The organic cosmetics market - Sweden

1.2 The global market's growth

Source: ****

The global market for organic and natural cosmetics is projected to grow at a strong pace of CAGR *.**% per year to reach $**.* billion in ****.

Europe is the largest consumer of this product category, followed by North America. Moreover, hair products will see the highest growth in demand (***) until **** according to the same source.

1.3 The domestic market signals strength

Source: ****

The Swedish market for organic cosmetics represented a mere *% of the total cosmetics market size in ****. Nevertheless, the market is growing at rapid pace, and between **** and **** the market is expected to demonstrate a CAGR of **.**%. This implies that in **** the market share of the organic cosmetics in Sweden will be valued at SEK *.** billion. Moreover, organic products will reap market share of traditional cosmetics; in **** the share will double from *% to **% of the total market value for cosmetics.

Several factors contribute to this market growth: first, trends around personal health are fast to expose any substance which is harmful in traditional cosmetics, and Swedish consumers are well informed about synthetic substances. Together with the animal abuse which often occurs in the production process, Swedes turn to organic alternatives where the business model revolves around ethics and health. [***] Secondly, the organic cosmetics market traces back to the fundamental ingredients used in skin care, namely plants and roots. For instance, trueorganicofsweden uses the Jojoba plant to slow down the ageing process and enhance hydration; many believe that these traits are indeed more effective than traditional cosmetics. Finally, Sweden can afford organic cosmetics: according to KOHF, Sweden in **** had the highest per ...

1.4 International Trade

This section analyses Sweden’s trade with cosmetics. Data is retrieved from UN Comtrade and in particular we use the code **** – “Cosmetic and toilet preparations; beauty, make-up and skin-care preparations (***), manicure or pedicure preparations "  in order to obtain the figures below.

Although this code is not specific to organic cosmetics per se, it still encompasses this product category. Moreover, we know from the previous section that in Sweden in **** around *% of the cosmetic market belonged to organic cosmetics, hence we can use this figure as a proxy to calculate the particular size to which organic cosmetics pertain.

Source: ****

From the data above it is clear that Sweden imports more cosmetic products than it produces and exports. The coverage rate (***) was **.*% in **** and decreased only marginally to **.*% in ****. In other words, Sweden imports almost double the value amount it exports.

In total, Sweden’s exports amounted to almost $*** million in ****, whilst imports were valued at around $*** million. 

Source: ****

The chart above highlights the five largest export destinations for cosmetics produced in Sweden. Moreover, based on the value for the top five countries, a market share between the five is calculated. Norway is the largest recipient of Swedish cosmetics, and between the five ...

2.1 Profile Analysis: The Swedish Consumer

Overview

In general, three types of customers can be identified for organic cosmetics: first, we find consumers who buy organic products to treat or mitigate skin problems. Secondly, we find a customer segment which looks to limit effects on for example the environment or animals involved in the production. By using labels, customers can indentify organic products. Finally, many consumers also buy natural or organic cosmetics as they are intergal to their lifestyle; often, this implies that the consumer in question also enforces this choice of product in other aspects of life and purchases. [***]

Source: ****

In a survey from ****, it was reported that a majority of consumers (***) use organic cosmetics to avoid negative consequences for other stakeholders, such as animals, the planet, and people employed in the industry. This reason is by far the most important factor to why Swedes would choose to purchase organic cosmetics. Moreover, **% of respondents also claim they are concerned about their own health. Nevertheless, according  to Euromonitor, the latter reason is gaining prominence in Sweden as to why one would purchase organic cosmetics. 

Source: ****

The graph above demonstrates that, in a survey, a majority (***) were well informed about the meaning of organic cosmetics. Product awareness is ...

2.2 Demand Trends

Increasing life expectancy

Source: ****

The Swedish population is ageing and living longer. This is evident from the graph above, which shows that the life expectancy for women will increase from **.* years in **** to **.* in **** (***). For men, the increase will be *.* years which will put the life expectancy in **** to **.* years. 

For the cosmetics market, this will be lucrative since more adults will look to buy cosmetics which can help with ageing and wrinkles for example. Moreover, it is likely to assume that also the organic product segment will benefit as environmental aspects are taken into consideration at an increasing pace.

Growth of e-commerce as distribution channel

E-commerce continues to reap market share from other distribution channels, alos in cosmetics. For this category in particular, consumers are inclined to purchase goods online as the purchase itself' is relatively risk-free. In other words, unlike items such as clothing, there is no issues regarding size or fit, as cosmetics most of the time are a "one-size fits all". Additionally, consumers are often brand loyal and purchase the same item again, which is often done online since the product is known and because using e-commerce delivers a product to the door which appeals to consumers ...

3.1 Market Overview

Source: ****

*this is the distribution in **** for cosmetics overall, so it is a proxy for organic cosmetics and may vary slightly.

3.2 Production

According to COSMOS organic cosmetics contain five categories of ingredients:

Water; Mineral elements; Physically processed agro-ingredients; Chemically processed agro-ingredients; Other ingredients.

Each category of ingredients must comply with specific requirements and different regulations. In addition, it is necessary to identify the percentage of organic products in each category. For more information on this subject, please refer to COSMOS standard pages **-**. [***]

Finally, the production process involves filtration, extraction, drying, distillation, pressing, milling, lyophilization and sieving. [***]

3.3 Distribution

In Sweden, approximately ** natural and organic cosmetics brands are distributed through eight primary retailers which include The Body Shop, Medstop Apotek, Åhlens, Kronans Droghandel, Apoteket and Nature – Livets apotek, Life – Naturligt Hälsa, and Kicks.

The Swedish cosmetics market is characterized by intense competition in the sector and is dominated by the main players in the global market including L’Oreal, Procter & Gamble, Beiersdorf and Unilever, while the largest market shares in the natural cosmetics sector are internationalized companies like Yves Rocher, Lumene Oy and The Body Shop and while the rest of the market is split between small companies, both Swedish and foreign. [***]

Source: ****

The graph above shows that beauty specialist retailers was the most common distribution channel (***) in ****. This includes the aforementioned Apoteket, The Body Shop, and Åhlens. Supermarkets remain a small distribution channel with a mere *.*% of sales.

Source: ****

The graph above concerns the largest companies in the cosmetics sector measured through sales. Although differences might exist for the organic cosmetic market, these should be marginal since the market is small and it is unlikely that there is a player included who is not in the list above. Hence, the graph above serves as a credible proxy.

In ...

4.1 Product Analysis

Labelling in cosmetics can cause confusion; for instance, products which are natural are not necessarily organic. The FDA states that they have no exact definition of organic cosmetics, and the same applies in Sweden. Nevertheless, in general, if different criterions are adhered to, it is plausible to assume that a product is organic. Senjacosmetics lists three criterions that can be used to determine whether a product might fall into the organic category, namely definition, certification, and origin of ingredients.

Organic cosmetic products must fulfill certain criterions, and contain a specific % (***) of organic ingredients, in order to gain status as organic. Below follows an overview:  

Vegan: this implies that products do not include beeswax, carmine / CI *****, honey, keratin, and lanolin Excludes chemicals: formaldehyde-free, chemical sunscreen-free, triclocarban-free, propylene glycol-free, mineral oil-free, cool tar-free, and microbead-free. [***] Limits animal cruelty: animal testing is not part of the production process Mitigating the ecological footprint: negative externalities must be excluded, which implies protecting wildlife and biodiversity

On top of this, there are not only restrictions to the production of organic cosmetics, but also points of encouragement which should be fulfilled in order for this product recognition: [***]

Include more antioxidants Include ingredients which have been organically sourced Ensure ...

4.2 Price Analysis

Source: ****

The graph above depicts the evolution of prices in the Swedish cosmetics market. In particular, we use the code **** “Cosmetics” from the Swedish National Statistics Office (***) to identify the evolution of prices.

The base year is ****, where the value is ***; accordingly, a value of *** means that, on average, prices have increased by *% (***). Following this logic, we can see that in March ****, prices had increased by **.**% since ****. Since January ****, the price increase was equal to *.**%.

Prices are cyclical, and as we can see from the graph above, prices were higher before COVID-**, which is demonstrated through the sharp decline in prices around March ****.

Source: ****

*this is a sample. There are numerous brands and products. Prices vary accordingly. Nevertheless, the brands and products included above are based on most popular items sold in these e-commerce stores.

4.3 Supply Trends

Labelling and certification

Although there are no bodies with exact defintions of an organic product, labelling is an important step in the process of identifying products which adhere to the organic paradigm.  However, many consumers express a difficulty in navigating through the djungle of different labels. The fact that so many exist today could imply difficulties when identifying which are legitimate and which are not. Moreover, the concept of a label could be eroded if everyone claims that their label represents an organic or eco-friendly product. 

In Sweden today, Ecocert is the most common single label which touches upon around **% of brands, followed by Cosmos and Natrue (***) each. "Other" labels account for around **% of all product, which emphasizes the large number of labels available today. Result were obtained in a survey by Agrovektor. 

Another issue is the fact that as long as *% of the product contains ecological/organic ingredients, it is possible to label them as just that. [***] Again, this dilutes the entire concept of organic products and diminishes the credibility. Indeed, Naturskyddsföreningen (***) states that the words ecological, organic, and natural aren't protected legally, so that anyone can include these labels on their products. 

To help nevigate this abundance of ...

5.1 Current Regulation

Regulation within cosmetics is strict, and in particular there are specific rules and guidelines around marketing. 

Sweden is impacted by EU regulation. On this level, we find the following guidelines: 

Regulation (***); Regulation (***) No ***/**** of ** July **** laying down common criteria for the justification of claims used in relation to cosmetic products

Moreover, on a national level, organic cosmetics are impacted by the following rules and standards:

The Marketing Act: in partcular Section **, "Prohibition of Misleading Marketing" and Section **, "Comparative Advertising"; Konsumentverket: statements about the environment in marketing. 

6.1 Segmentation

• Estée Lauder
• IsaDora (Invima AB)