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Eco-labels: Environmental Marketing in the Beauty Industry

By: Margaret H. Whittaker, Elizabeth Engimann and Imogen Sambrook
Posted: August 11, 2009, from the August 2009 issue of GCI Magazine.

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A multi-attribute eco-label sets criteria for product categories across a number of environmental impacts and may involve life cycle assessments. Multi-attribute eco-labels incorporate impacts such as environmental and health considerations throughout the life cycle of a product (raw material sourcing, manufacturing, distribution/storage, product use, and product disposal).

What is the Benefit in the U.S.?

U.S. consumer sales of natural and organic personal care products in all channels grew 8.4% to $7.9 billion in 2008, according to a February 2009 report by Nutrition Business Journal. Although double-digit growth has slowed due to maturation of the market, the natural and organic personal care market is anticipated to exceed $10 billion by 2010. In terms of worldwide expansion, the majority of this growth is happening in the U.S. and Europe, markets where eco-label recognition is growing at a similar pace. In these regions, the natural and organic sector of the beauty industry is anticipated to grow to nearly 15% of total sales in coming years, according to Organic Monitor.

In the U.S. and beyond, the demand for natural and organic personal care products is developing in two tiers: 1) large budget, high-end designer brands that distribute to extensive, yet exclusive, distribution channels such as department stores, specialty stores and salons; and 2) smaller, more traditional companies that focus on distribution in the traditional marketplace.

Sustainability-minded cosmetics giants such as Aveda and Origins are now moving into department and retail stores in nearly every shopping mall in the U.S., while companies such Burt’s Bees and Tom’s of Maine are profiting from distribution in the mainstream market, according to Organic Monitor. Even the U.S.-based pharmacy retailer CVS Caremark has adopted a cosmetic safety policy to integrate “safer” ingredients and minimize packaging and energy use in its brand and private labels.

Recognition by an eco-label program can help a marketer break into one of the fastest-growing sectors of the beauty industry, or increase an existing market share. An eco-label enables a brand to communicate values and a positive, active position on environmental and/or human health concerns in a credible manner. Additionally, the growth of effective eco-labels will positively impact stragglers who may not be interested in making a greener products, but will do so if competitors realize a market advantage through use of an eco-label.

Which One to Choose?