The market for ethically sourced and made health, well-being, beauty and personal care products has seen a spike in consumer interest in recent years, due to the COVID-19 pandemic and a growing preference for “clean-label”, vegan and “green” items.
According to leading data and analytics company GlobalData, the Australian skincare market will rise from US$1.3 billion (A$1.8 billion) in 2021 to US$1.5 billion (A$2.1 billion) by 2026, at a compound annual growth rate (CAGR) of 3.5%.
GlobalData consumer analyst Likitha Nalluri said consumers are starting to acknowledge “businesses that have a strong philosophy of ethics, environmental safety, and human health”. “Informed consumers are thereby avoiding products with artificial colours, micro-plastics, and fillers that may provide short term benefits, albeit at great cost to their health and the environment in the long run,” she said.
The growth in the market can be attributed to a number of factors including preferences for online retail, local and “green” products.
A Statista study projected growth of vegan cosmetics will reach US$24.79 billion (A$34.57 billion) by 2028, with a CAGR of 6.57%.
EZZ embracing the shift
EZZ Life Science (ASX: EZZ) is one company that is focused on capitalising on this upward trend, by developing locally manufactured health and well-being products that combine natural ingredients with scientifically proven technology.
The New South Wales-based company is developing a line of products that align with the reception of the general population and aim to utilise ingredients that are Australian and Certified Organic.
EZZ’s chairman Glenn Cross said the company is prioritising and fully supporting the “new norm”, which is the demand for vegan and ethical products.
“While we are a life sciences company that is focused on improving people’s health, we also understand that part of the mission is also to look after our environment, which can have a detrimental effect on people’s overall well-being, he said.”
“It was important for us to make sure that we not only use natural and organic ingredients as much as possible, but that we also use recyclable and environmentally friendly packaging when we can.”
“And of course, being locally manufactured and using local ingredients also mean that we are less likely to be impacted by shipping delays or other restrictions,” he added.
COVID-19 pushed consumers online
With extensive lockdowns and periods of isolation, e-commerce has become the norm throughout society, however this rise has been plagued by shipping delays.
These delays were not only due to an increased pressure on the delivery network, but often they would face delays in the product’s country of origin, as a result of the COVID policies and restrictions in place in certain countries.
Retailers have warned that the supply chain issues “are expected to continue for up to 18 months”.
Australian Retail Association chief executive Paul Zahra said “retailers were reporting a sevenfold increase in supply chain costs and ordering times from overseas that have doubled or tripled.”
This news comes as a great opportunity for locally manufactured products in a bid to reduce such costs associated with supply chains and shipping delays.
Appreciation for locally-sourced ethical products
The demand for ethical products domestically made with local ingredients is starting to grow considerably.
Back in 2019, the Australian Senate passed the Industrial Chemicals Bill, “which bans the use of new animal test data for chemicals introduced into Australia for use as ingredients in cosmetics.”
This is a reflection of a new study which has found nine in 10 Australians are more likely to purchase ethical and sustainable products.
In response to this, many new Australian brands have been developed with the sole mission of providing consumers with ethical and environmentally friendly products.
CouriersPlease chief commercial officer Paul Roper said the shift is a big wake-up call for retailers to realise that there is a rise in conscious consumerism.
“They need to change their practices to play their part in the world and also respond to what consumers want, in order to remain relevant,” he said.
“It is time that businesses and organisations think about their environmental footprint and understand the influence they have on consumers.”