The Guest Blog

By Madi Sharma, UK Member of the European Economic and Social Committee (EESC), Entrepreneur

Europe has always played a key role in the innovation and development of personal care, body hygiene and beauty products. However, its leading position has been progressively eroded in the process of global competition.

In promoting European initiatives in this sector, the European Economic and Social Committee (EESC) is hosting a policy debate in Nottingham, UK on Tuesday May 17 whereby it will consider policy recommendations from business, trade unions, consumers, research, academia and various interest groups on how to strengthen growth in the sector, create more jobs and launch new innovations.

While the innovative capacity of Europe’s specialised enterprises is impressive, the production and commercialisation of EU innovations have shifted to other parts of the world, bringing serious economic and social consequences in terms of growth, employment opportunities and incentives for R&D. Enhancing an enabling environment for the further development of this sector in the EU through appropriate strategies will lead to major contributions to industrial reshoring and development.

The personal care and cosmetic sector is made up of both large and small companies with over 4 400 SMEs in Europe. The SME segment is estimated to be 30% of the market, but in some EU States this can be up to 98%. The product portfolio ranges from 20,000+ products for large companies to around 160 for smaller companies.

Over 1.7 million people are employed across the sector from manufacturing to marketing, sales and retail environments. Over the past five years, the industry has grown its direct and indirect employment by 2.3%, or more than 39 000 jobs.

The sector is highly innovative in R&D in this fast-moving consumer-focused goods market. The industry employs over 25 000 scientists and 514 000 students in life sciences researching new areas of science, working with new ingredients, developing formulations and carrying out safety assessments, leading to an impressive number of patents in the EU each year.

The European sector is credited with having the highest level of consumer safety globally, taking the lead on zero tolerance for animal testing, whilst still promoting innovation and competitiveness. Today’s European cosmetic market is driven by new product developments, with new colour pallets, skin-specific treatments, anti-ageing products and unique formulas. Consumers constantly demand more choice and even greater efficacy. In order to respond more effectively to potential users’ preferences and expectations, it is key to involve consumer groups and organisations at the earliest possible stage of the design of care, hygiene and beauty products.

Personal care, sanitary and cosmetics products are daily essentials for over 500 million consumers in Europe. Products range from everyday hygiene products such as soap, shampoo, deodorants and toothpaste to luxury beauty items such as perfumes and make-up. The European business sector is worth £57 billion and Europe is well established as a world leader in the sector and is a dominant exporter of cosmetics. The overall value of the UK’s cosmetics market is worth £8,381 million (2014 retail sales prices).

In alliance with the Cosmetics Regulation (Regulation (EC) No1223/2009), Europe needs to take further steps to achieve greater growth in this sector with regard to research and innovation. Specifically, it could achieve greater convergence between the life science engineering sector and the beauty and care sector, better collaboration between large and small companies and bio-technical research and greater market intelligence, targeted data provision and knowledge transfer between academia, industry and consumers to enhance innovation.

Population growth, the resulting increase in consumption and the depletion of resources (particularly water) are further issues to consider in addressing consumers’ “social responsibility” concerns and their own CSR sustainability commitments. The phasing out of animal testing included in the Regulation and conflicting national laws have also posed challenges to manufacturers, therefore, without intention to lift such ban, there need to be provision for alternatives, especially in the context of reformulation, exports and replication of human skin.

Increased transparency for consumer protection, e.g. with regard to labelling, supporting claims, advertising and pricing policy, should be a priority of the regulators, ensuring the protection of consumers and fair competition in the industry. Consumers have begun to focus on multifunctional products and those that provide better value for money. Technological advances have allowed this, but in some cases safety concerns are being raised more frequently on imported or very cheap products from China and inside Europe.

Additionally, the initial findings of the e-commerce sector inquiry were that half of the companies surveyed in the EU cosmetics and health sector did not sell cross-border. Different national regulations (often conflicting with EU legislation, particularly regarding animal testing bans) are the main obstacle. Trade guidance and access to relevant and timely information would provide better support.

Hosting the event in Nottingham with its major industries in healthcare, pharmaceuticals and incubators such as MediCity and BioCity will showcase not only the City’s capability of being a key driver for new products, new jobs and new companies but also the capabilities of the European Union.

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