Personal care, surfactants and biocides: these are three crucial and interdependent areas of the speciality chemicals industries. It was thus appropriate that they were all among those that featured in ‘market perspectives’ presentations at the annual British Association of Chemical Specialties (BACS) forum in London this April.
Personal care, according to June Graham who heads R&D at McBride, is a £5,673 million market in the UK, which has been growing at a relatively modest 1.5%/year in value terms in recent times. This is divided in the Kantar World Panel figures she cited into four main categories: bathroom toiletries (by far the largest), hair care, oral care and ‘others’, none of which are related to ingredients.
A 13.5% increase in consumer spending on personal care products is projected in the years to 2015. Whilst about one third of consumers have not changed their spending habits in the economic downturn, about 25% say that they spend less and 20% are shopping around more than before to get bargains. About one third are still prepared to pay more for good quality fragrances, as opposed to 23% for skin care products and 21% for cosmetics. All in all, Graham said, the picture is one of ‘skimp and splash’.
The £2.8 billion bathroom toiletries market has been “virtually static” of late, Graham observed. Within this, skin care accounted for £1.2 billion in the year to 20 March 2011, but has seen rather modest 0.3% value growth over the last two years, though volume growth was 1.6%. Premium products have been in decline as consumers have sought cheaper and multi-purpose alternatives. However, the sector is forecast to see constant growth over the next five years.
There has been relatively little innovation in skin care products of late and strong price promotion has curtailed any value growth. Sustainability is gathering pace as a concept; botanicals and ‘free from’ ranges have become increasingly common. Anti-ageing is by far the most dynamic market sub-sector, at least for those products that convince sceptical consumers that they will actually do what they are meant to.
Shower products – the largest sub-category within skin care, accounting for 45% of the total last year – and liquid soap are accounting for increasing shares of the total, thanks to their convenience and increasing popularity. Bar soap and bath additives have been declining since 2004, in view of their decreasing relevance to modern life. Mintel forecasts that these trends will continue, though there will be at least modest growth in all areas of the market.
Also within bathroom toiletries, deodorants and body sprays are a £550 million market. Despite their poor eco-credentials, aerosols remain the most popular format, especially among men. New product development is driven above all by claims of long-lasting effectiveness, in some cases for up to 48 hours (“48 hours! Does anyone go 48 hours without washing?” Graham wondered), and not leaving white marks.
Mintel forecasts growth to £581 million for the years to 2015 for deodorants and body sprays, with a best case scenario of £603 million and a worst case scenario of £559 million. There is limited potential for further market penetration, since most of the people who are ever likely to use them already do and that longer-lasting formulations will inevitably impact volume consumption. This growth will be driven mainly by new product and new formulation development.
Hair care, by contrast, is much more dynamic. It grew by 4.6% to reach £1.1 billion in the year to 20 March 2011, driven mainly by hair colourants. Consumers are increasingly looking for what Graham called ‘DIY beauty’ rather than splashing out at a salon. Conditioners and crèmes are more stable, other sub-sectors are growing less rapidly. Indeed, there is a wider trend to ‘DIY beauty’ seen from the increasing demand for root treatments and depilatory creams, as well as hair colourants.
The £812 million oral care market is mainly static, because the amount of toothpaste used – the largest sub-category – has virtually no growth potential. That said, there has been a strong growth in teeth whitening products, denture care and mouthwashes “as people pursue that dazzling Hollywood smile” or fret about yellow teeth. Indeed, mouthwashes have grown by 44% in the past five years. Mintel forecast growth to £907 million in 2015, with best and worst case alternative scenarios of £953 million and £822 million.
Mintel has also tracked the tendencies in product claims made by beauty products, Graham noted, and this is indicative of what producers look for in the ingredients they source. ‘Beauty enhancing’, not surprisingly, has been the top claim in each of the last three years, with over 50% of products claiming it, though this figure appears to have plateaued. ‘Natural’ was second in 2009, with not far short of 50%, but was overtaken in 2010 by ‘functional’. The real climber has been ‘convenience’, rising from 10% of the total in 2008 to over 25% in 2010.
“The key trend is that consumers in general are looking for more cost-effective alternatives,” Graham concluded. “Natural products have gone mainstream but the market is still driven mainly by convenience. Performance and and innovation still matter.” She left the audience with five conclusions to ponder
- Ongoing innovation is essential, because mass market personal care faces competition from many sources
- Lines are still blurred between value, mass and prestige as consumers look to benefits more than brands
- The mass market will continue to ‘borrow’ concepts from prestige brands
- Purity and simplicity of ingredients is equally as important as technical, science-based claims
- Consumers will still be willing to experiment with new products that make new claims
The personal care sector is not just a major consumer of surfactants, it is also the customer industry that has most obviously driven innovation in the field, said Guido Bognolo of WSA Associates, who has worked in the field for his whole career.
“Obtaining surface and interfacial effects through amphiphatic molecules from renewable resources is of increasing interest,” he said. “Personal care is leading the trend but it is inevitable that others will follow”. As the consuming industry next most directly exposed to consumer whim, household detergents is likely to be next in line.
‘Renewable’ is a much misused term, Bognolo added. It is often used as a synonym for ‘natural’ and ‘sustainable’. There are some common denominators in terms of respect for humans and the environment and conveying images of safety, protection and care, but there are also internal contradictions between them. Not only is ‘natural’ not always good – cyanide, strychnine and the red seeds of Taxus baccata could all be mentioned – what is natural and renewable may not be sustainable and an uncontrolled explosion of resource consumption could badly damage eco-systems and impact the food chain.
“The confusion of terms and the absence of clear, independent, objective regulatory rules leaves ample room for arbitrary interpretations and claims. These are essentially meant to strike a chord with end users’ emotions and allow formulators to advertise renewability where it is more of a myth than a reality,” Bognolo said.
For this reason, in his view, it would be better if some raw materials producers and formulators were voluntarily to apply higher standards of transparency and honesty in communications and, in the absence of independent certification, for those who endorse claims to rely constantly to scientific evidence, consistent judgement and common sense – especially the latter.
Bognolo added that, whilst it is very difficult to define renewability with respect to surfactants, one thing is certain: there is no such thing as a 100% renewable surfactant. Those that come closest, in his opinion, would be those that have both the hydrophobe and the hydrophile made from renewable raw materials and which use the minimum amount of non-renewable resources relative to total volumes in manufacture. His definition thus includes those derived from:
- Natural sources, such as lanolin, casein, saponins and lecithins
- Chemical modification of natural raw materials, such as soaps and mono- or di-glycols
- Further chemical synthesis of chemically modified natural raw materials, such as sorbitan esters, APGs, sugar esters, fatty acyl amino acids, oxy acid esters or hydrophobically modified polysaccharides
- Biosynthesis, such as glycolipids, lipo-peptides, lipo-proteins and phospholipids
Excluded were those that used harsh chemicals and/or a large number of process steps. Not everyone would share these definitions, Bognolo conceded.
The paradox is that large numbers of natural surfactants exist. However, they were brought close to extinction in the second half of the 20th century by the ever increasing availability of synthetics with tailored structures for specific applications. Thus formulators have given very little attention to extracting value from them and their differentiating or other – often unquantifiable – benefits have been overlooked.
In recent years, the response of mass consumers to messages empahsising eco-friendliness and care for human well-being has catalysed the return to natural surfactants. In parallel and in response, there has been a move away from “the perceived evils”: anionic sulphates, non-vegetable fatty alcohols, cationics and non-ionic ethoxylates.
In the case of ethylene oxide, said Bognolo, a real phobia began in the early 1990s, because of which the formulators moved the spotlight on renewable surfactants. “It was ridiculous really, because they soon came back to ethylene oxide for lack of suitable alternatives,” he remarked.
The spotlight for renewables has moved from ethylene oxide to sugar esters, APGs and polyglycerols. Meanwhile anionic sulphonates have given way to renewable fatty acyl amino acids lactylates, citrates and tartrates, though also to non-renewable or only partially renewable phosphates and amphoterics.
However, Bognolo observed, renewables can rarely replace synthetics on a wt/wt basis. Innovative formulation concepts are needed to manage the switch over and this is where the loss of formulation knowledge about naturals has been felt hardest.
One positive aspect of ‘surfactant-phobia’ has been to make many – though not all – formulators understand the difference between emulsification and emulsion stabilisation. The latter can be achieved with, among other things renewable interference-active polymers or hydrophobically modified polysaccharides, at much lower levels of surfactant than are generally used in formulations. Japanese companies are leading the way here, but the Europeans are not far behind.
Most of this, Bognolo said, has been happening in the personal care market but detergents are increasingly following suit. Two key trends have emerged: the use of bio-surfactants as co-surfactants in green formulations (one major brand that uses them in this way is now on the market in Belgium) and the use of enzymes as partial replacements for conventional surfactants. Ultimately, he believes, 50% of the surfactants currently used in laundry detergents will cease to be used.
“There is one sad observation I have to make about biosynthesis of surfactants, however. Over 50 years of academic research into biosynthesis have failed to produce a step change impact on the surfactants industry,” Bognolo remarked.
Biosurfactants, he continued, are broadly of two types: specialities and commodities. The specialities – which are used in medical and pharmaceutical applications, such as glycolipids in antibiotics and anti-virals, with a small niche in personal care – have enough value in use to cover their high raw material costs and the extra isolation and purification.
The commodities, which seek to replace conventional surfactants, emollients and emulsifiers, are still not price-competitive enough to close the gap, though the use of cheaper carbon sources, such as chicken fat or molasses, or the use of GM technology to increase yields and technological advances in recovery and purification are making some impact. The last year has seen some success in the biosynthesis of emollient esters by enzymes with unique physical-chemical properties
Formulation, Bognolo concluded, is still the key to driving the replacement of synthetic surfactants with renewables, while the perceptions of mass consumers will create the underlying drive to do so. The trend is certain to continue and there have been some promising indications of progress in recent times.
The final speaker, on the subject of biocides, was also a consultant: Niall D’Arcy of Ireland-based Biocide Information. The company carries out an annual ‘Global Biocides Report’, based on discussions carried out with end-users and confirmed with manufacturers of actives and suppliers between November and March, so some of the latest details were available just in time for the Forum.
The focus of the Global Biocides Report is on specialities, which are mostly halogenated, inorganic or nitrogen-based, phenolics, organometallic or organosulphur-based, plus miscellaneous others. These apply to three main areas for which biocidal activity is their sole function:
- Preservation (in such areas as paints and coatings, plastic resins, inks, leather, metal-working fluids, textiles, etc.)
- Water treatment (recreational water, cooling water, oil and gas, paper, etc.)
- Disinfection (antiseptics and soaps, disinfection and surface care, sterilants, wipes, etc.)
The biocides market world-wide, according to D’Arcy, is worth about $4 billion at a 100% active level or $9 billion as formulated products. Biocide Information segments the market in terms of participants into four: suppliers, formulators, distributors and ‘intermediates’, companies who use biocides in finished products, such as BioCote in coatings, X-Static in fibres, masterbatch producers like PolyOne and polymer producers like Arkema. Typically, active ingredient suppliers mark up prices on their own formulations by about 40%, formulators by about 80% and distributors by about 20%.
From 2000 to 2010, the number of manufacturers fell from 295 to 200 due to market consolidation, while the number of formulators fell from 200 to 170, for the same reason, slightly offset by new market entrants. Distributor numbers also fell, from about 2,000 to about 1,800, barriers to entry being quite low here. The real growth was in ‘intermediates’, who went from some 20 to nearer 100 by exploiting their knowledge of biocidal effects to develop products that offer them.
The US remains the largest market, at about $1.2 billion/year, followed by Japan (about $300 million/year), then Germany and China (each about $200 million). However, as in almost all major industries, it is the ‘BRIC’ countries (Brazil, Russia, India, China) that are growing fastest and will continue to. China and India are both forecast to grow by 4% in volume, as opposed to 2%/year in the US and Europe and 1% in Japan.
The largest end use market in volume terms is recreational water, followed by wood preservation, personal care, industrial and institutional cleaning, paint and household. In value terms, however, recreational water and personal care are on a rough par at about $500 million/year, ahead of industrial and institutional ($400 million) and wood preservation ($300 million)
D’Arcy cited a couple of key influences on the market that have emerged in the latest report. One is biologically active surfaces, a $700 million and rapidly growing market. The biocides used are mainly silver-based, including some nano-silver formulations, plus triclosan and silane quats. The main suppliers of products in this are mostly not traditional suppliers of biocides.
Because regulatory compliance is a major cost factor in this field, small companies have developed brands to offset the cost. Major influencing factors include promotional support and trademarking, supplier relations, efficacy and regulatory and independent approval. Growth is expected to accelerate in the coming years, especially in medical devices.
Another key influence is biofuels, where fatty acid methyl esters from vegetable oils, used cooking oil and animal fats are used at levels of typically 2-6% in blend with diesel fuel. Europe is the most advanced of the developed regions of the world in the use of renewable oils and there is a strong drive behind it for political and economic reasons, not to mention tax incentives and the influence of the farm lobby.
Unlike in traditional markets, the biocides used have to be approved by engine manufacturers, fuel suppliers, vehicle manufacturers and airlines, so performance is critical and standards are very stringent. This, D’Arcy said, is a big trend and it will continue as the minimum percentage of renewables used in fuels grows from 5% to 10%.
His third example was antibacterial sanitisers, in the form of surfaces and liquid soaps. This is a $5 billion worldwide market, of which 40% is antimicrobials. In terms of consumers, it is divided roughly 30/30/20/20 between household, HoReCa, home car and industry. The biocides used are mostly alcohols, chlorhexidine, quats and triclosan. This market “has shown phenomenal growth, but will probably decline in the future without an epidemic,” D’Arcy said.
As in every sector of the chemicals industry, there is the ‘Green Challenge’. Formulators are being challenged to create products with benign environmental effects but which are also still effective against bacteria. There are many influencers here. Coatings producers, for example, are under pressure from home owners, designers, architects, industrial bodies, governments and others and there are many environmental initiatives. In paint in the US alone, there are five green ‘institutes’.
Different green specifications are leading biocide manufacturers to develop formulations that meet customers’ needs for such parameters as low VOCs, being formaldehyde-free, air quality and hazard component restrictions, all while performing against microbes.
And finally there is something that never used to be part of the biocides industry at all: brands. Quite a few have come onto the market in the past five years as suppliers have sought to help consumers make purchasing decisions – and decisions that will hopefully include paying a premium for known quality – especially in antimicrobials. Examples include Troy’s Homeguard, Dow’s Biopfur and Silvadur, Microban, Arch’s Purista and Reputex and Sanitized’s Actigard.