raw materials such as nanomaterials, and processes such as irradiation, genetic engineering or treatments using chlorine or ethylene oxide chemistry.
It is the case that currently there is in development an International Standard Organisation (ISO) voluntary guideline for natural and organic cosmetic ingredients and products, ISO 16128.
The ISO guideline development has been a six year process by ISO/TC 217/WG4, initiated not by private standards but by the conventional cosmetics industry, with the hopeful aim of creating harmonised technical criteria to encourage innovation. A number of private standards, including Natrue, have joined the guideline development process as ‘liaison representatives.’16
The ISO 16128 guideline, which consists of two parts (ISO 16128-1: Definitions;17 ISO 16128-2: Criteria18 – both of which are required for real-terms use), is expected to be released in 2016 does not, however, provide guidance or criteria for when a finished cosmetic product can be considered ‘natural’ or ‘organic’. The ISO guidelines provide only information to the natural/organic ingredient content in a product based upon the ingredient definitions and corresponding criteria calculations.
Consequently, and particularly from the perspective of the major EU-based private standards, there is no need for more guidelines. Especially when certification to verifiable criteria requirements from welladopted and established criteria already exist, which provide stronger definitions of NOC finished products and their ingredients, and permit notification to the consumer for when a product can be considered ‘natural’ or ‘organic’ according to compliance with a respective standard’s classification of ingredients, certification level scheme and, in certain cases, the specific product category requirements of that standard. Indeed, clear differences between the technical criteria of existing private standards and those of the ISO guidelines exist; including, for example, the permitted use by ISO 16128 of GM plants for raw materials where GM is considered as natural in a given region, and the technical allowance for specified portions of defined functional ingredients to originate from petrochemical sources.
Consequently, the ISO guidelines are viewed by private certifiable standards, including Natrue, as fundamentally weaker and more obscure than existing criteria and do not work in the consumer interest of natural and organic cosmetic authenticity. Ultimately, consumers should always be given the option to be able to make a conscious and informed purchase decision based upon clear and transparent information, and so, in this aspect, a key challenge for present and for the future is to maintain and develop, not lose, consumer trust and confidence in NOC ingredients and finished products.
1 Cosmetics Europe, 2015
2 Organic Monitor, 2015
3 Kline group, 2015
9 http://aseancosmetics.org/default/ asean-cosmetics-directive
14 Cosmébio, 2015