By Jennifer Wang
Botox, schmotox. When it comes to anti-aging solutions, beauty seekers are starting to thumb their noses at injections in favor of "cosmeceuticals," personal-care products with supposed skin-enhancing ingredients.
Market research group IBISWorld estimates that cosmeceuticals accounted for 13.4 percent of the $54.9 billion wholesale cosmetics and beauty-products market in 2012--a whopping $7.4 billion. Another research firm, Freedonia Group, predicts that demand for cosmetic chemicals will jump 4.9 percent per year to reach $9.4 billion by 2016.
This growth will be driven by products advertising "active and natural" ingredients like rice-enzyme powders and rainforest plant extracts, such as those from Lily Herbceuticals--which uses exotic ingredients like the Tibetan Snow Lotus, a flower that survives in the Himalayas at 21,000 feet above sea level and 70 degrees below zero--and Personal Cell Sciences' U Autologous, a skincare line that incorporates customers' own stem cells in the service of anti-aging.
Lindsey Guest, founder and CEO of San Francisco-based BeautyArmy, a year-old tech company that uses algorithms to match individuals with personalized beauty samples, says the number of skincare lines on the market has quadrupled over the last five years. It's an especially lucrative category because of an urban and affluent customer base willing to pay a premium for the latest innovations. "They don't want to use what their mothers and grandmothers used, and a new algae or deep-sea ingredient really resonates," she says.
Dan Obegi, CEO of Los Angeles-based DermStore, the largest e-tailer of physician-strength skincare products, agrees. "There's new demand as beauty influencers and tastemakers get older and become more interested in these types of products," he says. DermStore has seen annual growth of 50 percent for the last three years. Its parent company, Intelligent Beauty, which expects 2012 revenue of $450 million, has introduced a cosmeceutical slant into other verticals, such as shampoos that treat split ends.
Katia Beauchamp, co-founder and co-CEO of Birchbox, a New York City-based discovery shopping service for beauty, grooming and lifestyle products, says that no matter the age of the consumer, spending is trending toward higher-performance products. A recent company survey revealed that BB creams--all-in-one products that work as a serum, moisturizer, primer, foundation and sunblock and were originally developed to protect skin after cosmetic surgery--are now finding mainstream use as a daily skincare option and are most popular among the under-21 set. And let's not forget the ever-growing opportunities in the ethnic and male-grooming markets, worth $3 billion and $2.6 billion, respectively, by some counts.
Beauty may only be skin deep, but consumers' desire to chase it offers endless potential for companies' bottom lines.