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Beauty Companies Lead in Fair Trade

Posted: September 29, 2008

New research by Organic Monitor finds that natural and organic cosmetic companies are among the early adopters of fair-trade practices. A large number are implementing fair-trade sourcing policies, with some launching certified fair-trade products. Most product launches have been in the French market, which now has the largest number of cosmetic products with the internationally recognized Fair Trade mark.

The fair-trade concept is becoming popular as it involves ethical sourcing of cosmetic ingredients. It encourages sustainability and guarantees growers in developing countries get a fair price. Although the Body Shop has been the pioneer in ethical sourcing with its Community Trade program, the company is losing out to newcomers. A number of natural and organic cosmetic companies are setting up fair-trade grower projects in Africa, Asia and Latin America. Some are growing endangered plant species and investing in social community projects.

In its new Strategic Insights report, Organic Monitor evaluates the business potential of fair-trade cosmetics and ingredients, giving details of standards, certification and market potential. The study predicts adoption rates to rise as natural and organic cosmetic products become mainstream and as more certified fair-trade ingredients become available. A major restraint to market growth is the limited number of certified fair-trade ingredients.

The "mainstreaming" of the natural and organic cosmetics market, which involves products crossing over from specialist to mainstream retail channels, is also encouraging fair-trade practices. Pioneers such as Weleda are investing in fair-trade projects to guarantee supply of organic ingredients and to encourage sustainability. The entry of large cosmetic companies and leading retailers is straining supply of natural and organic cosmetic ingredients. Corporate social responsibility is also coming to the forefront as brands compete for limited shelf-space in retailers.

Preliminary research from Organic Monitor shows that the European market for natural and organic cosmetics is, in 2008, expected to break the $2 billion barrier for the first time. High market growth rates are occurring across Europe as consumers increasingly demand "chemically clean" and ecological-friendly cosmetics. Mainstreaming is leading to new product launches in supermarkets, hypermarkets, discount stores, drugstores and department stores.