Functional Cosmetics Market

The Functional Cosmetics Market is projected to grow from USD 3.2 billion in 2023 to USD 4.1 billion by 2030, with a compound annual growth rate (CAGR) of 5.2% during the forecast period. Key factors driving this growth include the rising demand for multifunctional ingredients and the increasing popularity of anti-aging, skin whitening, and sun protection products. Another significant opportunity for market expansion lies in the growing focus on cosmetics specifically targeted towards men. In terms of market value, Europe is the dominant region for functional cosmetics, experiencing the highest growth rate globally. Following closely behind is the Asia Pacific region, which is the second-largest market, followed by North America.
Impact of COVID-19 on Functional Cosmetics  Market

The global functional cosmetics market has been negatively impacted by the COVID-19 pandemic, which has caused disruptions in the global supply chain and a decline in oil prices. These factors have led to a decrease in demand from the cosmetics industry, resulting in negative growth for the market. Europe is the largest region in terms of market value for functional cosmetics.

In the Asia Pacific region, there has been a reduction in the consumption of cosmetics, particularly in South Asian countries such as India, Bangladesh, Sri Lanka, and Central Asian countries. This decline in demand has affected the market for functional cosmetics in the region. China, although holding a significant market share in the Asia Pacific functional cosmetics market, was severely affected by the initial impact of the pandemic. The country imposed strict quarantines, leading to disruptions in supply chains dependent on China. Travel bans and lockdown measures in major Chinese cities, such as Shenzhen and Shanghai, resulted in reduced oil production and the closure of ports. The workforce was also affected, further impacting operations. However, after a three-month lockdown period, China has shown signs of recovery. Most businesses have reopened, which is expected to generate increased demand for functional cosmetics.

Market Dynamics

Driver: Increasing demand for multifunctional ingredients
Functional cosmetics are specialized chemicals that are incorporated into skincare products to enhance their functional properties. These cosmetics encompass a range of ingredients, including anti-aging agents, exfoliators, conditioning agents, and UV agents, among others. They are utilized in various skin and hair care formulations such as facial and body creams, lotions, masks, shampoos, dyes, and more, in order to enhance the overall value of these products.

There is a growing emphasis on sustainability and the reduction of compounds used in cosmetic formulations. Consequently, there is an increasing demand for enhanced functionality and multiple benefits from a single product. For example, BB (Blemish Balm) cream, marketed as a multifunctional product, claims to address various skin concerns such as anti-aging, skin brightening, and sun protection. From BB, CC, and DD creams to post-shave moisturizers with UVA and UVB sun protection, there is a rising demand for products that target two or more skin concerns simultaneously. Consumers are particularly interested in skincare products with sun protection features due to their awareness of the harmful effects of UV radiation.

The demand for functional cosmetics is expected to surge as there is a growing desire among consumers in regions like Europe, Middle East & Africa, and Asia-Pacific to obtain multiple benefits from a single product or ingredient. Furthermore, the number of individuals using fairness and whitening products is continuously increasing, contributing to the growth of these multifunctional products.
Restraints: High cost of organic products
The use of synthetic ingredients in cosmetic products has been linked to various side effects. For instance, hydroquinone and mercury are commonly used but have negative health effects. Hydroquinone, which is used for skin lightening in concentrations of up to two percent, can cause skin cancer, organ toxicity, and respiratory irritation. Similarly, mercury, another cosmetic ingredient used for reducing dark spots and lightening the skin tone, can be harmful to the kidneys, liver, and brain.

The risks associated with conventional synthetic cosmetics have brought attention to natural and organic products. To address the issues caused by harsh synthetic products, there is a growing trend towards using natural alternatives. This involves incorporating natural or organic compounds into cosmetic formulations. Manufacturers are shifting their focus towards creating products that are gentle on the skin and don't pose health concerns. However, the main challenge lies in the higher cost of organic cosmetics, particularly due to expensive raw materials or feedstock. As a result, organic cosmetics are mostly limited to premium product ranges, making it difficult for manufacturers to allocate sufficient resources for research and development activities. Consequently, the high cost of organic raw materials and associated overhead costs hinder the growth of the functional cosmetics market.
Opportunities: Shifting focus towards male specific cosmetics

The notion that one's appearance and how they present themselves is important is widely accepted. Individuals tend to prefer products that enhance their aesthetic appeal. There is a significant demand for cosmetics designed specifically for men, including moisturizers, anti-aging products, and mud masks. Younger males often encounter various issues such as oily skin, acne, hair loss, and wrinkles. However, these concerns can be effectively addressed through the use of suitable cosmetics, provided there is awareness about them. This presents a profitable opportunity for ingredient manufacturing companies to develop products that cater specifically to the male demographic.

Conditioning agent  is estimated to be the largest functionality  in the  functional cosmetics  market between 2021 and 2026.
Conditioning agents applied to the skin can enhance the natural renewal mechanism, thereby impacting the homeostatic process of repair and growth. However, in the case of hair, these agents have minimal influence on growth or cellular repair. Instead, they provide temporary cosmetic improvements for damaged hair, necessitating reapplication after removal. The market for such conditioning agents is primarily driven by population growth and higher per capita spending on cosmetics in Asia-Pacific and Europe. Conversely, the North American market for conditioning agents is expected to experience slower growth due to increasing government regulations in the region.
Skincare  was the largest application for functional cosmetics market in 2020

Functional cosmetics in skin care applications primarily address concerns related to safeguarding against sun damage, reducing wrinkles, diminishing blemishes, treating acne, combating signs of aging, and smoothing frown lines, among other issues. The global demand for skin care products is driven by the universal desire of individuals to enhance their appearance. The pursuit of radiant and healthy skin plays a significant role in the escalating demand for beauty and skin care items. Furthermore, the rise of gender-specific cosmetic products targeted towards males and the growing population in the Asia-Pacific region are anticipated to contribute to the increased demand for skin care cosmetics, consequently boosting the demand for functional cosmetics used in these products.
Europe  is estimated to be the largest region in the functional cosmetics market in 2020.
In terms of value, Europe held the largest share of the functional cosmetics market in 2020. However, it is anticipated that Europe will experience slower growth compared to the Asia Pacific and Middle East & Africa regions. The production and consumption of functional cosmetics are increasing in Europe and this trend is expected to continue throughout the forecast period. Europe's market dominance is primarily attributed to the higher prices of functional cosmetics in the region. Additionally, the preference for natural and organic personal care products, as well as easily biodegradable options, contributes to the larger market size in terms of value. These natural functionalities often need to be imported from countries in the Asia Pacific region, where they are abundant, such as Indonesia and Malaysia.

Asia Pacific is estimated to be the second-largest functional cosmetics market during the forecast period.
In terms of value, Asia Pacific ranked as the second-largest market for functional cosmetics in 2020. The Asia Pacific region presents abundant opportunities for various industries to thrive. With a growing population and their increasing demands, coupled with initiatives for innovative technologies and products, this region is poised to become a favorable destination for the growth of the functional cosmetics market. The rising standard of living, escalating cost of living, and expanding population contribute to the flourishing of industries such as personal care, soaps & detergents, and pharmaceuticals in developing regions, thereby aiding the growth of the functional cosmetics industry. However, industry players may face challenges in establishing new manufacturing plants, implementing advanced technologies, and creating a seamless value-supply chain between raw material suppliers and manufacturing industries in the developing regions of Asia Pacific. Moreover, the existing environmental laws and regulations in these regions are not as stringent as those observed in Western developed countries, posing a challenge for governments and national agencies to modify and enforce environmental laws effectively.

Key Market Players

The report includes profiles of major players in the market, such as Ashland Inc. (US), Stepan Company (US), BASF SE (Germany), Nouryon (Netherlands), Clariant AG (Germany), Evonik Industries AG (Germany), Gattefosse (France), Lucas Meyer Cosmetics (Canada), Sederma(France), Seppic SA (France), CP Kelco (US), Eastman Chemical Company (US), Emery Oleochemicals (Malaysia), Givaudan SA (Switzerland), Symrise AG (Germany), Sonneborn LLC (US), Vantage Specialty Chemicals (US), United-Guardian, Inc. (US), Innospec Inc. (US), KAO Corporation (Japan), Momentive Performance Materials Inc. (US), ADEKA Corporation (Japan), DuPont (US), and Koninklijke DSM N.V. (Netherlands).

This report categorizes the global functional cosmetics market based on functionality, application, and region.
On the basis of functionality, the functional cosmetics market has been segmented as follows:
• Conditioning agents
•  UV filters
•  Anti-aging agents
• Skin lightening agents
•  Others

On the basis of application, the functional cosmetics market has been segmented as follows:
• Skin Care
• Hair Care
On the basis of region, the functional cosmetics market has been segmented as follows:
• Asia Pacific
• North America
• Europe
• Middle East & Arica
• South America

Recent Developments
• In April 2020, Nouryon introduced a natural polymer for sunscreen formulation. SolAmaze Natural is compatible with organic and synthetic sunscreen formulations. The product is bio-based and biodegradable.
• In August 2020, BASF SE launched a naturally derived and biodegradable product, Lamesoft. It can be used for the stabilization of products in skin and hair cleansing formulas. It can be used to stabilize surfactant-based and wax-based opacifiers.
• In August 2020, BASF SE also introduced a new production line at the Kaohsiung site in Taiwan to double the production of Uvinul A Plus, an ingredient used for UVA (UV longest wavelength) protection. It is used in various sun and skin formulations. The production line is introduced to meet the rising demand of consumers in the Asia Pacific market.
• In August 2021, Clariant AG acquired the remaining 70% of Brazilian personal care specialty company Beraca and took over full control. This acquisition will strengthen its functional cosmetics business, assuming full operational ownership of Beraca's broad portfolio of natural ingredients.

The functional cosmetics market is projected to grow from USD 3.2 billion in 2023 to USD 4.1 billion by 2030, with a compound annual growth rate (CAGR) of 5.2% during the forecast period. Key factors driving this growth include the rising demand for multifunctional ingredients and the increasing popularity of anti-aging, skin whitening, and sun protection products. Another significant opportunity for market expansion lies in the growing focus on cosmetics specifically targeted towards men. In terms of market value, Europe is the dominant region for functional cosmetics, experiencing the highest growth rate globally. Following closely behind is the Asia Pacific region, which is the second-largest market, followed by North America.
Impact of COVID-19 on Functional Cosmetics  Market

The global functional cosmetics market has been negatively impacted by the COVID-19 pandemic, which has caused disruptions in the global supply chain and a decline in oil prices. These factors have led to a decrease in demand from the cosmetics industry, resulting in negative growth for the market. Europe is the largest region in terms of market value for functional cosmetics.

In the Asia Pacific region, there has been a reduction in the consumption of cosmetics, particularly in South Asian countries such as India, Bangladesh, Sri Lanka, and Central Asian countries. This decline in demand has affected the market for functional cosmetics in the region. China, although holding a significant market share in the Asia Pacific functional cosmetics market, was severely affected by the initial impact of the pandemic. The country imposed strict quarantines, leading to disruptions in supply chains dependent on China. Travel bans and lockdown measures in major Chinese cities, such as Shenzhen and Shanghai, resulted in reduced oil production and the closure of ports. The workforce was also affected, further impacting operations. However, after a three-month lockdown period, China has shown signs of recovery. Most businesses have reopened, which is expected to generate increased demand for functional cosmetics.

Market Dynamics

Driver: Increasing demand for multifunctional ingredients
Functional cosmetics are specialized chemicals that are incorporated into skincare products to enhance their functional properties. These cosmetics encompass a range of ingredients, including anti-aging agents, exfoliators, conditioning agents, and UV agents, among others. They are utilized in various skin and hair care formulations such as facial and body creams, lotions, masks, shampoos, dyes, and more, in order to enhance the overall value of these products.

There is a growing emphasis on sustainability and the reduction of compounds used in cosmetic formulations. Consequently, there is an increasing demand for enhanced functionality and multiple benefits from a single product. For example, BB (Blemish Balm) cream, marketed as a multifunctional product, claims to address various skin concerns such as anti-aging, skin brightening, and sun protection. From BB, CC, and DD creams to post-shave moisturizers with UVA and UVB sun protection, there is a rising demand for products that target two or more skin concerns simultaneously. Consumers are particularly interested in skincare products with sun protection features due to their awareness of the harmful effects of UV radiation.

The demand for functional cosmetics is expected to surge as there is a growing desire among consumers in regions like Europe, Middle East & Africa, and Asia-Pacific to obtain multiple benefits from a single product or ingredient. Furthermore, the number of individuals using fairness and whitening products is continuously increasing, contributing to the growth of these multifunctional products.
Restraints: High cost of organic products

The use of synthetic ingredients in cosmetic products has been linked to various side effects. For instance, hydroquinone and mercury are commonly used but have negative health effects. Hydroquinone, which is used for skin lightening in concentrations of up to two percent, can cause skin cancer, organ toxicity, and respiratory irritation. Similarly, mercury, another cosmetic ingredient used for reducing dark spots and lightening the skin tone, can be harmful to the kidneys, liver, and brain.

The risks associated with conventional synthetic cosmetics have brought attention to natural and organic products. To address the issues caused by harsh synthetic products, there is a growing trend towards using natural alternatives. This involves incorporating natural or organic compounds into cosmetic formulations. Manufacturers are shifting their focus towards creating products that are gentle on the skin and don't pose health concerns. However, the main challenge lies in the higher cost of organic cosmetics, particularly due to expensive raw materials or feedstock. As a result, organic cosmetics are mostly limited to premium product ranges, making it difficult for manufacturers to allocate sufficient resources for research and development activities. Consequently, the high cost of organic raw materials and associated overhead costs hinder the growth of the functional cosmetics market.
Opportunities: Shifting focus towards male specific cosmetics

The notion that one's appearance and how they present themselves is important is widely accepted. Individuals tend to prefer products that enhance their aesthetic appeal. There is a significant demand for cosmetics designed specifically for men, including moisturizers, anti-aging products, and mud masks. Younger males often encounter various issues such as oily skin, acne, hair loss, and wrinkles. However, these concerns can be effectively addressed through the use of suitable cosmetics, provided there is awareness about them. This presents a profitable opportunity for ingredient manufacturing companies to develop products that cater specifically to the male demographic.

Conditioning agent  is estimated to be the largest functionality  in the  functional cosmetics  market between 2021 and 2026.
Conditioning agents applied to the skin can enhance the natural renewal mechanism, thereby impacting the homeostatic process of repair and growth. However, in the case of hair, these agents have minimal influence on growth or cellular repair. Instead, they provide temporary cosmetic improvements for damaged hair, necessitating reapplication after removal. The market for such conditioning agents is primarily driven by population growth and higher per capita spending on cosmetics in Asia-Pacific and Europe. Conversely, the North American market for conditioning agents is expected to experience slower growth due to increasing government regulations in the region.
Skincare  was the largest application for functional cosmetics market in 2020

Functional cosmetics in skin care applications primarily address concerns related to safeguarding against sun damage, reducing wrinkles, diminishing blemishes, treating acne, combating signs of aging, and smoothing frown lines, among other issues. The global demand for skin care products is driven by the universal desire of individuals to enhance their appearance. The pursuit of radiant and healthy skin plays a significant role in the escalating demand for beauty and skin care items. Furthermore, the rise of gender-specific cosmetic products targeted towards males and the growing population in the Asia-Pacific region are anticipated to contribute to the increased demand for skin care cosmetics, consequently boosting the demand for functional cosmetics used in these products.

Europe  is estimated to be the largest region in the functional cosmetics market in 2020.

In terms of value, Europe held the largest share of the functional cosmetics market in 2020. However, it is anticipated that Europe will experience slower growth compared to the Asia Pacific and Middle East & Africa regions. The production and consumption of functional cosmetics are increasing in Europe and this trend is expected to continue throughout the forecast period. Europe's market dominance is primarily attributed to the higher prices of functional cosmetics in the region. Additionally, the preference for natural and organic personal care products, as well as easily biodegradable options, contributes to the larger market size in terms of value. These natural functionalities often need to be imported from countries in the Asia Pacific region, where they are abundant, such as Indonesia and Malaysia.

Asia Pacific is estimated to be the second-largest functional cosmetics market during the forecast period.
In terms of value, Asia Pacific ranked as the second-largest market for functional cosmetics in 2020. The Asia Pacific region presents abundant opportunities for various industries to thrive. With a growing population and their increasing demands, coupled with initiatives for innovative technologies and products, this region is poised to become a favorable destination for the growth of the functional cosmetics market. The rising standard of living, escalating cost of living, and expanding population contribute to the flourishing of industries such as personal care, soaps & detergents, and pharmaceuticals in developing regions, thereby aiding the growth of the functional cosmetics industry. However, industry players may face challenges in establishing new manufacturing plants, implementing advanced technologies, and creating a seamless value-supply chain between raw material suppliers and manufacturing industries in the developing regions of Asia Pacific. Moreover, the existing environmental laws and regulations in these regions are not as stringent as those observed in Western developed countries, posing a challenge for governments and national agencies to modify and enforce environmental laws effectively.

Key Market Players

The report includes profiles of major players in the market, such as Ashland Inc. (US), Stepan Company (US), BASF SE (Germany), Nouryon (Netherlands), Clariant AG (Germany), Evonik Industries AG (Germany), Gattefosse (France), Lucas Meyer Cosmetics (Canada), Sederma(France), Seppic SA (France), CP Kelco (US), Eastman Chemical Company (US), Emery Oleochemicals (Malaysia), Givaudan SA (Switzerland), Symrise AG (Germany), Sonneborn LLC (US), Vantage Specialty Chemicals (US), United-Guardian, Inc. (US), Innospec Inc. (US), KAO Corporation (Japan), Momentive Performance Materials Inc. (US), ADEKA Corporation (Japan), DuPont (US), and Koninklijke DSM N.V. (Netherlands).

This report categorizes the global functional cosmetics market based on functionality, application, and region.
On the basis of functionality, the functional cosmetics market has been segmented as follows:
• Conditioning agents
•  UV filters
•  Anti-aging agents
• Skin lightening agents
•  Others
On the basis of application, the functional cosmetics market has been segmented as follows:
• Skin Care
• Hair Care
On the basis of region, the functional cosmetics market has been segmented as follows:
• Asia Pacific
• North America
• Europe
• Middle East & Arica
• South America