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Read this article and more in the September 2023 digital magazine
Editor’s note: In the spirit of a major theme in our September 2023 issue, “back to the basics,” we present the following insights and advice from consultant and industry veteran Kevin Gallagher. They are offered for your consideration and further investigation.
A question I’m frequently asked by clients is what trends I’ve seen over the course of my 40+ years of experience in personal care (see related sidebar: Getting Started – Be Willing to Learn and Get Involved). Consumer and ingredient companies are also interested in whether these trends are still impactful today – and what they might say about future directions for beauty and personal care. There are, in fact, important long-term trends or mega-trends that speak to today’s market and future directions. One example is sustainability; another is reliance on the ingredient supplier.
This article examines the evolution of these and related mega-trends. It explores how they have shaped the market, the industry and product development, and gives product developers advice through the lens of each trend, including tips, traps and lessons I’ve learned along the way.
Sustainability
Sustainability is an important mega-trend. It has become so critical that it now sits alongside performance as a key element in the ingredient selection process. As with all trends, if we can understand the drivers, we can better understand not just the trend, but also its future direction. Considering the drivers also helps to differentiate what might be a fad from an important trend. So a first tip is: to understand the future direction of a trend, understand its drivers.
There are numerous aspects to sustainability and their importance will vary depending on the user and their priorities. One major driver is that ingredient choices are no longer about performance alone, but the larger impact of using the ingredient. This goes beyond the generalized ideas of “green” and “natural” to a more specific and scientific understanding of the ingredient’s impacts.
So how might we approach sustainability from an ingredient standpoint? We can read the news and talk to colleagues, but there is also a published scientific approach: The Twelve Principles of Green Chemistry by Anastas and Warner (2000). These have become widely accepted and are available on the American Chemical Society website.1 A number of personal care ingredient companies use these principles to help guide their new product development efforts. So another tip would be: know and understand the 12 Principles of Green Chemistry.
Interestingly, the industry has seen shifts in the emphasis or prioritization of these principles and those shifts have led new market directions. For example, not long ago, just having a naturally sourced ingredient would have been enough, but today there is an emphasis on carbon footprint and other aspects.
But how does one prioritize these principles? While ideally we could address every aspect of sustainability, this may not be a reflection of what is possible with today’s technology. So to answer this question, one very practical approach is to understand what sustainability and social issues are important to customers and stakeholders – which goes back to the drivers.
Identifying Drivers and Priorities
Fortunately, there is an established process to help a company, or even an industry, understand the immediate drivers and concerns of customers and stakeholders. This process is known as a materiality assessment. Some readers may already have been a part of such an assessment or discussed how the results can help a company establish priorities. This process can be of enormous value to understanding the risks and opportunities for a company.
Its larger use dates back to 2015, when the American Cleaning Institute (ACI) conducted a materiality assessment for the cleaning industry. This was one of the first times the tool had been used on an industry-wide basis and the ACI was rightfully recognized for its foresight and achievement.2
Briefly, issues of concern to stakeholders are compared with issues of concern to the company/industry, which can be plotted on a graph from low (lower left) to high (upper right) concern. This aggregates issues across the value chain to highlight those that both groups have in common.
Clearly, the topics appearing in the upper right-hand quadrant of the resulting graph are the most important to both customers and stakeholders. This can provide important guidance to companies for making short to mid-term plans for sustainability and other social concerns. For the cleaning industry in 2015, these included: materials, ecological impacts, disclosures and transparency, climate change (GHGs) and workplace health and safety.
Many consumer and ingredient companies have since published these assessments as part of their annual sustainability reports. So, another tip is: become familiar with materiality assessments and sustainability reports.
Understanding Consumer Perception
It’s interesting to consider how besides priorities, consumer perceptions have impacted product development. In 1990, controversy brewed when customers in California were claiming that our company’s (Croda’s) protein ingredients and derivatives such as collagen and keratin for beauty care were not “natural.” What on earth could be more natural than a cow? we wondered. But we were missing the point.
We were using our scientific acumen to answer the question of what is natural but after some investigation, it became clear that our customers had changed the definition of what natural meant. No longer was it important that these materials were not synthesized and that they were extracted from byproducts of the foods industry. What had become important was that these ingredients were (undesirably) animal derived.
The new definition of natural as meaning non-animal derived was an “a-ha!” moment. The company had to abandon its scientific explanation and adopt a definition that was determined by perception and pragmatism. This meant having to adapt quickly to this interpretation that questioned our entire range of proteins and derivatives (dozens of ingredients).
In order to rise to the challenge and the difficult decisions it would entail, it was necessary to understand the extent of this change. The company therefore conducted a simple, three-question survey with customers, and the results determined we had to move – and quickly. As a solution, a range of vegetable proteins was developed, with much time devoted to additional development and testing to prove the ingredients performed.
The tip here is: understand that important trends may not be logical or scientific. Many times, the trends “are what they are,” and they’re not the result of logic and science. They instead come from human emotion and societal pressures. A related trap to avoid, then, is focusing solely on the scientific and technical issues. In my experience, I have seen and continue to see this limited view in scientists and engineers especially. The situation with naturals is a good example, which started with the science until it became clear that a broader view was necessary – even redefining what had already been accepted.
There is an established process to help a company, or even an industry, understand the immediate drivers and concerns of customers and stakeholders. This process is known as a materiality assessment."
Taking a Global View
More recently, the sustainability mega-trend has evolved further, again due in part to a shift in consumer priorities. In 1990, simply being derived from a vegetable source was acceptable. Today, there are broader criteria – especially driven by concerns over deforestation to expand palm plantations to produce palm oil (mostly for food) and the related palm kernel oil (PKO) used in personal care. This has led the emergence of different types of certifications for sustainability; although as many readers know, there is no easy answer for a product that has such a complex supply chain.
One certification is offered by the Roundtable for Sustainable Palm Oil (RSPO),3 which has developed a mass balance system that validates that a portion of sustainably grown palm is present in the product. This may be a temporary solution until a supply chain can be put into place to allow for segregated palm kernel oil that is sourced 100% through sustainable methods.
Another challenge with palm kernel oil is that so many derivatives and ingredients are based on the C12 and C14 fractions from PKO, especially some of the most widely used surfactants. Some of these same starting materials can be derived from coconut oil instead, but this produces about half as much per acre as palm kernel oil does. Furthermore, a complete replacement with coconut oil starting materials would make the deforestation problem worse. The tip here is: think deeply about the sustainability of the entire supply chain.
Also, because the requirements for what is acceptable can change over time, be flexible in your thinking and be prepared to change your own acceptability criteria accordingly. It’s likely that many readers subscribe to the view, “it’s only a matter of time before XYZ is unacceptable.” This mental threshold may be easier to accept than changing criteria either due to social pressure; disagreements between scientists and engineers over definitions; or contradictions over what is reasonable to achieve right now.
While the ingredient/product side of the beauty industry has its sustainability challenges, the packaging side is facing arguably bigger issues, many of which do not have immediate universal solutions. Consider single use plastic packaging. The good news about these challenges is they create opportunities for innovation. This highlights another tip: if you identify the problem, you’ve taken the first step in identifying an opportunity for innovation.
Social Pressures Drive Regulation, Reformulation
In view of today’s broader criteria for sustainability, the industry has shifted toward another trend: renewable resources. In the same way that companies reformulated to omit animal-derived products in 1990, many companies today are omitting petroleum-derived ingredients not only because they are perceived to be less safe, but also because petroleum is not renewable. Another example is silicon, which is not considered to be “renewable”; although I don’t believe the world will run out of silicon anytime soon, since it’s one of the most abundant elements in the earth’s crust.
While this movement may not make sense in all cases, if we ignore the trend, we fall into the trap of focusing solely on the scientific and technical issues. It’s much like the natural vs. animal-derived situation. The results are also remarkably the same: wide and accelerating reformulation. And these kinds of societal pressures are not going to go away.
In the mid-1970s when I was an R&D lab technician, one of the driving forces that created my position was the need to reformulate to remove aerosols that were dependent on chlorofluorocarbon propellants. All aerosol products were instead to be reformulated using volatile hydrocarbons. Yes, really – we were essentially going to turn every aerosol-delivered product into a propane- or butane-containing flammable. It may not have made scientific sense but societal pressure resulted in government regulations that deemed this response was preferable to chlorofluorocarbon propellants potentially depleting the ozone layer.
Similar occurrences are too numerous to list here but one other example is the delisting of what were certified colors. Companies responded by reformulating to accommodate “positive lists” by countries that restricted ingredients based on arbitrary lists. Japan had such regulations in the 1980s, which were recently changed; today, the challenge is with China.
I doubt that anyone at the Cosmetic, Toiletries and Fragrance Association (CTFA – now the Personal Care Products Council or PCPC) ever would have thought that the International Nomenclature Cosmetic Ingredient (INCI) names would be used for the purpose of regulatory acceptance. Or that China would choose one edition of the INCI dictionary, as it has, for the list of what ingredients were acceptable. To avoid this trap, don’t expect logic alone to apply.
Acknowledging the Fear Factor
Where do the social pressures come from that lead to regulations and restrictions – including those imposed by consumer brands and retailers? Most often, from fear. These fears can be legitimate concerns driven by science, which generally are easier for the industry to accept, whereas unreasoned fears such as technophobia and chemophobia can be more difficult to acknowledge. Still, as another tip: we must understand these phobias since they are such important drivers.
In his book, “The Science of Fear,” Daniel Gardner interviewed psychologists and social scientists to gain insight about what drives human fear.4 One conclusion is that we have used fear and avoided fear throughout history as a survival mechanism. We humans are story oriented, so there is a part deep in our “animal brain” that uses stories about bad things as a first step to avoiding them and surviving.
Gardner deals with all kinds of fears; for example, highlighting how, after the events of 9/11, thousands more people, driven by the fear of flying, took to the road and died in automobile accidents. He makes this point because our fears operate on a primal level. They don’t always make us safer and they can expose us to greater dangers.
He also makes specific points about chemophobia and compares “caveman toxicology” – i.e., if it’s “bad,” avoid in any quantity, with “scientific toxicology” – i.e., that the potential for harm depends on the dose and exposure. For example, as most readers will understand, many dangerous compounds such as polycyclic aromatic hydrocarbons (PAHs), acrylamide, ochratoxin A and pesticide residues have been identified in coffee but they’re present at such low levels that they are unlikely to harm us.
So here, the tip is: understand fear as the driver of societal pressure. A related tip might be: help explain scientific toxicology to anyone who may be unfamiliar with it.
Seeing Opportunities for Innovation
Where there is social pressure, there will be change – and the sooner we recognize these pressures, the sooner we can respond. Phrased differently, a tip would be: where there are societal pressures, there is opportunity for innovation. This doesn’t mean we need to abandon the chemistry but we may need to either modify how we use ingredients or think of different approaches to the desired function.
A number of approaches and ingredients are currently responding to societal pressures. These include: for petrochemicals, a new ethylene oxide technology derived from ethanol; silicone alternatives; for preservation systems, alternative hurdle technologies; bio-derived surfactants; biochemistries as opposed to chemistries for the creation of rhamnolipids and sophorolipids, etc.
In the ethylene oxide case, I was part of a team at Croda that decided to invest in building a plant in North America to produce ethylene oxide from bioderived ethanol, rather than producing ethylene from petrochemicals. This has enabled the manufacture of nonionic surfactants such as polysorbate from 100% renewable sources. Since ethoxylates are the most functional and cost effective nonionics, rather than abandon the chemistry, the company chose to develop a technology that would allow these important ingredients to be made from a renewable resource; in this case, ethanol derived from the fermentation of corn.
For silicones, the industry has developed and commercialized many emollients that can be used in their place in formulations. This has led to a variety of approaches including the use of esters, typically from fatty acids derived from agricultural vegetable sources; one industry leader using esters is Inolex. Another approach to creating emollients is using renewable starting materials such as forestry side streams from the paper industry. In this case, P2 Science has created emollients with aromatic groups using ether chemistry. These groups also can contribute fragrance fixative properties to the emollients.
In terms of preservation, concerns over biocide materials in personal care products have led to different approaches as well. In this case, inspiration came from the foods industry and so-called hurdle technologies, as described by Kabara and Orth.5 The foods industry shares the need to preserve products but adding biocides to food is not the preferred approach. Instead, food chemists use ingredients to help create hurdles to microbial growth. Inolex, again, has used this approach to develop a range of multifunctional ingredients that can be used to make personal care products self-preserving.
Yet another approach the industry is taking to respond to social pressures is using a completely different process for creating ingredients: biochemistry. Biosynthesis has been made possible through advances in fermentation; i.e., fermenting natural products such as sugars using either yeast or bacteria. While fermentation has faced challenges during scale-up, these are being overcome, enabling the introduction of a new generation of bioderived surfactants; examples include the commercialization of sophorolipid surfactants by Locus Performance Ingredients and rhamnolipid surfactants by Evonik. These ingredients are now being used commercially in consumer products. And since they are made through fermentation, they use much less water, land and resources than even conventional agriculture.
Taken together, these approaches to address societal pressure culminate in another tip: innovation can include novel chemistry, new processes and technologies, the supply chain and even completely new approaches.
Where there is social pressure, there will be change – and the sooner we recognize these pressures, the sooner we can respond."
Leaning on Ingredient Suppliers
Sustainability aside, another important mega-trend that has continued over the last 40 years is an increasing reliance on ingredient suppliers. Consumer goods manufacturers are among the most successful in the world at building brands that resonate and create emotional connections with consumers. This brand equity is the largest part of a company’s value – far greater than its physical assets.
The R&D departments at these companies have worked alongside marketing teams to create products consumers love. Over the decades, however, increased demand and pressures have focused manufacturers on the final formulations and how they fit into a brand’s vision and value – limiting their bandwidth to address ingredient technologies and regulations. This has increased companies’ reliance on ingredient suppliers not only for improved ingredient performance – perhaps with better natural credentials – but also for ingredient-related technical support.
Adding to the focus on brand creation are the challenges of merchandizing and distribution in a highly dynamic environment where consumers are more likely to buy products online rather than through brick-and-mortar stores. This brings a complicated set of challenges in channel-to-market decisions.
All of these demands encourage consumer companies to focus on their strengths and rely on others for a wide variety of support; whether it is vendors, outsourcing or even “back laboratories.” The increased reliance on suppliers, as well as the growth in contract manufacturing, come from the same driver: the need to focus on business-critical activity by beauty brands.
In 2016, I moderated a session at the PCPC annual meeting on ingredient supplier-consumer brand relationships. During this session, Rob Edmonds, president of Kolmar at that time, made this remark: “We are now at the stage where the flow of the paperwork has become more important than the flow of the actual product.” He gave examples of how the demands of regulatory, GMP and quality systems have created new kinds of challenge for manufacturers, who must then rely on their ingredient suppliers for support.
For example, during my career, I fortunately played a role in commercializing dozens of new personal care ingredients. As they were developed, significant investments were committed to measuring ingredient performance – and whether this performance would translate to measurements in the final formulations. One obvious result was receiving requests from a number of consumer brand companies to help them establish both objective and subjective measures of formulation performance. This represented a massive shift to rely more heavily on ingredient suppliers than from earlier decades. Fragrance suppliers have shared with me that they experienced the same mega-trend.
So it’s not just about innovative ingredients and all the regulatory and technical work needed to support them. The role of the ingredient supplier has grown to become an important partner in improving performance with new ingredients and then proving that performance is present in the final formulations. This underscores another important tip: be customer focused.
I’ve been asked many times what I think represents a “best practice” between ingredient suppliers and consumer brand companies. It’s the same answer as for employees and management: feedback is the key. And whether it’s positive or negative, acting on feedback produces superior results (that’s another tip). Encouraging consumer brand customers to share what they like and don’t like, just as a conscientious employee would ask a supervisor, leads to positive outcomes.
Understanding the Human Element
One would be remiss to discuss mega-trends, as well as tips and traps, without coming back to the human element. In today’s world, we don’t operate as individuals. We operate as part of large and sometimes complex teams and interrelationships with suppliers and customers. The above comment about feedback between customers and suppliers is perhaps a good introduction – but what an organization can do with this feedback is ultimately even more important.
Peter Drucker, the business thinker and author, once wrote, “Culture eats strategy for breakfast.”6 I’ve learned first-hand how the positive and productive culture of an organization can lead to success. This is not only my observation, of course. Many studies have shown a high correlation between a positive and productive culture and business performance. The tricky part is: sometimes the same aspects that make your culture strong can lead to some blind spots.
Anyone who has taken or administered a Meyers-Briggs or similar personality evaluation knows that we are not all the same. We think, feel and communicate differently, and we need to understand who we are and how we prefer to communicate. This will help us to understand the personality types around us and how we can best communicate with them.
These differences can create challenges on both a personal and organizational level. Much self-selection within organizations occurs, so it’s not unusual to find a company or department composed of only one or two personality types. They get along and are very efficient; but they only see what they see. This can result in terrific achievements – but are these organizations flexible to allow contributions by other personality types? These issues are reflected in the next tip: understand the organization’s culture and work to improve it.
Seeing from Different Perspectives
Many of the lessons I’ve learned have come about because I got an issue wrong first or misunderstood it. Fortunately, the longevity of my career has given me the chance to become part of the solution. Often, the ability to see issues better is the result of having seen them from several different perspectives. As such, another tip is to take different positions and work in different departments to develop a rich “mental map” of both the company and the industry.
Also, unlike conventional maps, the industry changes, so we must be flexible in our understanding and continue to learn. And while learning is important, it is even more challenging to unlearn the things we thought we knew.
We may become more efficient over time with our decision-making because we know the underlying assumptions and how they impact our current decisions. But as previously stated, these assumptions change over time with the continuous evolution of the both the consumer market and ingredient and formula technologies. Clearly, in this regard, it is important that we learn what we can from colleagues – and it is in this spirit that I’ve shared with you some of what I’ve experienced.
Acknowledgements: I’d like to thank Laurie Joseph, Ph.D., and the staff at the Center for Dermal Research (Rutgers University) for initially requesting a presentation on this subject for one of their meetings. I’d also like to thank my wife, Donna, for her countless contributions and support over these many decades.
Comment: I’m happy to answer any follow-up questions that may arise from this article. I can be reached at [email protected]. It’s my hope to have provoked some thoughts and discussions about understanding and responding to trends. This continues to be a vitally important subject for our industry.
References
1. ACS. (accessed 2023, Jul 11). 12 principles of green chemistry. Available at https://www.acs.org/content/acs/en/greenchemistry/principles/12-principles-of-green-chemistry.html
2. ACI. (accessed 2023, Jul 11). Committing to key issues. Available at https://www.cleaninginstitute.org/industry-priorities/sustainability/committing-key-issues
3. RSPO. (accessed 2023, Jul 11). Certification. Available at https://rspo.org/as-an-organisation/certification/
4. Gardner, D. (2009). The science of fear. How the culture of fear manipulates your brain. Available (for purchase) at https://www.amazon.com/Science-Fear-Culture-Manipulates-Brain/dp/0452295467
5. Kabara, J.J. and Orth, D.S. (1997). Preservative-free and self-preserving cosmetics and drugs: Principles and practices. Available (for purchase) at https://www.amazon.com/Preservative-Free-Self-Preserving-Cosmetics-Drugs-Principles/dp/0824793668
6. The Management Center, =mc Learning. (Accessed 2023, Jul 11). Culture eats strategy for breakfast. Available at https://www.managementcentre.co.uk/management-consultancy/culture-eats-strategy-for-breakfast/
