Global Cosmetic Industry: The Rise in Biotech Beauty
In 2022, the global cosmetics active ingredients market was valued at ~$5 billion; biotechnology held just over 20% market share. The category is, however, the fastest growing, with a CAGR of over 7%, compared to the average 5% growth in the wider active ingredients category. Currently, these biotech ingredients have a higher penetration and a tremendous growth curve in the anti-aging and moisturizing active ingredient categories.
In light of the immense opportunity in the biotech space, there is a major axis shift in the growth strategies of players across the value chain. Brand owners such as L’Oréal and Estée Lauder, among others, have accelerated the product development activities of biotech beauty products, while ingredient manufacturers are heavily investing in the development of innovative biotechnological raw materials, which are cost-effective and environmentally friendly alternatives to ingredients derived from both petrochemical and plant-based sources.
The Power of White, Blue and Green Biotechnology
The term “biotech beauty” refers to ingredients produced using cellular organisms like bacteria, yeast or algae in the course of biocatalysis or biofermentation processes. Based on the type of biomass used, the technology can be divided into three main nodes: white biotechnology, blue biotechnology and green biotechnology, each offering a novel and distinctive way to generate value.
• White biotechnology is the science of using microorganisms (fermentation and bioconversion) or enzymes (biocatalysis) to produce active cosmetic ingredients. Unlike chemical bioconversion, these procedures are natural and employ environmentally friendly solvents. There have been several innovative product launches in the past year, such as Biobloom Microecobeauty by Biomage Biotech, obtained by fermentation of Lactobacillus rhamnosus bacteria, which helps to balance the skin microbiota. This results in multifunctional benefits like anti-aging, long-term hydration and overall improved skin health.
• Blue/marine ingredient biotechnology draws on molecules and active ingredients found in the ocean with a particular focus on algae and microalgae. This is among the fastest growing and evolving ingredients categories, particularly with the advent of photobioreactors, which have facilitated the industrialscale cultivation of microalgae. At present, just over 20 species are commercially used. However, this algal biomass represents a largely under-exploited potential because more than 1 million species of microalgae that can be produced within this technology. The marine biomass is not only a highly sustainable resource but also offers powerful anti-aging and hydrating beauty benefits. The manufacturers leading in this technology are primarily based in France, Japan and South Korea.
• Green biotechnology enables the production of plant cell and tissue cultures, offering skin care technologies to the market. Apart from sustainability, this technology is enables manufacturers to adopt a faster and more efficient extraction technologies, capture the most valuable metabolites in a botanical source, and produce extracts with enhanced photoactive profiles and better performance than conventional botanical extracts.
Beauty Biotech Investments Growing
Although there are numerous brand owners, OEMs/ODMs and brands creating products with biotech ingredients, the actual innovators in the biotech sector are the speciality chemicals and ingredients manufacturers.
For instance, Silab, which has long been a leader in the production and distribution of botanical extracts in France and Europe, has significantly increased its investments in the biotech sector. Silab has quadrupled the production capacity of its microorganism feedstocks like yeasts, microalgae and bacteria, and devoted a new, larger space to its biotechnology research laboratory, which is outfitted with the most recent technological innovations.
Innovative ingredients manufacturers such as this are increasingly focussing on growing the share of biotech ingredients in their overall offerings, responding to today’s key security issues, traceability and respect for the environment.
Other key suppliers investing in the biotech sector include Bloomage, C16 Biosciences, Apoena Biotech, Lubrizol Life Science, Vytrus Biotech, DSM and Gelita, to name but a few.
Feasibly backing these huge investments are the big brand owners, including L’Oréal and Unilever, which have vowed to improve their carbon footprint using sustainable practices. Lately, to support their product development teams, these big brand owners are ambitiously collaborating with innovative ingredients manufacturers to get their formulation support and create exclusive biotech cosmetic raw materials from cultured biomass. One such example can be seen in the recent investment by L’Oréal in Microphyt, a start-up in the blue biotechnology space.
Challenges and Barriers to Biotech Beauty
Despite the rapidly increasing demand for biotech beauty products and the reduced production costs associated with them, the initial investment cost in product development and production activities is a significant barrier for many ingredient manufacturers. However, due to rising consumer demand and their propensity to pay a premium for sustainable beauty products, the market for biotech beauty products is anticipated to experience rapid expansion.
Widespread greenwashing practices are another constraint. Although biotech beauty is an environmentally friendly solution, marketers of biotech beauty products face significant consumer skepticism toward “lab-made” or genetically modified products, compared to conventional organic or natural ingredients.
However, the category will ultimately succeed due to growing consumer awareness and the evolution of clean beauty away from naturalness and toward aspects like sustainability and carbon neutrality. Manufacturers would also be helped by a higher safety rating for these products because of the thorough testing they’ve undergone and their relative lack of contaminants.
The Potential Future
In the last few years, the entry of many new-age biotech startups and the shift in focus of several established ingredient suppliers has exponentially increased the number of available materials. Though still in the early stages of industrialization, these technologies hold great promise for the future. Although the demand is currently primarily concentrated in the United States, Europe and a few East Asian nations like Japan and Korea, developing economies such as India, China and Latin America offer a significant future market for biotech beauty.
Market leaders in the ingredient supplier space, as well as FMCG giants, have already begun experimenting with biotechnology and developing synergistic capabilities that extend to all three of the major biotechnology subfields. Growth strategies likely to be implemented in the future include increased technical and formulation capabilities, smart partnerships and targeted M&A, and large-scale manufacturing capability buildup.