London – Sales of natural & organic cosmetics are projected to surpass the EUR 1 billion mark for the first time this year.

New research by Organic Monitor (www.organicmonitor.com) finds that European revenues have been increasing by over 20% a year. Widening availability and strengthening consumer demand are the major drivers of market growth. Availability of natural & organic cosmetics is increasing in European retailers with some launching private label products.

Initially most demand for natural cosmetics was from consumers who suffered from ailments like skin rashes and allergies, however demand has broadened in recent years. Many are turning to natural cosmetics as they contain minimal levels of synthetic substances like parabens and petrochemicals. Others are turning to natural products because of the functionality of natural ingredients and / or traceability of organic ingredients. Organic food consumers are favouring these products as they realise chemicals in cosmetics could possibly be as harmful as chemicals in foods.

The German and French markets are the fastest growing in Europe. Whilst the French market started showing high growth in 2005, natural cosmetic sales have been booming in Germany for a number of years. The popularity of natural cosmetics with German consumers has led drugstores, organic food retailers and even discounters to launch private label products. As a consequence, natural cosmetics are the most widely available and most competitively priced in the German market.

Organic Monitor’s new report on The European Market for Natural Cosmetics, finds the German and Italian markets to be the largest in Europe, comprising almost 70% of revenues. Natural cosmetics are highly established in Germany where they comprise over 4% of total cosmetic sales; the market share is forecast to approach 10% by 2012. Natural cosmetics also have high market share in other German-speaking countries like Austria and Switzerland.

The supply-side is highly fragmented with over 400 European companies involved in producing natural cosmetics. Most are small producers, with very few companies having a regional presence. Weleda is the leading producer of natural cosmetics in Europe; the Swiss company has a strong market position in almost every European country. However, its market share is being eroded by new entrants. High growth rates are attracting new entrants, which include large cosmetic companies that are launching natural and organic products.

The study finds a major barrier to market growth and consumer trust in natural cosmetics is the lack of industry regulation. Unlike organic foods, there are no national and EU regulations for natural & organic cosmetics. As a result, legitimate products are competing against conventional cosmetics that are marketed as ‘natural’ because they contain some natural ingredients. The inconsistency between private standards of natural & organic cosmetics is also stifling consumer demand; consumers are unable to differentiate between products that are certified by organisations like BDIH and Soil Association.