Global Personal Care Contract Manufacturing Market - 2023-2030

Market Overview

Global Personal Care Contract Manufacturing Market reached US$ 20.8 billion in 2022 and is expected to reach US$ 40.5 billion by 2030, growing with a CAGR of 8.7% during the forecast period 2023-2030.

During the forecast period, increasing demand from Asia-Pacific will be key to driving global personal care contract manufacturing market growth. India and China, with their large populations and younger demographics, presents sustained growth opportunities for global cosmetic brands.

Rising investments in contract manufacturers by private equity firms will fuel new growth opportunities for the global market. For instance, in April 2023, TruArc Partners, a U.S.-based private equity firm, announced a substantial investment in Trademark Cosmetics, Inc., a U.S.-based contract manufacturer and cosmetic formulation developer.

Market Dynamics

Advancements in Production Technology

New advancements in production technology have proven highly beneficial to contract manufacturers. Highly automated industrial production systems have increased production efficiency and reduced down time, thus allowing contract manufacturers to expand output. It also allows manufacturers to streamline processes and ensures efficient allocation of resources, enabling cost effective manufacturing.

Real-time monitoring and quality control systems have enabled contract manufacturers to meet stringent quality control and regulatory standards. It also provides an assurance to cosmetic brands that outsourcing production won't result in a drop in quality standards. Advances in production technology also enables contract manufacturers to utilize new encapsulation techniques and novel packaging solutions in keeping up with emerging trends.

Market Entry of New Cosmetic Brands

The global cosmetics industry has witnessed the entry of a slew of new brands, which has further intensified competition. New startup brands are focusing on niche and unique aspects to grow their brand identity. By outsourcing manufacturing to contract manufacturers, new entrants do not have to make substantial upfront investments in production facilities.

Outsourcing production to contract manufacturers allows new cosmetic brands to focus on other major tasks such as branding, marketing and product development. New entrants can thus concentrate on building brand awareness and consumer loyalty. Outsourcing to contract manufacturers allows new entrants to share the production risks as the contractors are responsible for ensuring regulatory compliance and quality standards. The risk-sharing arrangement reduces the financial and operational risks for new entrants in the market.

Increase in Pricing Pressures

The global cosmetics industry is highly competitive and contract manufacturers vie with each other to obtain business from leading global cosmetic brands. Since cosmetic brands seek highly cost-effective production, contract manufacturers face significant downward pressure on pricing to secure and retain contracts. The increased downward pressure on pricing can affect the profit margins of contract manufacturers.

Volatility in raw material prices leads to an increase in production costs for contract manufacturers, who are unable to pass on the costs to brands, due to the highly price sensitive nature of the market. It leads to further erosion of profit margins for contract manufacturers. Typically only large, high-volume contract manufacturers are able to bear sustained downward pressures on pricing due to their long-term contracts and large financial reserves. It creates a situation where new entrants and small and medium-scale manufacturers are unable to compete with the large industry players.

COVID-19 Impact Analysis

The COVID-19 pandemic led to global supply chain disruptions and contract manufacturers struggled to obtain materials to ensure continued production. Furthermore, the pandemic also led to major changes in consumer preferences. It caused an increased demand for hygiene products and contract manufacturers had to pivot towards production of hand sanitizers and other hygiene products.

The pandemic also led to a shift in distribution models, with consumers increasing preferring e-commerce and home delivery services. Some personal care contract manufacturers, in partnership with their cosmetic brands, began to implement direct-to-consumer distribution models in response to the changing consumer dynamics during the pandemic.

AI Impact Analysis

Automated quality control systems with AI-based algorithms can be used to monitor production lines in real-time, detecting defects and deviations from quality standards. It helps contract manufacturers to ensure consistent product quality and compliance with all government regulations. AI-driven predictive analytics can be used to gauge demand trends, thus helping contract manufacturers to optimize their supply chain operations.

AI-based data analytics enables contract manufacturers to offer personalized and customized products based on customer data. A high level of personalization can help manufacturers to better cater to the growing demand for unique personal care products. AI-powered analytics can also help contract manufacturers gather insights from customer feedback and social media data, enabling a better understanding of consumer preferences.

Russia-Ukraine War Impact Analysis

The Russia-Ukraine war has had a major impact on contract manufacturing in both countries. The war has destroyed Ukraine's industrial infrastructure and millions of Ukrainians have fled the country. It has devastated the personal care contract manufacturing industry in Ukraine and has also impacted the industry in neighboring countries which were reliant on demand from the Ukrainian market.

The market has also witnessed major disruptions in Russia, with many manufacturers facing shortage of raw materials and other components from western suppliers due to economic sanctions. Some manufacturers have switched to Chinese suppliers to keep production running. Furthermore, the Russian government has set up a 'parallel import' scheme, allowing business to manufacture and distribute trademarked products without compensation to trademark owners.

Segment Analysis

The global personal care contract manufacturing market is segmented based on based on formulation, service, application and region.

Lotions are The Most Widely Used Formulation Within the Industry

Lotions are the most widely used formulation within the global market, accounting for more than a third of the market share. Lotions have a semi-fluid consistency and are mainly used for various skincare products that moisturize and hydrate the skin. Lotions offer a balance between ease of application and fast-absorption, making them the ideal choice for various skincare and body care products.

Creams are thicker and more viscous than lotions and are commonly used for anti-aging products and specialty skincare treatments. Oils are mainly used in premium, organic skincare products. Liquid formulations, such as serums and toners are highly concentrated with active ingredients and are used for niche and specialist products.

Geographical Analysis

North America's Growing Cosmetics Industry

North America accounts for more than a third of the global market. North America is a wealthy region with a high level of economic development. A large middle and upper middle class generates persistent demand for personal care products. U.S. is a major market in North America, with consumers spending nearly US$ 90 billion annually on personal care products. Annual per capita spending on personal products in U.S. averages between US$ 300 to US$ 500.

Many domestic cosmetic brands have emerged in recent years and the North American personal care market is fragmented, with major brands constantly launching new products to augment their market position. The high level penetration of social media also contributes to increased consumer awareness. Many brands are adopting digital marketing strategies by entering into partnerships with social media influencers.

Contract manufacturers in North America have significantly expanded their operations and scope of services in response to growing investments in the region by leading cosmetic brands. For instance, in April 2023, Shay Labs, a U.S.-based contract manufacturer, announced the opening of its fourth production line at its plant in Woodstock, Illinois, U.S.

Competitive Landscape

The major global players include A.I.G. Technologies, Inc., PLZ Corp, McBride, Formula Corp, Skinlys, Covalence Laboratories, Fareva, Albea, Tropical Products and Sarvotham Care.

Why Purchase the Report?

• To visualize the global personal care contract manufacturing market segmentation based on formulation, service, application and region, as well as understand key commercial assets and players.
• Identify commercial opportunities by analyzing trends and co-development.
• Excel data sheet with numerous data points of personal care contract manufacturing market-level with all segments.
• PDF report consists of a comprehensive analysis after exhaustive qualitative interviews and an in-depth study.
• Product mapping available as Excel consisting of key products of all the major players.

The global personal care contract manufacturing market report would provide approximately 57 tables, 62 figures and 190 Pages.

Target Audience 2023

• Cosmetic Companies
• Industry Investors/Investment Bankers
• Research Professionals
• Emerging Companies