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High-Tech Delivery Systems Mean Big Business for Cosmetics Firms

(press release from Kline @ Company, INC.)

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LITTLE FALLS, N.J., Jan. 13 -- In an effort to meet the soaring demand for personal care products that stave off the ravages of time, cosmetic and toiletry manufacturers are focusing not only on the active ingredients that go into their products but also the technologies used to deliver these ingredients to the skin.

As highlighted in a recent New York Times article: www.nytimes.com/2005/01/08/business/08skin.html, leading skin care marketers like L'Oreal and Estee Lauder have adopted technologies from other fields, including pharmaceuticals and electronics, to introduce anti-aging actives to the skin more effectively, more efficiently, and for a longer duration.

By employing novel delivery systems like nanoparticles, these companies and their competitors have not only introduced several new product lines, they've also been able to breathe new life into existing ones. This has led to double-digit growth rates for skin care products -- the only segment to show such excitement for the short term in an otherwise mature cosmetics and toiletries market.

Retail sales of anti-aging skin care products are valued at nearly $2.5 billion in the U.S. alone, to according estimates from market research firm Kline & Company. And Kline's recently published study, COMPETITIVE INTELLIGENCE IN SPECIALTY ACTIVES AND ACTIVE DELIVERY SYSTEMS FOR COSMETICS AND TOILETRIES 2004: U.S. AND WESTERN EUROPE, pegs U.S. and Western European consumption of specialty active ingredients -- compounds that provide a demonstrable therapeutic benefit to the skin or hair -- and the systems used to deliver these ingredients, at more than $500 million at the manufacturer level and rising steadily.

"Skin care marketers have always focused a lot of attention on finding better and more powerful active ingredients, but they're also developing new and more effective ways to deliver the actives they're already using," says Gillian Morris, industry manager for Kline's Chemicals and Materials Practice. "These new delivery systems can provide more targeted results to the application site and can really differentiate a marketer's product from the rest of the field."

This has also helped to extend the anti-aging trend into the mass market, where there is enormous demand for effective -- but affordable -- noninvasive alternatives to cosmetic surgery. Morris notes that until fairly recently, advanced specialty actives could be found only in "professional" products purchased from spas and salons, dermatologist offices and cosmetic surgery clinics, or high-end prestige outlets.

Now, thanks in part to more effective delivery systems, the larger C&T marketers have been able to introduce their own anti-aging products in the retail market. Brands like Olay and Neutrogena have launched "professional-type" products in the mass retail market, positioning themselves to compete with professional skin care brands but at much lower price points and with much larger distribution.

Another study recently published by Kline, THE U.S. PROFESSIONAL SKIN CARE MARKET 2004, states that sales of these professional-oriented products increased by more than 80% in the past year, leaping to an estimated $285 million in 2004.

The anti-aging trend has also energized the raw materials side of the business, attracting new entrants as well as generating mergers and acquisitions. In March, ISP Hallcrest was formed when ISP acquired certain businesses and assets of Hallcrest, a leader in microencapsulation for cosmetics and toiletries. And Englehard, which previously focused on effect pigments, purchased Collaborative Labs, a leader in delivery systems and actives for personal care.

"Like their clients, raw materials suppliers are also scrambling to meet demand for newer and better actives and delivery system technologies," says Morris. "This is one of the only sectors in specialty chemicals where the supplier base is expanding right now, and many firms are leveraging technologies from pharma applications to capitalize on the tremendous growth in personal care."

About Kline & Company

Established in 1959, Kline & Company, Inc. www.klinegroup.com is an international market research and business consulting firm serving the specialty raw materials, specialty chemicals, and cosmetics and toiletries industries.

Kline offers a broad catalogue of syndicated market analyses for both the finished products and raw materials sectors of the cosmetics and toiletries industry.

For more information on Kline's studies for the personal care sector, go to:
www.klinegroup.com/ssconsumer.htm
or contact Carrie Bonner at (973) 435-3412 or
carrie_bonner@klinegroup.com

For more information on Kline's studies on specialty raw materials used in cosmetics and toiletries and other industries, go to:
www.klinegroup.com/sschemmat.htm
and scroll to Specialty/Fine Chemicals, or contact Gillian Morris at (630) 761-9587 or
gillian_morris@klinegroup.com

Those based in Europe should contact Jonathan Duff at +32-2 776 0738 or
jonathan.duff@kline-europe.com

For more information, contact: Gillian Morris Industry Manager, Chemicals and Materials (630) 761-9587
gillian_morris@klinegroup.com

Kline & Company, Inc.

CONTACT: Gillian Morris, Industry Manager, Chemicals and Materials for
Kline & Company, Inc., +1-630-761-9587,
gillian_morris@klinegroup.com

Web site: www.klinegroup.com
www.klinegroup.com/ssconsumer.htm
www.klinegroup.com/sschemmat.htm

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