Functional Cosmetics Market Trends

Growth Drivers

• Shift toward bio-based ingredients: The functional cosmetics sector is experiencing a significant transition towards bio-based ingredients, influenced by consumer preferences and changing regulatory standards. There is a growing preference for plant-derived surfactants, emulsifiers, and active agents due to their biodegradability and lower environmental impact. The USDA BioPreferred Program reports a 12% increase in the use of bio-based chemicals in personal care products in 2023, highlighting a notable market shift. This trend indicates a wider industry movement away from petrochemical sources, increasing the demand for fermented and botanical-based compounds that comply with sustainability criteria while improving product safety and effectiveness by global green chemistry goals.
• Sustainability and carbon reduction targets: The objectives of sustainability and carbon reduction are transforming procurement strategies within the functional cosmetics sector, as leading brands pledge to achieve net-zero emissions. These ambitions are propelling a shift towards low-carbon ingredients and more environmentally friendly production methods. Consequently, there is an increasing demand for sustainable functional chemicals, such as biodegradable surfactants, stabilizers, and active agents. The OECD projects that the green chemicals market will expand by $11 billion by 2027, with functional cosmetics significantly contributing to this growth. This transition highlights the industry's commitment to global climate goals, emphasizing the necessity of sustainable sourcing and carbon-aware formulation practices.
• Growing demand for multifunctional skincare products: Consumers are progressively looking for skincare items that provide various advantages within a single formulation, including hydration, anti-aging properties, sun protection, and skin repair. This trend is motivated by the desire for convenience and a commitment to holistic wellness. As a result, there is a surge in innovation regarding ingredient technologies and product design. For instance, Shiseido has introduced multifunctional offerings such as its Vital Perfection line, which delivers lifting, brightening, and firming effects, merging cosmetic outcomes with dermatological effectiveness for users who prioritize efficiency and results.

1. Functional Cosmetics Market: Trade Dynamics

Global Production of Personal Care (2023)

Source: World Bank

2. Analysis of Aging Population

Population Age 65 and Above (2024)

Source: World Bank

Challenges

• High environmental safety costs: The EPA standards require costly testing and reformulation. For instance, Innospec’s operating expenses rose 10% in 2022 due to compliance. These elevated costs create significant entry and sustainability barriers, particularly for small and mid-sized manufacturers in the functional cosmetics sector.
• Supply chain disruptions and infrastructure gaps: The lack of raw materials, especially botanical and biodegradable resources, presents considerable difficulties for the functional cosmetics industry. These shortages lead to disruptions in the supply chain and reveal deficiencies in infrastructure, which in turn impact production schedules, cost-effectiveness, and the reliable availability of sustainable ingredients that are crucial for fulfilling both consumer and regulatory demands.