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Suppliers’ Day 2013: Optimism amid shifting preferences

2:51 PM MDT | June 3, 2013 | —Vincent Valk

Hufer: Industry trending towards natural products.

Personal care chemical manufacturers remain optimistic about industry’s outlook despite weakness in Western Europe, attendees at New York Society of Cosmetic Chemists’ Suppliers’ Day, held recently at Edison, NJ, said. Attendees said the outlook has been buoyed by an improving economy, consumer spending, and growth in emerging markets. Some companies, however, have been feeling the effects of trading down among consumers, leading to lower demand for premium products, particularly in Europe.

“There is a shift from prestige brands down to private labels,” said Josef Koester, director/marketing and product management, personal care at BASF. “But the [private labels] are also trading up. The consumer is expecting more for less.”

Trading down “has caused some customers to look for cheaper materials and formulations,” said Denise Elias-Costrini, director/personal care and cleaning at Univar. Customers who trade down to cheaper materials are unlikely to go back even as the economy picks up, according to Costrini.

Some producers said they are well positioned to benefit from trading down. Vertellus’s products mostly go into mass-market or private-label brands, so trading down is a benefit for the company, said Brad Buehler, business director/personal care at Vertellus. Trading down can also manifest itself by shifting preferences to lower-cost consumer goods, such as using body spray instead of cologne, Buehler added.

Greater consumer attention to costs also manifests itself as a preference for multifunctional products. Consumers, especially in developed markets, increasingly want products that can provide multiple benefits to hair or skin, producers said. Such products can often command a high price, since one product with many functions is typically cheaper than the several products it can replace. For example, customers are asking for emulsifiers that have sensory attributes, such as pleasant aromas, in addition to emuslification benefits, said Anna Howe, applied technology manager/personal care at Evonik.

Consumers are also interested in products with antiaging properties. Antiaging properties are particularly important for skin care products but are increasingly seen as desirable in other personal care products as well. Croda and Dow Corning both emphasized products that can repair hair damage, which goes along with aging, at Suppliers’ Day. Age-defying ingredients are becoming more important for hair care formulators as consumers begin to consider hair damage as part of the aging process, said Feifei Lin, global hair care marketing manager at Dow Corning.

Consumer preferences are also driving growth for naturally sourced and sun-care products. The development of more natural and milder products is “clearly the direction the industry is taking, such as things that come form flora and fauna,” said Oliver Huffer, v.p./home and personal care, Novecare at Solvay. Milder products can include low-surfactant hair-conditioning formulations, Huffer added. Meanwhile, “sun care in general is growing at twice the level of the overall personal-care market,” said David Sutton, product marketing manager at Dow Chemical. “People are more conscious of the damage caused by [ultraviolet] exposure. They’re more aware of skin cancer risks.”

In terms of raw material prices, producers say the outlook is stable. Propylene prices jumped earlier this year, but such increases are normal at the start of the year and have stabilized by now, according to Sutton. Natural ingredients and specialty surfactants also tend to be expensive, noted Elias-Costrini. Nevertheless, producers agreed that the overall raw material environment is stable.

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