Page 132 - CW E-Magazine (30-4-2024)

Point of View

China and India are the other two significant markets – not surprising considering their large populations – but the value share of these two are
much lower than their volume shares, due the fact both production and markets are still dominated by low-price commodities.

Kline’s study pegs the Indian PCI market as the fastest growing in the world at a CAGR of 5.9%, compared to a global average of about 3.2%. The
growth is being driven by growing awareness of personal hygiene; the power of social media in amplifying the voices of brands and influencers; and the
emergence of several e-commerce platforms bringing even sophisticated products to the doorsteps of consumers in the remotest parts of the country
with ease. With self-care routines becoming more sophisticated, including amongst men, unexplored market opportunities are opening up.
While some portion of the Indian PCI market is still served by imports (from MNCs), a number of home-grown companies have scaled up and
widened their portfolios to meet local and, increasingly, global demand. In aroma chemicals, for example, a handful of Indian companies count among
the top-three suppliers of specific ingredients in the world. Galaxy Surfactants, which started out (as the name suggests) as a surfactants producer and
has widened its offerings to also include several PCI won recognition (Silver medal) at in-cosmetics Global for what it claims is the world’s first 100%
green oil soluble cleanser system based on an amino acid.

Growth in China’s PCI market was muted in 2021 and 2022, due the intense lockdowns, but is expected to get back on track. As was evident
in another expo held recently in Shanghai (covered in the inside pages of this issue), there is a vibrant and innovative PCI industry in the country
that is keen to service markets in China and elsewhere. The Chinese suppliers-focussed trade fair witnessed a highly confident domestic industry
competing with global majors in new product launches and showcasing innovative solutions.

Strong growth in demand for PCI is also expected in Africa. The continent has unique styles and characteristics (e.g., hair and skin types) and
catering to this requires tweaking of products and compositions.

Over-arching trends
Notwithstanding some recent reversals (in the wake of Covid and due to increased price sensitivity amongst consumers), some overarching
trends will likely resurface – sooner than later – even if they have receded somewhat to the background in the last couple of years.

The first and foremost is the tendency to go ‘green’ or bio-based. For most actives commonly used today, natural substitutes are available, though not
always at the same price point or with the same level of functional efficiency. Several ingredients, made through synthetic chemistry from fossil-derived
raw materials are being offered with lower carbon footprints – mirroring a trend in the broad chemical industry. Often this is through a validated Mass
Balance approach, which qualifies a portion of the output with the green attribute depending on the quantum of the renewable or recycled feedstock
used in the manufacturing process.

The decline of some ingredients including silicones (for hair and skin care) and sulphates (in body and oral cleansing) has been slower than anticipated
even in a discerning market like Europe, but this too will change. The concerns over cyclic silicones stem from their persistent, bio-accumulative and toxic
properties, and while they are still used due to their unmatched properties, in some applications such as hair care and anti-perspirants & deodorants, they
are being formulated out. While supply chain challenges for alternatives for sulphates – mainly sodium lauryl sulphate (SLS) and sodium lauryl ether sulphate
(SLES) – has slowed the pace of their substitution briefly, this is another trend that will regain momentum as the alternatives – currently expensive – become
more widely available and cheaper.

Market influencers
Going forward the business of PCI will be increasingly influenced by factors such as multi-functionality, naturality, sensorial experience and
sustainability.
Ingredients that offer multiple benefits are clearly benefitting from quicker and greater market acceptance, both for reasons of economy and for
convenience in formulation. In skin care, for example, it is not uncommon for products to offer sun protection as well as anti-ageing functionality.
The increasing adoption of multi-functional ingredients will also edge out some other ingredients and reshape options available to formulators.

Naturals, despite having a smaller share, are growing faster than the market as a whole. There is a perception – at times contrary to science – that
naturals are safer than synthetics. Customers in the PC industry prefer to bend to public opinion rather than attempt to change perceptions through
rationale arguments, and there are several instances wherein companies have reformulated products to avoid synthetics on the mere suspicion of safety.

Bad press; pressure from big brands, NGOs, & consumers; and regulations will force more PCIs out of the market. Even some large volume
essential oils like orange oil and tea tree oil are under scrutiny for the properties of their ingredients. These trends originate in the developed
economies (particularly in Europe), where customers are more informed and discerning, but tend to eventually spread to other markets as well,
sooner or later. Above all, consumer companies – especially globalised ones – will find it increasingly difficult to justify use of an ingredient in
one market while keeping it out of their formulations in others on grounds of safety to human health and/or the environment.
Ravi Raghavan

132 Chemical Weekly April 30, 2024

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