Insights

Changing World: Clean Beauty

July 5, 2020

With the birth of our daughter, my wife began scrutinizing the products she was buying, aiming for “natural,” “organic,” and of course, “free of sulfates, parabens, and pthalates,” in order to limit the baby’s exposure to potentially harmful chemicals. That scrutiny progressed to products for the rest of the family. After all, if it’s better for baby, it must be better for the rest of us.

She has lots of company in this endeavor. For example, shampoo bottles now market themselves frequently by what ingredients are NOT included. Sephora, the largest retailer of high-end beauty products, now specializes in “clean beauty.” The movement to clean beauty is expected to continue its steady growth in the coming years (see chart.)

Sources: Statista, Somar

While there is no universal definition of “clean” or “natural” products, and the terms are not regulated, consumers are choosing more and more these products driven by:

  • Safety fears after backlash against chemicals and contamination from ingredients previously thought of as being safe (such as traces of asbestos in talc-based baby powder);
  •  Low trust in the oversight in cosmetic and personal care industry (the EU bans over 1300 ingredients while the FDA bans 11);
  • Virtue signalling on social media to be supportive of healthier, “cleaner” lifestyles

During the ongoing pandemic, market research firm NPD estimates sales of prestige cosmetics dropped 14% in the US, while sales of natural cosmetics rose 11%. Companies and entrepreneurs that can delight customers with transparent, safe and effective beauty and personal care products will continue to win over consumers and take market share. This opens up attractive business opportunities. For example, clean beauty brand Drunk Elephant was recently acquired by Japanese luxury brand Shiseido for $845m. This trend informs Somar’s investment decision in the Health and Beauty space.

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