Euromonitor: ”We have not reached peak organic yet”
The British corporation was founded more than 50 years ago, helping their clients to make decisions based on data and facts rather than intuition and gut feeling.
— We are a provider of strategic data, says Povilas Sugintas, Senior Consultant Beauty & Fashion. Increasingly, we are also offering tactical data because the decision cycles are getting shorter and there’s no such thing as a long term anymore, so we are responding to that.
Here, at Natural Beauty Show, you took the stage for a seminar. What did you talk about?
— The title of my presentation was Beauty industry in ugly economic times. What I tried to explore is that we all know that things have not been exactly great economically speaking, for the last couple of years, with high inflation. I was interested in how that affects beauty and specifically sustainable beauty products that are organic. It’s a challenge but also an opportunity.
How can it become an opportunity to work more with organic and natural beauty?
— One of the important takeaways is that if we look at the data, the demand for organic and natural products is still going up. Even in these challenging economic times, you cannot argue that consumers — because of education, changing values, world views, or a lot of other things — still have a growing demand. When the demand is increasing, so does the competition. That’s the easy part. The tough part is, how do you make it work financially? There are a lot of participants in here (at the fair, Ed’s note) that I cannot say with 100% certainty are going to be here in the next year and the following. It’s tough making a business out of a small organic brand. The Nordics is probably the region where you have the highest chance of success, because of the support and sometimes verging of this fanatical belief that you can make it. Also, equally important, is that some people just won’t go for a standard beauty product produced by the giants with sometimes questionable decisions when it comes to ingredients, sourcing, and treating their suppliers. So, this is really a good area to try things out.
Do you see the trend with natural and organic beauty will continue to grow?
— Yes. Whenever we see a trend, you can draw a graph which is a line that is growing for five years straight. As a researcher or any reasonable being, you just think, can this go on indefinitely? The obvious answer is no. But another question you can ask yourself is, ’OK, is this the ceiling? Have we reached peak organic?’ My answer would be no, definitely not — just because of the supply. For many years now, even just a simple thing as availability would be a problem. We can still see from the data that we collect when we do consumer surveys that a lot of people say, that they’d love to buy it but just cannot find the products. One of the obvious solutions to that is internet — it’s all solved in there. You still have to build a brand, you need to work on awareness and availability and all that. But that’s one of the solutions. But can it continue to grow? My answer is definitely yes, for at least a few more years. We have not reached peak organic yet, of that I’m sure.
Have you also analysed the reason behind the growth?
— It’s impossible to narrow it down to just one factor. Some of it is based on values, those fundamental values, especially in the younger generation who are so concerned about the climate crisis. So, it just follows that the products you consume on a daily basis have to somehow reflect that. What cannot continue is that you buy something that is damaging forests in another area of the globe, such as deforestation in Asia. Then it’s being shipped here across the globe using a lot of transporting and is being sold in a package that you are going to use once, carry for 10 minutes from the shop to your home, and then it’s in the landfill for many centuries on. All this just makes zero sense when you think of it.
— Then you just think that there’s no way we’re going to keep doing it that way. Based on those questions and the problems come the answers to it. All the companies in here are trying to find out the answer to it one decision at a time. There’s going to be some trials and errors and we are getting there gradually but I think the movement is irreversible. I just cannot imagine one day people waking up saying, ’let’s go back to the old days’. What also gives me confidence in these findings is that just now we are in a stagnation or recession in the Euro zone and we see that this does not stop or scare consumers, that they cannot afford this anymore. That gives me hope and certainty that this is going to just continue.
Do you have any other takeaways from your session to share?
— What’s really hard to put into numbers and quantify is digitisation. We’ve been hearing about it for so long that we kind of got tired of it or desensitised. One of the companies that I covered very briefly today was Oddity, a tech company in the beauty industry. I’m sure that a lot of beauty companies would not even think about it as their direct competitor. But we are talking about a company with just two brands, skyrocketing sales and the way they do business is just vastly different from the way it was done 10 years ago. They are tracking people and trends on social media, identifying consumer profiles and their needs and are then coming up with different customisable products, a completely different distribution mode, not using any kind of influencers, but just going directly to consumers. They just rethought the whole approach. It’s a young company, so there is no way of knowing but at least for these months, it seems to be working. This is just a juggernaut in the beauty industry. So digitisation is going to continue, just as the sustainability — that process is also irreversible.
Peer Accelerator Circle gathers entrepreneurs who ”want to succeed together”
During Natural Beauty Show, entrepreneurs Satu Mäkinen (pictured left) and Andrea Endres (right) launched Peer Accelerator Circle for brand owners and entrepreneurs in the field.
— It’s for like-minded natural cosmetic entrepreneurs and we want to succeed together, Endres explains. As the founder of the Nordic and European Natural Beauty Award, Satu has met a lot of small brands with a lot of passion, but we saw that they feel pretty alone. It’s a very big business landscape and very hard competition, so we were saying that let’s get together and mastermind, let’s meet every month for brainstorming. It’s not that we have the answers, but we can bring people in, who can give the answers, like a distributor that can explain the processes, and by that help them to navigate the business landscape of natural cosmetics. It’s international and an online membership for natural cosmetic entrepreneurs.
— We’ve had two pilot rounds this year with a handful of people to get feedback and testing. People like it, getting together and get out of their box. In the beginning of next year, we will have bigger networking for brands, distributors, and ingredient suppliers.
You’ve also just launched a survey called Green Beauty Consumer Insights: Uncovering Desires and Behaviour.
— Yes, it’s created by me, Satu, and Eco Living Scandinavia. We just thought it would be fun to get more of an insight and also share the results with the brands that are here.
What have you asked about?
— We had 16 questions, everything from skin issues to ingredients; ’Do you read ingredients?’ ’What about the scents, is fragrance important?’ ’Do you prefer natural or synthetic ones?’ For the last two questions, they could leave their own input, in their own words, on why they are choosing organic skincare.
And what did they say?
— ’I don’t want to have synthetic chemicals on a natural body.’ They also mentioned hormones, the environment, transparency, ingredients, and that it’s not tested on animals, Endres concludes.
Ecocert presents Sustainable Wellbeing Center
Ecocert group is present in over 130 countries and has been supporting numerous stakeholders in the implementation and promotion of sustainable practices through certification, consulting and training, for over 30 years. Now, the company presents a new label, called Sustainable Wellbeing Center, in response to increasingly demanding consumers who are keen to consume more responsibly. It includes three steps and for each step, the appliant needs to commit more and more to three main pillars: reduce the environmental footprint, offer and use certified natural or organic products such as cosmetics, textiles, cleaning products, and snacks, and implement the social criteria for the workers to ensure a healthy workplace.
— It’s a really progressive label and a new standard where the objective is to promote the approaches and the effort made by spa institutes, salons and hair salons, barber shops, and fitness centres in the commitment towards environmental and social practices, Pauline Raffaitin (pictured left), Home & Personal Care Business Unit Manager at Ecocert, explains. This is more or less a mix between social responsibility and also a product-based standard where there is a strict criteria for the reduction of environmental footprint.
What’s the difference compared to your regular certification, Cosmos Ecocert?
— This is more holistic and dedicated to sustainable wellbeing centres while Cosmos is related to brands and cosmetic products. Here, we are more addressing a place, where the people wants to commit themselves to better and more sustainable practices. They need to tackle all the issues that are relevant for such a centre by selecting the right products, changing the way they use water, the temperature in the rooms, and the social aspects.
— We have many companies who are contacting us and they say that they are doing things but don’t know how to structure it. So, this is also a tool of an improvement process for companies or centres that would like to progress and how to communicate it, given that there is always the risk of greenwashing.
And how has the reception been?
— Good. Since we are based in France, we’ve had more feedback and already have two clients there, but what is interesting is that the companies and the centres really want to go deep and assess everything. So, it can take a little time to do it in a proper way, but the objective is to be really accessible. Also, we ask the salon or centre to, for instance, have a natural or ecological detergent for when they clean all their things. They will of course also have partnerships with cosmetic brands, for when they make a massage or so and these products — the salon’s suppliers — are also required to be certified. Or, if they’re offering the customer food or coffee, they need to select brands that are certified. The objective is to have a holistic approach to sustainability.
When the brands get more and more sustainable, do you also have to become stricter and increase the level that they need to commit to?
— For sure. As an example, for the Cosmos Standard for cosmetics, we just launched the new version of the standard, Cosmos V4. Each time, we think about increasing the level of expectation and requirements. One of the criteria where we are strengthening the requirements is about palm oil derivatives. In the previous version, we had some ingredients for which we were asking for sustainable palm oil derivatives. And now, we are asking that all the derivatives from palm must be from sustainable sources, without deforestation. It’s a step-by-step process to pull everyone in the right direction.
— We are also always following regulations and innovations, since there are new ingredients coming to the market. We need to assess if they could be suitable and if they are sustainable or not.
And the EU believes that there are too many certifications, so they will also become stricter.
— Yes, and that’s a good thing for us because having a stronger framework for green claims is key in order to fight greenwashing, says Raffaitin. Even if there are reliable practices, we still see many false labels or self-declarations. Implementing such a regulation, to ask the company to substantiate any environmental claim, will be key for us and we are really in favour of such regulation. It’s an important step to be sure that the consumer will have a good guarantee of the product. It’s really difficult when you are a consumer and not aware of this. Of, even if you are aware, it’s quite misleading sometimes.
What are the hot topics when you speak to brands about ingredients and sustainability?
— Right now, they are also suffering from the crisis and inflation. So it’s quite difficult for them to project themselves on investment — even if they know that the sustainability way will be mandatory. They are cautious about what they can do because they see that the consumer is also selecting the product depending on the price. Right now, there is also fear about the future from companies but still, I think that sustainability will continue to develop. There is no other option.
And what do you predict will be the next big thing? What will we talk about?
— What I see is that consumers are really conscious about how they consume and select the products, so brands will be required to have very clear messages on what they promote. Not only on claims but also a holistic approach with how they can assess all the aspects that are important for the consumer, including social and gender aspects but also environmental, to have a consistent approach.
Is Scandinavia an important market for you?
— Yes, here we have more than 1,000 certified cosmetic products. I would say it’s a really stable market — the awareness about us from the consumer has been here for many years. It’s really in the culture of the countries. That’s why we think it’s an important market — and also a driving market for the rest of Europe.
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