If ever there were a time to be in the nontoxic personal care business it’s now, with ”natural” cosmetics representing the fastest growing segment of the $50 billion cosmetics industry. But in the absence of strict government regulations, which companies truly fit the bill?
Just call them the Champions.
The Campaign for Safe Cosmetics has released its new report, “Market Shift: The Story of the Compact for Safe Cosmetics,” announcing the 321 companies that earned the Champion superlative by meeting all Compact for Safe Cosmetics requirements, including avoiding ingredients prohibited in other countries; disclosing all ingredients, even those that make up “fragrance;” and submitting products to the Environmental Working Group’s Skin Deep cosmetics database.
“The 321 companies in the Champion category are proving it's possible to be fully transparent about the ingredients in their products. That's huge, and it's where the whole industry needs to go,” said Stacy Malkan, founder of the Campaign for Safe Cosmetics and co-author of the report.
From its inception in 2004 through its last days in 2011, more than 1,500 companies signed the Compact. In addition to the 321 companies that met all requirements, 111 companies, or “Innovators,” made significant progress. Though the campaign officially closed the Compact in August, it will continue its efforts through the new Safe Cosmetics Business Network, which will promote nontoxic cosmetics innovation and growth by connecting manufacturers, consumers, and policymakers in the industry.
“Companies can use safer ingredients and disclose all ingredients and still do well for themselves—even in these difficult economic times,” said Mia Davis, organizing director of the Campaign for Safe Cosmetics. “This is a smart move because consumers are increasingly concerned about their health and the safety of product ingredients.”
Natural cosmetics: a recession-proof industry
Nutrition Business Journal estimates that US consumer sales of natural and organic personal care reached $8.2 billion in 2010, a 6 percent increase over 2009, with similar positive results expected for 2011. More good news for the Compact’s Champions: Consumer concern about unsafe ingredients has made natural and organic cosmetics the fastest growing sector of the personal care market, and the “green” personal care sales could soon outperform conventional cosmetics sales, according to market research firm Mintel.
“Consumers are demanding better alternatives, which impacts what companies offer,” said Rebecca S. Gournay, co-founder of New Jersey-based Champion company SEED Body Care. “We have done hundreds of in-store demos, and by the questions that people ask you can see that they are more educated about ingredients. At first people were asking if the products had parabens; now they are asking about synthetic fragrances.”
As more manufacturers give these savvy shoppers what they want, suppliers, too, are seeing the perks of entering the natural segment.
“One of the most gratifying things is suppliers realizing that it’s good business to supply safe ingredients,” said Larry Weiss, MD, founder of San Francisco-based soap and hand sanitizer manufacturer CleanWell. “We encourage other companies to do well by doing good. It is an important thing, but it’s also a viable, sustainable business model,” said Weiss.
In just three years in business, Gournay also has noticed an increase in availability of pure, plant-based ingredients, as more manufacturers incorporate them in their products. “Suppliers are going where the growth is. You are seeing more plant-based ingredients available that focus on efficacy and science,” she said.
Beyond consumer and manufacturer demand, other aspects of the natural cosmetics business make it ripe for growth, according to Davis. “Many of these companies are small- and medium-sized independent businesses, which are great job-creators,” she said.
Cosmetics industry self-regulation remains key
With the Safe Cosmetics Act of 2011 still in limbo and other FDA ingredient regulations loose, consumer and manufacturer demand for safe ingredients is critical to change, as are retailers’ independent ingredient criteria (think Whole Foods’ premium standard and organic labeling requirements) and strong industry-wide partnerships.
“The Compact is a great example of what's possible when we can build meaningful partnerships between businesses and non-profit health groups. Through the Compact, we've built a community of collaboration, which we will continue to build upon as we continue our work to shift the whole cosmetics industry toward safer products,” said Malkan. She notes that the Compact’s bi-annual meetings held at the Natural Products Expos have been key to organized collaboration necessary for industry-wide change.
While the US has banned very few ingredients, demand from consumers and small- to medium-sized natural companies has helped improve ingredient safety internally. With the increasing focus on ingredient transparency, suppliers can no longer keep consumers and manufacturers “in the dark,” said Davis.
“Consumer awareness and their ‘vote-with-their-dollar’ commitment to pure botanically based products versus synthetic, chemical ingredients will definitely affect supply chains in this industry,” said Nova Covington, CEO of mineral sun care manufacturer Goddess Garden.
But the most direct effect on ingredient safety comes from manufacturers increasing their safety-testing efforts and communication with suppliers, according to Weiss. Since launching CleanWell five years ago, he has noticed a significant shift in supply-chain relationships and ingredient quality because of manufacturers raising their standards. Though the regulatory process isn’t irrelevant, it is incredibly slow, he points out.
“Suppliers would offer all sorts of materials and they didn’t even understand when we said we would look deeply into every ingredient. Since 2007, we have seen raw material suppliers grow their expertise, not only supply the ingredients,” he said. “We, the small businesses, are the ones holding these folks accountable.
Eliminating international double ‘standards’?
As of 2003, the European Union had banned 1,100 ingredients, while the United States only 11. This clear “double standard” was one reason behind the launch of the Campaign for Safe Cosmetics.
Recent research continues to shed light on the issue. Johnson & Johnson finally announced it would reformulate its baby products after the Campaign for Safe Cosmetics revealed that products in the United States and Canada contained 1,4-dioxane and formaldehyde, while the “same” products in countries that had banned these ingredients did not. After this information went public, Chinese retailers immediately pulled products from shelves and its government publicly reprimanded the personal care powerhouse; in the US, the Campaign for Safe Cosmetics was the one putting on the pressure.
The Campaign acted on these clear discrepancies back in 2007 with the Compact's launch. A primary requirement being that all companies meet the criteria of the European Union’s Cosmetics Directive, widely considered the current global “gold standard” of cosmetics safety regulation.
New regulatory organic efforts, too, are aimed at creating international consistency for the personal care industry. NSF International recently announced it will allow international organic ingredients under the NSF Made with Organic Ingredients label, due to the “increasing interest in global harmonization,” according to an NSF release. The organization also is working with NaTrue, a European third-party certifier, on its in-progress natural certification.
But in order to develop international consistency, companies in the US will first need to recognize the common goal, and this starts with the Compact’s Champions, said Kim Grusta,s owner of Good For You Girls, LLC. “If all these companies continue to spread the message, consumers will be sure to see its consistency.”
